Discover the boundless opportunities that Portugal offers in the realm of nearshore services. This article delves into the thriving landscape of nearshore development in Portugal, shedding light on its strategic advantages for businesses seeking efficient outsourcing solutions.
From the benefits of proximity and cultural affinity to the exceptional talent pool and cost-effectiveness, Portugal has emerged as a sought-after destination for nearshore services.
In this article, we explore how setting up a nearshore development centre and collaborating with skilled dedicated development teams in Portugal can elevate a company’s growth trajectory in the ever-evolving global market.
Join us as we unveil the potential of nearshore services in Portugal and the transformative impact they can have on your business.
Understanding Nearshore Services
Nearshore services refer to the practice of outsourcing business functions or software development to a nearby country, typically one that shares a border or is located within a close geographical proximity. Portugal, with its strategic location in Europe, has swiftly become a favoured destination for companies seeking efficient nearshore solutions.
Nearshore in Portugal – A Winning Combination
A recent study by the real estate company Savills reveals that Portugal has been able to attract increasing interest from international investors who make strategic decisions to establish their businesses in Shared Services Centers/ Nearshore Development Centers, managing them in some cases or delegating the management to companies like Affinity Portugal in others.
The most sought-after areas of technological expertise cover a wide range, including backend and frontend software development, data, cloud, cybersecurity, automation, artificial intelligence, low code, blockchain, among others.
As of 2021, the data from the Portuguese Trade and Investment Agency (AICEP) indicated that there are currently 175 BSCs/Nearshore operations in Portugal, with the majority located in Lisbon (111) and Porto (56). Besides these two major cities, Braga (9) and Aveiro (5) have also managed to attract some interest, according to the same organization. Notably, these numbers have been gradually increasing year after year.
The report highlights several reasons for the rise in the number of Nearshore development centers establishments in the country, such as the appreciation of Portuguese talent, the quality of Portuguese universities, a relatively peaceful and stable political climate, as well as constant investment in digital services and infrastructure (AICEP, 2022).
The benefits of Nearshore in Portugal
Portugal’s strategic location serves as a gateway to European markets, further augmenting the benefits of nearshore services in the country. Situated at the crossroads of Europe, Africa, and the Americas, Portugal offers unparalleled connectivity and accessibility to a vast customer base.
With a well-developed transportation infrastructure, including modern airports and efficient logistics networks, companies can effortlessly reach their European clientele.
Leveraging this geographical advantage through nearshore partnerships enables businesses to establish a strong presence in the European market, tapping into diverse consumer preferences and expanding their global footprint.
Embracing Portugal as a nearshore software development destination not only fosters seamless collaboration but also opens up a world of new opportunities for companies seeking international growth and market diversification.
Cost-Effectiveness and skilled IT workforce
Today, Portugal is considered a preferred location for prestigious multinational companies, mainly from Europe but also from the USA, to invest in new technology service centers.
Successful case studies already implemented confirm that choosing Portugal was the right decision, attracting the attention of other companies during their respective processes of choosing a location for their technological operations.
The most significant factor for selecting Portugal is the availability of qualified talents at competitive costs compared to other European geographies.
It’s worth noting that Portuguese talent quickly adapts to different work styles and communication methods.
According to many international companies, cost savings are an important criteria when evaluating locations to set up technology service centers. The availability of highly qualified individuals from reputable universities with strong language skills is a key factor that, combined with other aspects, places Portugal at the top of the list when considering different locations.
Time Zone Convenience and great location
The geographical location, bridging Europe and the USA, and a convenient time zone compatible with regions on both sides of the Atlantic are also essential for multinational companies with global operations.
A peaceful country with a pleasant climate and a good quality of life also attracts foreign talent, such as digital nomads — an important aspect for recruitment departments in Portugal — further enhancing Portugal’s attractiveness (AICEP, 2022).
Good infrastructure, especially in communications, is particularly relevant for centers with high volumes of activity and employees working from different locations. The Portuguese people’s characteristics, notably their hospitality towards foreigners and digital nomads, combined with a commitment to providing quality services, are decisive factors.
The growing culture of entrepreneurship, supported by various public and private investment funds, has led to the emergence of several technological startups and unicorns (such as Farfetch, Outsystems, Talkdesk, Sword Health, Feedzai, Remote, Anchorage Digital) and has also created a favorable environment for the creation of new hubs.
According to the latest data from Startup Portugal, a non-profit entity created to promote entrepreneurship and innovation, the country has more than 165 incubators and accelerators and over 2,236 startups in operation, along with 59 active investment programs.
Challenges of hiring a Nearshore development team
Before the Covid-19 pandemic, talent retention was already the main challenge for all organizations. In 2023, it remains a top concern for managers and has become a problem that has been exacerbating over the past years.
This challenge is even more critical in the Information Technology areas. The main concerns in the sector are:
- Increase in competitive salary packages.
- Hiring people with the necessary technical qualifications.
- Growing prevalence of remote teams, making physical spaces less relevant.
Benefits of a Nearshore Partner in Portugal:
Local Expertise and Market Knowledge: Partnering with a nearshore service provider based in Portugal means gaining access to invaluable local expertise and market knowledge. A reputable nearshore partner will have an in-depth understanding of the country’s business landscape, regulations, and industry trends. This insight can prove instrumental in making informed decisions, navigating local challenges, and identifying opportunities for growth.
Seamless Integration and Communication: A reliable nearshore partner in Portugal will seamlessly integrate into your existing operations and corporate culture. With shared time zones and cultural affinity, communication becomes smoother, leading to enhanced collaboration and reduced misunderstandings. Working with a nearshore partner fosters a sense of unity, as they align their processes and methodologies with your organization’s objectives and values.
Scalability and Flexibility: Flexibility is a key advantage when collaborating with a nearshore partner in Portugal. As your business requirements evolve, a reputable partner can quickly scale their resources up or down to accommodate changing needs. This agility allows your company to respond efficiently to market demands, stay competitive, and adapt to dynamic business conditions without major disruptions.
In conclusion, Portugal should continue its path of investment to attract even more qualified talent from all around the world, starting with Brazil. For this, it is essential to continue valuing talent by providing excellent working conditions in both mainland Portugal and the islands, offering exciting career projects. From the Portuguese government, a more aggressive approach with measures to reduce the tax burden on individuals and companies is expected. At times, it can be suffocating.
The entire Portuguese technological ecosystem should foster flows of talent and business from Portugal to the world and vice versa, replicating the success story of Portugal from over 500 years ago.
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Carlos is Affinity’s CEO & Founder. Having started his career as a Technical and Business Consultant, he later accomplished his dream of building its own IT consulting company with a clear focus on people, relationships and affinity. It is with great ambition and focus that Carlos defends its position both in the tech industry as well as in the tennis table!