Nearshore in Portugal: A Cost-Effective Solution for Your Business

By InnoTech
April 19, 2023 — Articles, Nearshore
Nearshore in Portugal

Nearshore in Portugal is a great way to take advantage of the increasing global connectivity. Nearshore software development boosts proximity leveraged by modern technology, thus accelerating innovation and delivering capacity. In fact, the world is becoming more tied, and we are closer than ever before.

One way in which businesses are making the most of this trend is by using nearshore services to drive their digital transformation projects forward. Nearshore teams, such as those available in Portugal, offer a unique combination of technical expertise, language proficiency and cultural affinity. These make them ideal partners for businesses looking to thrive and grow.

By capitalizing on IT consulting services, businesses can tap into new talent pools, and novel approaches, such as Agile methodologies and innovative technologies. Nearshore partners and their teams can guarantee knowledge, and expertise, driving innovation and accelerating the delivery of new products and services.

In this article, we will explain why Nearshore in Portugal is an excellent choice for your business.

What is nearshore outsourcing?

Nearshore outsourcing is a business model that allows you to relocate certain services to a nearby country. The main goal is to rapidly access a skilled workforce while benefiting from lower costs. When talking about IT, it means counting on a remote, dedicated, customized and multidisciplinary tech squad that is in the same (or almost) time zone and shares a similar culture.

All this simplifies interaction among internal and external teams as well as their management. So, nearshore development centres make it easier and faster to get the job well done, and enables you to focus on core and strategic activities.

It is expected that having a nearshore partner saves an amount between 30% to 50% of IT budget for a  contract spanning from 3 to 5 years, as stated in a Research Report by Associação Outsourcing Portugal.

What are the advantages of nearshoring?

When it comes to services, software development is one of the most requested and with a greater fit with nearshore. Relying on a Nearshore Service Provider to create, test, evolve, secure and maintain your digital products ensures several advantages (some even more notorious in nearshore in Portugal, as we will see later) including:

  • Cost savings: Nearshore services often cost less than hiring locally, as labor costs in other countries may be lower. Hiring a team of software developers from a different country with lower labor costs can be a cost-effective way to develop and maintain digital products. This is particularly true when choosing to nearshore in Portugal, where the cost of living and labor is lower than in many other European countries.
  • Fast time to market: With a team of tech experts working on your project, you can speed up the development time of your digital products. This enables you to launch your products faster and beat your competitors to market. When compared to in-house teams, nearshore teams can provide faster turnaround times. They often have a dedicated focus and a streamlined process for project delivery.
  • Overcome tech talent shortage: This is a global problem and is more noticeable in some countries. Using Nearshore services, you can benefit from a larger pool of skilled professionals. Having a larger talent pool might make it easier to fill existing gaps in demanding/specialized functions and have the team you need, when you need it.
  • Flexibility: Nearshore outsourcing allows you to scale development teams up or down based on your needs at each moment. This means you can quickly adjust to changing market conditions or new product requirements, without having to go through the time-consuming process of hiring, onboarding and training new employees.
  • Access to new technologies: Nearshore development teams may have access to technologies or methodologies that you may not have been aware of. New, better ways of doing things can speed up development time and improve the quality of the end product.

Overall, nearshore software development services, especially in Nearshore in Portugal, offer a range of benefits for businesses looking to accelerate innovation and delivery capacity of their digital transformation projects.

Why Nearshore in Portugal?

Here are some reasons why Portugal is a great choice for nearshore in critical areas such as software development:

  • Talent’s quality: Portugal is recognized for the quality and dedication of its tech professionals, thanks to the high standards of universities that prepare students for the corporate world (both in terms of hard and soft skills) and the worldwide projects in which they are involved from the very start of their career. In addition, most are fluent in English and understand/speak other languages, which truly facilitates communication with other countries.
  • Competitive costs: Portugal offers competitive labor costs compared to other European countries or in-house development. This means that companies can benefit from cost savings without sacrificing quality and invest more in their products/innovations.
  • Advanced technology infrastructure: Portugal has invested heavily in its technology infrastructure in recent years, with a strong focus on developing its IT sector. As a result, the country has state-of-the-art data centers, fiber-optic networks, and high-speed internet connections. All this contributes to a remarkable tech ecosystem.
  • Time zone compatibility: Portugal is in the Western European time zone, which is compatible with many other European countries. A similar time zone improves the ability to respond quickly to changes and provides faster turnaround times due to geographical proximity.
  • Cultural affinity: Portugal shares cultural affinities with many other European countries, which facilitates business relationships and communication.
  • Pride in doing well and willingness to go further: Given the small size of the country and its location, the Portuguese people have always had an open and exploratory mind. They enjoy discovering new paths and finding ways to make a difference for the better. This translates into the excellence of deliverables and the genuine happiness of exceeding expectations.

In essence, and combined with the usual Nearshore advantages mentioned before, these factors make Portugal a real attractive location and one of the favorites of European companies.

What are the challenges of nearshore in Portugal?

Nearshore in Portugal offers numerous advantages, including a skilled workforce, strategic location, and cultural similarities with Western Europe. However, businesses must navigate challenges such as language barriers, cultural differences, regulatory complexities, and economic fluctuations. By understanding and addressing these challenges, companies can successfully leverage nearshoring to Portugal to achieve their business goals.

  • Differences in Business Practices

Business practices in Portugal may involve more formal procedures and hierarchical structures compared to other regions. Decision-making processes can be slower due to the emphasis on consensus and thorough consideration.

  • Overview of Portuguese Legal System

The Portuguese legal system is based on civil law. It is essential for businesses to familiarize themselves with local laws and regulations, which can be complex and require careful navigation.

