How to Open a Captive Nearshore Software Engineering Center

High-Performance Collaboration, Nearshore, Software Development, Strategic Digital Nearshoring, Successful Outsourcing

Written by: Luis Aburto –

Companies that depend on proprietary software to provide their products and services are constantly looking for ways to scale their software development capabilities efficiently. For many companies, the idea of establishing a captive nearshore software engineering center in Mexico offers compelling benefits—proximity, cultural alignment, cost savings, and access to a deep talent pool.

This guide covers the considerations, steps, costs, and risks of establishing a nearshore captive operation in Mexico. While the general process applies across Latin America, specific legal, tax, and labor regulations must be adapted to each country.

Why Choose Nearshore and Mexico?

When companies evaluate options for scaling their software development capacity, the decision often boils down to three primary models: onshore, offshore, or nearshore development. While each has its merits, nearshore stands out for companies prioritizing real-time collaboration, cultural alignment, and cost-effectiveness.

How Companies Typically Reach This Decision

The choice to go nearshore—and specifically to Mexico—often follows an in-depth evaluation process. Key considerations include:

Challenges with Onshore Development

Talent Shortages: The U.S. labor market for software developers is highly competitive, with prolonged hiring cycles and escalating salary demands. In large cities and key tech hubs, hiring challenges often lead to project delays and higher operational costs.

Cost Constraints: U.S. developers command salaries and benefits that are often unsustainable for scaling teams, particularly for companies that are balancing growth and efficiency.

Retention Risks: High employee turnover and stiff competition from larger enterprises create challenges in maintaining team continuity.

Concerns with Offshore Outsourcing

Time Zone Differences: Offshore locations, such as India or Southeast Asia, operate in time zones with limited overlap with U.S. working hours, making real-time collaboration difficult.

Communication Barriers: Variances in language proficiency and cultural norms can slow down progress, especially in agile environments requiring frequent team interactions.

Integration Difficulties: Offshore teams can feel disconnected, leading to lower alignment with company goals and challenges in integrating into the core business culture.

Why Nearshore Emerges as the Best Option

Geographic Proximity: Nearshore destinations like Mexico are in the same or overlapping time zones as the U.S., enabling seamless collaboration. Teams can participate in real-time meetings, work on tight deadlines, and respond promptly to issues.

Cultural Alignment: Shared cultural influences between the U.S. and Mexico, bolstered by long-standing business ties, foster smoother communication and team integration.

Cost-Effectiveness: Nearshore operations provide significant cost savings compared to U.S.-based teams, while avoiding the lowest-cost, high-risk compromises of offshore locations. Labor costs in Mexico, for example, are typically 20–40% lower than in the U.S., without sacrificing quality.

Ease of Travel: Mexico’s proximity allows for frequent in-person visits, which are critical during the setup phase of a captive operation or during major project milestones. Direct flights to most major Mexican cities from U.S. hubs add to this convenience.

Why Mexico Specifically?

Mexico has emerged as a preferred nearshore destination for the following compelling reasons:

Legal and Economic Stability under the USMCA

The United States-Mexico-Canada Agreement (USMCA) offers a framework for strong legal protections and trade advantages. Companies feel secure knowing that their operations in Mexico are safeguarded by a predictable legal and economic environment. This includes robust IP protection, which is critical for companies building proprietary software.

Deep and Growing Talent Pool

Mexico has one of the largest IT talent pools in Latin America, with approximately 800,000 IT professionals, including engineers with expertise in modern technologies such as artificial intelligence, machine learning, and cloud computing.

Education Strengths: The country’s universities produce tens of thousands of STEM graduates annually, ensuring a steady supply of skilled developers.

Bilingual Workforce: Most Mexican developers are fluent in English, which is often taught as a second language in higher education institutions, making communication with U.S. teams easier.

Established Tech Ecosystem

Mexico has a thriving technology ecosystem supported by government incentives and global investments. Large cities such as Guadalajara, Monterrey, and Mexico City are recognized as tech hubs, offering a rich infrastructure and a vibrant developer community, while mid-size cities like Morelia, Colima and Mérida also offer access to experienced developers while offering excellent quality of life and less turnover.
Forma

When Does a Captive Operation Make Economic Sense?

For smaller teams, outsourcing often provides the most cost-effective and flexible solution. However, as a company scales, the economics of outsourcing versus owning a captive operation shift.

A captive center becomes economically viable at around 40-50 full-time engineers, when the cumulative cost of outsourcing premiums begins to outweigh the higher setup and operational costs of a captive model.

Cost Comparison

Outsourcing: Outsourced developers often come with markups of 20–40% for vendor overhead, project management, and profit margins. For 50+ engineers, and over multiple years, these markups can exceed the initial setup costs of creating a captive center.

Captive Center: Operating costs, including salaries, office rent, and technology, are typically 20–30% lower than outsourcing rates. However, the initial setup costs (typically $200,000–$800,000) play a key role in determining when a captive center becomes cost-effective. These initial costs are fixed, so for smaller teams, they can outweigh the savings achieved by lower operating costs. However, as the team grows, these setup expenses are spread across more engineers, reducing the per-engineer cost, and making the captive model financially viable.

