Outsourcing software development has not lost its appeal since first being introduced decades ago. But times are changing. Companies are now more willing to look at nearshore outsourcing as a better and more economical alternative to the traditional offshore model. As such, there are a large number of burgeoning startups located in Mexico and points south catering to U.S. customers.

iTexico is an example of an American company with a nearshore subsidiary in Mexico. The question is, why did iTexico choose Mexico? For that matter, what criteria do companies look at when determining where to launch a nearshore startup?

There are five things in particular that nearshore startups need to consider. Each of these five things plays a vital role in determining whether the environment is a good fit. Bear in mind that this discussion focuses mainly on software development in general, and mobile app development in particular.

1. The Right Business Environment

At the very top of the list is a business environment conducive to the nearshore model. In this way, nearshore software development is no different than any other business enterprise. Startups are less willing to locate to environments where doing business is especially difficult. They are not interested in environments that are highly regulated, highly taxed, and subject to excessive political volatility.

Along with minimal regulations and taxes, startups want an environment that is economically favorable for business. They look for things such as low inflation and a track record of economic growth. They look for environments with a focus on international competition.

2. An Adequate Talent Pool

In order to create a successful nearshore software development firm, companies need a full range of specialists. They need developers with experience in the most used development environments like angular and node. They need people with experience in both iOS and Android development. They need project managers comfortable with the Full Stack methodology.

Finding all these people requires an adequate talent pool. The good news is that talent abounds in countries like Mexico, Colombia, and Argentina. Local universities and training centers are churning out more than enough qualified candidates to meet the staffing needs of nearshore startups.

3. Reasonable Geographic Proximity

The final three things companies look for are considered less crucial than the first two, but they are still important nonetheless. The first of them is reasonable geographic proximity. In other words, a nearshore partner operating in the same time zone or one that’s relatively close makes communication and collaboration easier. Mexico’s four time zones are identical to the U.S., making the country an excellent choice for nearshore startups serving mainly U.S. clients.

4. Cultural Similarities

Cultural similarities between nearshore partners and their clients are also important to some degree. This includes business culture. Sharing cultural similarities often means partners on both sides of the equation find it easier to forge similar goals and ideas. Similar cultures also tend to foster more opportunities for innovation.

5. Safety and Living Conditions

The last consideration is that of safety and living conditions. Nearshore startups have to locate to environments that potential workers would be comfortable living in. Safety is also a concern for clients who may choose to travel to the nearshore location for occasional meetings. Finally, safety heavily impacts how a business operates on a day-to-day basis.

Nearshore startups are popping up all over Mexico and select countries in Central and South America. They are meeting the needs of clients that have decided they would rather go nearshore than continue sending their products to offshore markets. Thankfully, it’s all working out well.