  • Compliance and Regulatory Requirements

Compliance with Portuguese labor laws, tax regulations, and industry-specific standards is mandatory. These requirements can be stringent and may vary depending on the nature of the business.

  • Competition for Talent

The growing demand for skilled professionals in various sectors means that companies must offer competitive salaries and benefits to attract and retain employees.

What industries benefit most from nearshore in Portugal?

Industries such as information technology, customer service, manufacturing, and engineering benefit significantly from nearshore in Portugal due to the availability of skilled professionals and advanced infrastructure.

  • Information Technology (IT) and Software Development: Portugal has a growing tech scene with a high number of skilled IT professionals and developers. The country’s universities and technical institutes produce graduates with strong technical skills, making it an attractive destination for IT and software development projects.
  • Customer Service and Call Centers: Portugal’s multilingual workforce and strong language skills make it an ideal location for customer service operations and call centers. The country’s time zone alignment with Europe also enhances real-time communication and support.
  • Engineering and Manufacturing: Portugal has a well-developed industrial sector with expertise in engineering and manufacturing. The country’s strategic location and access to European markets make it an excellent choice for companies looking to nearshore manufacturing operations.
  • Pharmaceuticals and Biotechnology: Portugal’s investment in research and development, along with its skilled workforce in the life sciences, supports the growth of the pharmaceutical and biotechnology industries. The country’s regulatory environment is also favorable for these sectors.
  • Finance and Fintech: The financial services industry benefits from Portugal’s stable economy, skilled professionals, and growing fintech ecosystem. Lisbon, in particular, has become a hub for fintech startups and innovation.
  • Creative and Digital Media: Portugal’s vibrant cultural scene and growing digital media industry attract companies in the creative sector. The availability of creative talent and favorable business conditions support the growth of digital media, advertising, and design firms.
  • Renewable Energy and Environmental Services: Portugal’s commitment to renewable energy and sustainability initiatives creates opportunities for companies in the renewable energy sector. The country’s natural resources and supportive policies make it a strategic location for renewable energy projects.
  • Tourism and Hospitality: The tourism industry benefits from Portugal’s popularity as a travel destination. Nearshoring tourism-related services, such as booking platforms and customer support, can enhance operational efficiency and customer experience.

By leveraging Portugal’s skilled workforce, strategic location, and favorable business environment, these industries can achieve significant advantages through nearshoring.

How does Portugal’s education system support nearshoring?

Portugal’s education system plays a pivotal role in supporting nearshoring through several key aspects:

  • High-Quality Universities and Technical Institutes: Portugal is home to a number of prestigious universities and technical institutes, such as the University of Lisbon, the University of Porto, and the Technical University of Lisbon. These institutions offer strong programs in engineering, information technology, business, and the sciences, producing a well-educated workforce that is ready to meet the demands of international businesses.
  • Emphasis on STEM Education: The Portuguese education system places a strong emphasis on science, technology, engineering, and mathematics (STEM) education. This focus helps develop a skilled talent pool in fields that are crucial for nearshoring industries such as IT, software development, engineering, and biotechnology.
  • Language Proficiency: English is widely taught and spoken in Portugal, particularly among university graduates. This proficiency in English, along with other European languages, helps facilitate seamless communication between Portuguese teams and their international counterparts, reducing potential language barriers in business operations.
  • Vocational Training and Continuing Education: Portugal has robust vocational training programs and continuing education initiatives that ensure workers remain up-to-date with the latest industry trends and technologies. This ongoing professional development is crucial for industries like IT and manufacturing, where rapid technological advancements are common.
  • Innovation and Research: Portuguese universities and research institutions actively collaborate with industry partners on innovative projects. This culture of research and development fosters an environment where businesses can benefit from cutting-edge technologies and methodologies. Additionally, government initiatives often support these collaborations, enhancing the country’s appeal as a nearshoring destination.
  • Entrepreneurial Ecosystem: The education system in Portugal encourages entrepreneurship and innovation. Many universities have incubators and partnerships with startups, creating a vibrant ecosystem that supports new business ventures and technological advancements. This entrepreneurial spirit is beneficial for companies looking to nearshore, as it provides a dynamic and innovative environment.
  • Internships and Industry Partnerships: Many educational institutions in Portugal have established partnerships with local and international businesses, offering students internships and real-world experience. These collaborations ensure that graduates are not only academically prepared but also possess practical skills that are immediately applicable in the workplace.
  • Government Support for Education and Training: The Portuguese government invests in education and training programs to enhance workforce skills and meet the needs of the economy. This support includes funding for higher education, vocational training, and initiatives to improve language proficiency and technical skills.

By fostering a well-educated, skilled, and adaptable workforce, Portugal’s education system directly supports the needs of businesses considering nearshoring. The emphasis on STEM education, language skills, innovation, and practical experience ensures that companies can find the talent they need to thrive in a competitive global market.

Why Nearshore in Portugal with InnoTech?

Well, if you are struggling to innovate at the speed of the business, it’s time to meet InnoTech as an experienced Nearshore Services Provider through the “NearTech” offer. Our IT Delivery Centre provides a flexible operational model, using face-to-face, remote working or a blend of the two to deliver what you need to get things done. Combining Dev & Ops, we are working from Portugal on projects across Europe with the perfect match between our talents and our customers’ ambitions.

At InnoTech we continuously invest in our people’s empowerment and happiness, and this is reflected in their motivation and ability to execute. Our High-Performance Squads are at your fingertips and represent the main reason for you to count on us as your selected partner for Nearshore in Portugal. Let’s discuss your specific challenges and make your next tech project a quick reality.