Key Indicators for Transition

Team Size: A stable team of 40-50+ engineers is a tipping point where long-term savings and operational control justify the upfront investment.

Long-Term Projects: Captive operations are ideal for companies with ongoing, multi-year development needs where team continuity and institutional knowledge are critical.

Cost Sensitivity: Companies aiming to reduce vendor markups and maintain direct control over budgeting can benefit from captives.

Strategic Control: Captives offer tighter integration with in-house teams, which is crucial for proprietary projects or sensitive IP.

Steps to Opening a Captive Center

Assess Feasibility

A captive center requires a sustained workload, cost efficiency, and a strategic focus on control. Typical triggers for such an initiative include high outsourcing costs, scaling challenges, an aggressive multi-year software development roadmap or the need for greater intellectual property (IP) security.

Define Objectives

Clearly articulate why the captive model fits your long-term goals. Are you looking for cost savings, strategic control, or scaling capabilities? These objectives will shape your approach.

Select Location

Major cities such as Mexico City, Guadalajara, and Monterrey offer the largest talent pools but also face intense competition for skilled professionals. Mid-sized cities like Mérida, Colima, and Morelia strike a good balance, combining access to experienced talent with lower competition. So, when choosing a location for your captive nearshore software development center, evaluate the following factors to ensure operational success:

IT Talent: Choose cities with a strong talent pool and competitive advantage in tech skills.

Educational Institutions: Target cities with universities offering strong STEM programs to provide a pipeline of skilled graduates.

Talent Competition: Assess local job market conditions to avoid high competition that may drive up recruitment costs or promote high turnover.

Infrastructure and Business Ecosystem: Consider the city’s infrastructure, cost of living, and overall business environment to ensure efficient operations and talent retention.

Legal and Administrative Setup

Choose the Appropriate Legal Structure: Decide on the type of entity that fits your business objectives. Common options include a Stock Corporation (S.A. de C.V.) for larger operations or a Limited Liability Company (S. de R.L. de C.V.) for smaller to medium-sized businesses.

Reserve a Company Name: Submit up to five potential names to the Ministry of Economy for approval.

Draft a Power of Attorney (POA): Authorize a legal representative in Mexico to act on your behalf during the incorporation process. This may require notarized and apostilled documents for each shareholder.

Prepare and Approve Company Bylaws: Define the company’s purpose, operational guidelines, share capital, and management structure, ensuring compliance with Mexican law. Translate these bylaws into Spanish by an official translator. The signing of the approval of the Bylaws needs to happen in front of a Mexican Public Notary.

Obtain a Tax Identification Number (RFC): Register with the Tax Administration Service (SAT) to secure an RFC, necessary for tax and financial transactions.

Open a Corporate Bank Account: Use the Bylaws, RFC and registration documents to set up a bank account in Mexico to pay for payroll and operational expenses.

Comply with Additional Registrations: Depending on your business, register with authorities such as the Mexican Social Security Institute (IMSS) and the National Institute of Statistics and Geography (INEGI), as well as the corresponding State and Municipal authorities.

Talent Acquisition

Hire an HR team or collaborate with local experts to effectively navigate Mexico’s competitive IT labor market. After building your team, set up HR administration processes to register employees with the required government agencies, such as the IMSS, and ensure contributions to homeowners’ savings and retirement accounts are managed appropriately.

Operational Setup

Secure office space and set up IT infrastructure.

Budget for technology tools, furniture, and compliance costs.

Hire experienced managers and supervisors to oversee the center’s setup and operations, ensuring efficient management of administrative tasks, employee motivation and retention, and software development activities.

Manage Risks

Common risks include talent retention challenges, cultural integration issues, and unforeseen operational costs. Mitigation strategies include strong local management, robust HR practices, and contingency planning.

Considerations for Captive Center Success 

While a captive center offers control and long-term cost savings, it comes with notable risks that require careful management:

1. High Turnover

Competitive job markets in Mexico mean that retaining top talent can be challenging. High turnover rates can disrupt productivity and increase recruitment costs.

2. Operational Complexity

Managing a captive center requires expertise in compliance, local labor laws, and cross-border operations. For companies without this experience, navigating these complexities can strain resources.

3. Scalability Issues

Rapid growth or changing project demands may outpace the captive center’s capacity, leading to inefficiencies or delays.

4. Cultural and Communication Gaps

Cultural differences, even in a nearshore context, can create alignment issues. Effective communication processes are critical to avoid misunderstandings and ensure team integration.

5. Upfront and Long-Term Commitments

The significant initial investment and operational requirements of a captive center lock the company into a long-term model, reducing flexibility.

Understanding the Costs of Captive Centers

Upfront Costs

Setting up a captive center involves significant initial investment:

Legal and Administrative: $50,000–$100,000

Recruitment: $30,000–$100,000

Office Setup: $70,000–$400,000

Technology and Tools: $50,000–$200,000

Total initial costs typically range from $200,000 to $800,000, depending on the size of the operation.

Ongoing Costs

Once operational, the captive center incurs monthly and annual expenses:

Salaries and Benefits: $160,000–$300,000/month for 40-50 engineers

Office Rent and Utilities: $10,000–$20,000/month

Technology and IT Maintenance: $5,000–$15,000/month

Management and Oversight: $15,000–$30,000/month

These costs scale with team size and the complexity of the operation, requiring careful budgeting and cost control.

Ongoing Costs<br />
Once operational, the captive center incurs monthly and annual expenses: </p>
<p>Salaries and Benefits: $160,000–$300,000/month for 40-50 engineers<br />
Office Rent and Utilities: $10,000–$20,000/month<br />
Technology and IT Maintenance: $5,000–$15,000/month<br />
Management and Oversight: $15,000–$30,000/month<br />
These costs scale with team size and the complexity of the operation, requiring careful budgeting and cost control.

An Alternative Path: Flexible BOT

For companies hesitant to commit to a full captive setup, the Flexible Build-Operate-Transfer (BOT) model, like the one offered by Scio, provides a strategic alternative. In this model, Scio handles recruitment, operations, and compliance during the initial stages, with the possibility of transferring ownership once the operation is stable and reaches the required scale.

Benefits of BOT

Lower Risk: Leverage Scio’s established expertise to avoid the complexities of setting up a nearshore operation. You will not have to worry about the intricacies of local laws, recruitment challenges, or the significant costs involved in infrastructure and office setup. Scio already has the systems, local knowledge, and operational framework in place, enabling a smooth and efficient ramp-up. This enables you to focus on core priorities while Scio manages the setup and operations, ensuring a quicker, smoother, and lower-risk entry to utilizing nearshore talent.

Cost Efficiency: This model incurs little to no upfront costs, as the nearshore engineering team can take advantage of Scio’s established infrastructure and capabilities, reducing the need for significant capital investment.

Faster Scalability: Immediate access to talent and infrastructure accelerates productivity.

Flexibility: Transfer ownership when you reach the desired scale and maturity.
Forma

How Flexible BOT Works

Build: We use our existing facilities to set up your operation. We manage the recruitment and onboarding of top talent, configure infrastructure, ensure regulatory compliance, and conduct a joint onboarding process to integrate the team smoothly into your software development workflow.

Operate: We manage all administrative operations, performance tracking, professional development, and continuous improvement, while your engineering leaders focus on managing priorities and task assignments. We guarantee seamless integration with your team and processes, consistently meeting your standards through a customized blend of coaching, mentoring, and training, all delivered in close coordination with you.

(Optional) Transfer: At your discretion, we initiate a seamless handover process, which may include setting up new facilities and infrastructure, establishing a local legal entity if needed, and transferring full operational control.

Choosing the Right Approach

While a captive operation offers control and long-term cost savings, a Flexible BOT model provides a safer, faster way to access nearshore talent. Companies can leverage BOT to validate the nearshore model before committing to a full captive setup, reducing risks, and optimizing resources.

Whether you are ready to open a captive center or want to explore the BOT model, understanding your goals, workload, and risk tolerance will help you make the best decision.

Scio can help you navigate this journey. With expertise in nearshore operations and the Flexible BOT model, we empower companies to scale confidently. Contact us to discuss your needs and chart the best path forward.

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Luis Aburto

CEO

Making Daily Scrums Enjoyable: Injecting Fun and Insights for Your Team

Agile Methodology, High-Performance Collaboration, Project Management

Written by: Adolfo Cruz –

Daily Scrums are an essential part of Agile project management—they help teams sync up, identify blockers, and adjust priorities. However, it’s easy for these daily check-ins to become mundane and repetitive, losing the energy and engagement they are meant to foster. If your Daily Scrums are starting to feel more like a chore than a productive, energizing meeting, it’s time to make some changes. Here’s how you can transform your scrums into sessions that are not only informative but also enjoyable for everyone involved.

1. Add a Fun Start

Start on a light-hearted note to break the ice and lift everyone’s mood. Try incorporating quick icebreakers to help team members feel connected, such as:

Random Fun Question: Begin with a question like, “What’s the most interesting thing you learned this week?” or “If you could have any superpower today, what would it be?”

Rotating Facilitator: Let someone different lead each day. This rotation keeps the meeting dynamic, encourages participation, and allows everyone to bring their own flavor to the Scrum.

2. Shake Up the Format

Sometimes, the simple act of changing how you hold the meeting can add some much-needed excitement. Consider these alternative formats:

Walk-and-Talk: Hold the Scrum while taking a walk, either virtually (for remote teams) or in person. The change of scenery and movement can boost energy levels.

Theme Days: Occasionally, hold themed stand-ups. Encourage team members to share updates like characters from a favorite movie or even use funny props. Themes can make the stand-up more memorable and spark creativity.

3. Focus on Impact, Not Just Tasks

Move beyond the standard questions (“What did you do yesterday?”) and make discussions more impactful:

Shift the Focus: Instead of asking what tasks were completed, try questions like, “What’s the most valuable thing you’ll work on today?” or “What’s one thing that could make a huge difference if we solve it today?”

Celebrate Small Wins: Take a moment to recognize individual or team accomplishments from the previous day. Highlighting wins helps create a positive atmosphere and boosts morale.

4. Productive Blocker Discussions

Instead of simply stating blockers, turn it into an opportunity for meaningful problem-solving:

Blocker Bingo: Create a playful “Bingo” card with recurring blockers. As the team works together to eliminate these blockers, mark them off—it adds a touch of fun and motivates the team to tackle obstacles.

Action-focused: Ensure blockers aren’t just noted but acted on. Assign a quick follow-up plan for each blocker to keep progress going.

5. Keep It Timeboxed and Energizing

Scrums should be short and to the point, but that doesn’t mean they can’t be fun:

Countdown Timer: Use a countdown timer with sound effects to add urgency. This helps keep everyone focused and adds a playful sense of pressure.

Music to Gather: Play an upbeat song as everyone joins the meeting—this small touch can set a positive tone for the rest of the Scrum.

6. Change Up Dynamics Occasionally

Introducing variety in the Scrum’s structure can help fight monotony and spark fresh thinking:
Silent Scrum: Once a week, try a written Scrum where everyone posts their updates in a shared document or messaging channel. This can offer a different perspective and give people a break from speaking.
Pair Sharing: Break into pairs for updates and come back together to share highlights. This variation promotes deeper discussions between team members and creates a more intimate space for collaboration.

7. Encourage Recognition and Gratitude

Acknowledging each other’s efforts goes a long way in creating a positive team culture:

Kudos Round: Dedicate a minute for team members to give shout-outs to others for help, great work, or going the extra mile.

Highlight Team Achievements: Show progress using visuals, like a chart or dashboard. This helps everyone see how their work fits into the bigger picture and fosters a sense of shared purpose.

8. Prevent Fatigue

Avoid routine fatigue by being mindful of how frequently and strictly you conduct scrums:

Skip Days: Consider replacing one day a week with an async update, especially when the team is in a smooth flow and less in need of daily verbal check-ins.

Shorten Updates: Encourage concise updates, focusing only on what’s necessary. This helps maintain momentum and prevents the meeting from dragging on.

9. Gather Feedback and Adapt

Regularly check in with your team to see what’s working and what isn’t:

Feedback Fridays: Set aside time at the end of the week to gather thoughts on how the Scrum process can be improved.

Anonymous Feedback: Use a survey tool to gather suggestions—this can help you get honest input, especially if team members are hesitant to speak up.

Conclusion

Daily Scrums are intended to be a powerful tool for team alignment, but they don’t have to be monotonous. By incorporating fun elements, adjusting the format, and focusing on value-driven discussions, you can make these daily meetings something your team looks forward to. A bit of creativity and openness to change can transform the Scrum from a routine check-in into an energizing collaboration session that brings out the best in everyone.

Try experimenting with some of these ideas and see what resonates best with your team. Who knows, you might make Daily Scrums the highlight of the day!

Adolfo Cruz

PMO Director

Achieving a Great Developer Experience with Nearshore Teams

Nearshore, Project Management, Strategic Digital Nearshoring

Written by: Rod Aburto –

Developer Experience (DX) is becoming an essential focus for companies aiming to build high-performing, satisfied development teams. It’s no longer enough to ensure developers have the tools to do their jobs; creating an environment where they thrive, collaborate seamlessly, and feel valued is critical to project success. When your team combines US-based developers with a nearshore team from Mexico and Latin America, the potential for a great DX is immense—if approached with the right strategy.

Here’s what achieving a great Developer Experience means in a cross-border context and how you can make it a reality.

1. Foster Seamless Communication

When US and nearshore teams collaborate, time zone alignment is a natural advantage, but communication must go beyond scheduling meetings at convenient hours. Great DX starts with a culture of open, transparent, and respectful communication.

Use the right tools: Platforms like Slack, Zoom, and collaborative coding environments help bridge geographic divides.

Encourage direct communication: Empower developers from both teams to speak directly with each other, bypassing unnecessary bottlenecks.

Promote shared language skills: Nearshore teams in Mexico and LATAM often have strong English proficiency, making real-time collaboration easier. Ensure everyone feels comfortable expressing ideas and concerns.

When developers can communicate without barriers, misunderstandings decrease, and camaraderie flourishes—a key driver of great DX.

2. Build a Unified Culture

Great DX isn’t about where developers are located—it’s about how well they work together. A unified culture that aligns values, work ethics, and expectations can transform collaboration between US and nearshore teams.

Onboard together: Include both teams in the same onboarding processes to establish shared goals and values.

Celebrate diversity: Acknowledge and respect cultural differences while highlighting shared values like teamwork, innovation, and accountability.

Encourage team-building: Virtual team-building activities and in-person meetups (when possible) help break down silos and create a sense of belonging.

By integrating nearshore developers into the larger company culture, you create an inclusive environment where everyone feels valued and motivated to contribute.

3. Provide Equal Access to Tools and Processes

Nothing erodes DX faster than inequality in access to tools or knowledge. Developers need consistent resources to do their best work, regardless of location.

Ensure tooling parity: Both US and nearshore developers should have access to the same development environments, frameworks, and documentation.

Streamline workflows: Define clear, shared processes for code reviews, deployments, and issue tracking to avoid unnecessary friction.

Invest in developer support: Whether it’s mentoring, training opportunities, or technical assistance, ensure both teams have the support they need to succeed.

Equal access fosters fairness, enabling developers to focus on solving problems rather than navigating logistical challenges.

4. Emphasize Growth and Engagement

Developers thrive in environments where they feel challenged, engaged, and supported in their growth. Nearshore teams from Mexico and LATAM bring unique strengths and integrating them fully into the team provides opportunities for mutual learning and development.

Encourage knowledge sharing: Create opportunities for US and nearshore developers to exchange expertise, from pairing on code to hosting technical workshops.

Recognize contributions: Acknowledge the efforts of all team members, regardless of location, and celebrate achievements together.

Support career growth: Provide opportunities for professional development, such as certifications or leadership roles, for developers in both regions.

Focusing on growth ensures that developers remain invested in their work and in the team’s success.

5. Prioritize Work-Life Balance

Developers in both the US and nearshore teams face unique challenges but ensuring a balanced workload and respecting personal time are critical for DX.

Align schedules thoughtfully: While time zones are similar, avoid scheduling late-night or early-morning meetings that might disrupt personal time.

Manage workloads effectively: Avoid overloading either team by distributing tasks equitably, considering skillsets and capacity.

Promote mental well-being: Encourage breaks, flexible work options, and initiatives that prioritize mental health.

A balanced approach to work helps developers remain productive and engaged without risking burnout.

Conclusion: Collaboration That Thrives

Achieving a great Developer Experience with a US and nearshore team from Mexico and LATAM requires intentionality. It’s about more than just having the right tools—it’s about creating an environment where developers can communicate openly, collaborate effectively, grow professionally, and feel appreciated.

When DX is a priority, teams don’t just deliver software; they deliver innovation, foster loyalty, and build long-term success. If you’re ready to take your cross-border collaboration to the next level, start by investing in your developers’ experience—and watch the results speak for themselves.

Rod Aburto

Senior Partner

Overcoming Procrastination: A Team Management Perspective

High-Performance Collaboration, Project Management, Workspace

Written by: Yamila Solari –

Procrastination is a common human behavior, so prevalent that it was even mentioned by ancient Greek poets and Roman consuls. However, psychologists began studying it systematically only in the 1990s, recognizing its harmful effects on health, such as increased stress levels and reduced well-being. Thanks to this research, we now have evidence-based strategies for managing procrastination and understanding its causes.

To procrastinate is to delay a task that we fully intend to complete, even when we know that the delay will harm us. Psychologists say it is a failure of self-regulation, and it has nothing to do with time management. It is, however, related to time inconsistency, our tendency to prioritize immediate rewards over future rewards. This evolutionary adaptation, which helped our ancestors focus on immediate survival needs, often clashes with modern goals, like saving for retirement.

Another main cause of procrastination is the desire to avoid negative emotions. “We procrastinate when a task stirs up feelings like anxiety, confusion or boredom,” says Adam Grant, a renowned organizational psychologist. We may also procrastinate when we feel unprepared, or fear being judged negatively.

Why procrastination happens in teams

Interestingly, procrastination is less likely to occur in teams, largely because teamwork naturally incorporates elements of team management that counteract it. Teams often operate with clear goals, accountability structures, and transparent workflows. Many teams also follow established work models, such as Google’s Objectives and Key Results (OKRs), Agile frameworks, or the GRPI model, which inherently discourage procrastination.

However, procrastination can still arise in teams. When it does, it often signals deeper issues, such as:

The absence of a clear framework or process.

Failure to follow the chosen framework correctly.

Lack of adaptation of the framework to the team’s specific needs.

Mismatch between the framework and the team’s work.

For example, I once worked with a team that struggled with a «free rider» problem despite using the Scrum framework. Observing their ceremonies, I noticed that team members gave status updates without relating their progress to the sprint goal or discussing whether they were ahead, behind, or on track. They also rarely questioned each other to find out why they were behind, if that was the case. After helping the team adopt more open and courageous communication practices, it became clear that one member was struggling with procrastination. Together, the team developed supportive strategies to address the problem

Team management strategies to stop procrastination

The most challenging part of addressing procrastination in a team is identifying it. As in the example above, teams may sense that something is off but struggle to pinpoint the issue without an external perspective. This is especially common in junior teams that haven’t yet built enough trust to ask direct, critical questions.

Once procrastination is identified, educating the team about its emotional roots can be transformative. Understanding that procrastination is tied to emotions rather than poor time management allows team members to approach the issue with empathy. A Scrum Master or coach can guide the team in naming and discussing the emotions causing delays. Even the simple act of naming these emotions can reduce their intensity.

Here are some strategies to combat procrastination in teams:

Pair Programming: Pair a non-procrastinator with a procrastinator to work together. This reduces anxiety for the procrastinator and helps them cross the action line.

Regular Check-Ins: Establish predefined check-ins during the day to share progress. Frequent accountability helps keep procrastinators on track.

Emotional Support: Create an environment where team members can openly discuss their emotions and challenges without fear of judgment.

As team leaders know, identifying obstacles that the team may face and design strategies to overcome them is an important step to take when managing a team. Here are some tips to prevent procrastination from happening in the first place:

Emotional Check-Ins: Begin daily scrum meetings with a quick emotional check-in to gauge the team’s mood.

Structured Updates: Use a meeting template that includes progress updates linked to the objective, whether the work is on time or delayed, and how team members feel about it.

Procrastination in Retrospectives: Use team retrospectives to specifically identify procrastination and co-design solutions.

Practice Self-Compassion: Create a culture of self-compassion rather than blame. This helps reduce anxiety which, in time, helps alleviate procrastination.

Teamwork challenges, including procrastination, offer opportunities for growth. Teams that have built trust and psychological safety can benefit the most from receiving well-intentioned help from each other. For this to happen, team members must be humble, both in seeking help and in accepting it. When teams genuinely work together, they grow not only as professionals but also as individuals.

You can read more at:

Yamila Solari

GM and Co-founder

Top Priorities for Software Teams in 2025

Software Development, Strategic Digital Nearshoring

Written by: Luis Aburto –

As we head into 2025, the landscape for software engineering teams is evolving rapidly. Economic challenges, the rise of generative AI, and shifts in team dynamics are shaping the decisions engineering leaders make daily.

In this blog post, we’ll look at what engineering teams are focusing on for the year ahead, and why understanding these priorities can help guide your own team’s strategy. This information is drawn from many in-depth conversations with our clients complemented with research published in industry publications. The goal is to use awareness of current trends to align our plans with the strategies driving success across the industry.

The Current Landscape for Engineering Teams

Engineering leaders are dealing with multiple external pressures—economic uncertainty, hype around artificial intelligence, and the constant need to maintain momentum in a competitive market. These pressures have led engineering leaders to prioritize optimization, adaptability, and strategic clarity as the key themes for 2025. In response, many teams are reevaluating their processes, leveraging new technologies, and reassessing how best to structure their operations.

Top Priorities for Engineering Teams in 2025

To provide more clarity, we’ve grouped the priorities into four main categories: Product Expansion and Innovation, Operational Efficiency and Developer Enablement, Ensuring Customer Satisfaction, and Leveraging AI & Data.

Product Expansion and Innovation

Building New Features and Capabilities

In a market where differentiation is key, new feature development helps companies maintain relevance and offer new value to customers. So, the need to drive growth and meet customer expectations is pushing engineering leaders to prioritize innovation while balancing it with the stability and reliability of their platforms. In this context, well-planned product roadmaps are becoming increasingly important, as leaders aim to keep new features aligned with customer needs, market trends, and technical constraints.

Key focus areas for building new features and capabilities include:

Differentiation in the Market: Teams are developing unique features to maintain relevance and stand out among competitors.

Driving Growth: Ongoing feature development is directly tied to customer acquisition and retention, leading to revenue growth.

Customer Needs Alignment: Ensuring that product roadmaps are in sync with customer expectations (which in part are driven by competing solutions) and evolving market trends.

Adding New Products or Services

Another major focus area for engineering teams is expanding product offerings. By adding new products or services, teams can target additional market segments and improve the overall value proposition of their companies. This expansion is critical in gaining a competitive edge and diversifying revenue streams.

Performance Improvements

Optimizing the performance of existing products is a priority to ensure that systems operate effectively and provide a high-quality user experience. Improving performance not only enhances customer satisfaction but also sets the foundation for future scalability.

Key areas of focus for performance improvements include:

Architecture, Database, and Code Optimization: Focusing on refining software architecture, optimizing data architecture and database queries, and enhancing code efficiency to improve overall system performance.

Performance Testing: carried out under various conditions and scenarios, ensures that the software can handle different types of user behavior and system loads effectively.

Scalability Planning: Making sure that systems are ready to scale as demand increases (gradually, cyclically, or event-driven), ensuring a seamless user experience.

Real-time Monitoring: Implementing effective monitoring to quickly identify and resolve performance issues.

Infrastructure Optimization: Investing in infrastructure enhancements that support consistent performance and reliability.

R&D and Experimentation

This involves experimenting with new ideas and technologies to enhance both the product and the development process. Teams focus on improving product functionality, ease of use, performance, and other user-facing features. Additionally, efforts are made to boost development efficiency by introducing advanced coding tools, leveraging Generative AI, exploring new programming languages, enhancing CI/CD pipelines, and adopting innovative practices that improve efficiency and/or the developer experience.

Key areas of focus for R&D and Experimentation include:

New/Different Technologies: Experimenting with technologies outside the current stack to explore opportunities for enhancing functionality, user experience, or performance.

Performance Optimization: Testing new approaches to improve system speed and efficiency.

Developer Tools: Introducing advanced tools that make the development process more seamless.

Generative AI Integration: Leveraging AI to enhance both product functionality and development workflows.

User-Centered Design Experiments: Incorporating user feedback during the experimentation phase to iteratively enhance the product’s usability and user experience.

Security Testing Innovations: Experimenting with advanced security tools and methods to proactively identify vulnerabilities and enhance product security.

Operational Efficiency and Developer Enablement

Managing Technical Debt and Maintenance

Technical debt, often neglected during high-growth periods, is now receiving the attention it needs to ensure long-term stability. The priority on managing technical debt is about maintaining a stable and sustainable codebase. Leaders are increasingly aware that maintaining system stability is crucial for long-term success and that ignoring it today only amplifies future risks. Effective technical debt management also frees up resources that would otherwise be tied up in fixing issues, allowing teams to focus on more strategic goals.

Key areas of focus for managing technical debt include:

Code Review Best Practices: Ensuring that code is regularly reviewed to maintain quality and prevent accumulation of technical debt.

Refactoring Legacy Systems & Code: Modernizing older systems and codebases to make them more maintainable and efficient.

Automated Testing: Investing in automated testing tools to catch defects faster and reduce technical debt.

Incremental Improvements: Addressing technical debt in small, manageable increments to avoid overwhelming engineering teams.

Long-term Stability: Prioritizing actions that contribute to the long-term stability and sustainability of the codebase.

Cost Optimization, Productivity, and Efficiency

Economic uncertainty has prompted engineering teams to reassess operations for efficiency and productivity. Many teams are adopting leaner processes, automating repetitive tasks, and aiming to get more output from the same or fewer resources. For engineering leaders, the challenge is creating environments where cost efficiency is achieved without compromising culture and innovation.

Key strategies for cost optimization include:

Improving Productivity: Teams are focusing on maximizing output by streamlining their operations and removing inefficiencies. Examples include fine-tuning agile methodologies to enhance team collaboration, implementing continuous integration and deployment (CI/CD) to speed up releases, and using data-driven metrics to identify bottlenecks and areas for improvement.

Automation Initiatives: Leveraging automation tools to handle repetitive tasks and remove the potential for human error can free up engineers for more strategic work and improve overall quality.

Leveraging Cost-Effective Engineering Teams: Augment in-house engineering teams with engineers from cost-effective regions, particularly nearshore developers, to maintain cost advantages while minimizing collaboration challenges.

Cloud Resource Optimization: Reviewing and optimizing cloud infrastructure to control spending and improve cost efficiency.

Developer Experience (DX)

Enhancing developer experience—by reducing unnecessary friction and improving internal tools—has become a significant focus to ensure effectiveness. This effort is closely related to improving productivity, as they are two sides of the same coin. Many engineering teams are investing in better development tools, streamlined CI/CD pipelines, and robust testing environments to create a seamless workflow.

Key strategies for improving developer experience include:

Reducing Friction: Minimizing obstacles in workflows to ensure developers can focus on coding without unnecessary interruptions.

Better Development Tools: Investing in tools that make coding easier and enhance developer productivity.

Streamlined CI/CD Pipelines: Ensuring continuous integration and deployment processes are smooth and efficient.

Robust Testing Environments: Creating reliable testing frameworks that provide developers with confidence in their changes.

Peer Reviews and Pair Programming: Encouraging collaboration to enhance code quality and foster a culture of learning.

Developer experience is now being treated as an essential part of productivity; leaders recognize that developers empowered with intuitive tools and smooth workflows are less prone to burnout and more likely to deliver high-quality code.

Ensuring Customer Satisfaction

Reliability and Performance Improvements

The need for operational resilience has made reliability and uptime key priorities for engineering teams. Ensuring system reliability directly impacts customer satisfaction and remains a key focus. For engineering leaders, it means making investments in infrastructure and system architectures that help minimize downtime and prevent issues before they affect users. This includes improving monitoring capabilities and adopting a proactive approach to incident management.

Key strategies for reliability and performance improvements include:

Operational Resilience: Investing in infrastructure that enhances reliability and minimizes downtime.

Resilient System Architecture Design: Designing system architectures with resilience in mind, incorporating redundancy, failover mechanisms, and modular components to minimize the impact of failures.

Proactive Monitoring: Improving monitoring capabilities to detect and address issues before they escalate.

Incident Management: Adopting a proactive approach to managing incidents to minimize customer impact.

Chaos Engineering and Stress Testing: Utilizing these practices to build resilient systems.

Team Upskilling: Training teams to respond effectively to incidents and recover gracefully when issues arise.

Quality Assurance and Testing

As customer expectations for software remain high in terms of availability, performance, functional accuracy, and usability, Quality Assurance (QA) continues to be a key priority for 2025. Teams are focusing on building automated testing frameworks to ensure stability and reduce the chances of defects in production. Investing in comprehensive QA practices ensures that systems are reliable and helps in maintaining customer trust.

Key strategies for quality assurance and testing include:

Automated Testing Frameworks: Building and implementing automated testing to ensure stability and catch defects early.

Continuous Integration: Utilizing continuous integration to maintain code quality and quickly identify issues.

Proactive Quality Measures: Adopting proactive QA practices to enhance reliability and robustness.

Comprehensive QA Practices: Investing in extensive quality assurance to improve system reliability.

Customer Satisfaction and Trust: Prioritizing bugs and improvements that directly enhance the user experience while ensuring quality to maintain and build customer trust by minimizing production issues. This combined focus leads to greater customer loyalty.

Leveraging AI & Data

AI for Internal Use

Engineering leaders are exploring how AI can improve team productivity and assist in decision-making, bug detection, and predictive maintenance. AI-driven insights enhance decision-making speed and accuracy, providing valuable data-backed support. However, effective adoption requires deliberate prioritization and investment in upskilling teams to understand and work effectively with these tools, while also navigating the risks and ethical implications associated with AI in engineering processes.

Key strategies for using AI internally include:

Automation of Repetitive Tasks: Leveraging AI to handle mundane, repetitive tasks, freeing up team members for more complex work.

Decision-making Support: Utilizing AI-driven insights to assist in making faster, data-backed decisions.
Bug Detection and Predictive

Maintenance: Implementing AI to identify bugs and predict potential system failures before they happen.

Generative AI for Code Generation: Using Generative AI tools to assist in code generation can significantly enhance developer productivity by automating boilerplate code and suggesting code solutions. However, it is important that generated code is thoroughly reviewed to mitigate risks such as vulnerabilities and technical debt.

Team Upskilling: Investing in training to ensure teams understand and work effectively with AI tools.

Ethical AI Use: Addressing ethical concerns and ensuring AI is used responsibly within engineering processes.

AI for Customer Use

AI for customer use targets enhancing products and services. This could involve personalizing user experiences, building intelligent product features, or creating AI-driven support solutions. The value of AI in customer-facing products is increasingly becoming apparent, especially in terms of providing better and more efficient service, though integration hurdles remain significant.

Key strategies for using AI for customer purposes include:

Personalizing User Experiences: Leveraging AI to create tailored experiences that better meet individual customer needs.

Intelligent Product Features: Building smart features powered by AI that enhance product functionality and user engagement.

AI-driven Customer Service/Support Solutions: Creating automated support systems, such as chatbots, that provide immediate assistance to users.

Addressing Integration Challenges: Focusing on overcoming the technical and operational hurdles of integrating AI into customer-facing systems.

Internal Data Management

Internal data management focuses on leveraging data effectively within the organization to drive better decisions, streamline processes, and enhance operational efficiency.

Key strategies for internal data management include:

Improving Data Quality: Investing in solutions that ensure high-quality data, reducing errors and improving the reliability of insights.

Enhancing Data Access: Implementing architectures and solutions that allow easier and more secure access to data for teams that need it.

Optimizing Data Utilization: Ensuring that data is used effectively across the organization to support AI initiatives and business intelligence.

Supporting AI Initiatives: Providing a strong data foundation to enable more effective AI applications.

Business Intelligence Alignment: Using data to drive strategic decisions that align with broader organizational goals.

Key Insights for Engineering Leaders

Aligning Team Goals with Business Needs

The key to prioritization this year lies in aligning technical work with business outcomes. Engineering teams must not only understand what they are building but also why it matters for the broader organization. This means that leaders must ensure there is transparency about how engineering initiatives tie into company objectives, allowing teams to remain motivated and purpose driven.

Balancing Immediate Delivery with Long-term Sustainability

Engineering leaders are tasked with balancing rapid feature delivery with the need for sustainable codebase health. Investing in the long-term stability of the codebase and reducing technical debt means fewer emergencies, fewer last-minute firefights, and smoother long-term development. A sustainable codebase leads to higher productivity over time, as teams spend less effort on bug fixing and more time on innovation.

Key strategies for balancing immediate delivery with long-term sustainability include:

Incremental Technical Debt Reduction: Addressing technical debt in small, manageable increments helps maintain stability without overwhelming the team or stalling new feature development.

High-impact Refactoring: Identifying and executing refactoring efforts that provide substantial improvements in system maintainability and scalability.

Maintaining Strong QA During Fast Delivery: Ensuring quality assurance processes are not bypassed during rapid feature releases, to prevent accumulating issues that could compromise long-term code health.

Stakeholder Communication: Clearly communicating the importance of technical debt reduction and long-term sustainability to stakeholders helps gain their support for initiatives that may not provide immediate visible results but are critical for future growth.

Dedicated Maintenance Sprints: Allocating specific sprints for addressing technical debt, system optimization, and maintenance tasks can help strike a balance between adding new features and ensuring stability.

Adopting a Sustainable Culture: Promoting a culture that values both speed and long-term sustainability encourages teams to make decisions that support a healthy codebase, reducing rework and boosting efficiency over time.

Conclusion

As we move into 2025, software engineering teams face a mix of opportunities and challenges shaped by economic pressures, advancements in AI, and the continuous demand for customer satisfaction. The ability to balance rapid innovation with long-term stability is more crucial than ever. Teams that prioritize aligning their goals with business outcomes, leveraging new technologies responsibly, and enhancing operational efficiency are best positioned to thrive.

The key insights provided in this blog are intended to guide engineering leaders in making thoughtful, strategic decisions that improve both productivity and resilience. Whether it’s managing technical debt, empowering developers with the right tools, or incorporating AI into both internal processes and customer experiences, every decision should be made with the goal of delivering enduring value to both the organization and its users.

How about you?

What priorities is your engineering team focusing on for 2025? Are your strategies aligned with broader business goals, and are you adopting a balanced approach to innovation and stability?

We’d love to hear your thoughts and insights! Share your experiences and challenges with us by reaching out on LinkedIn or sending us a message through our contact us page to discuss how we can help your team achieve its goals in the upcoming year.

Luis Aburto

CEO

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