Nearshore software outsourcing refers to the practice of assigning software development jobs or projects to organizations in nearby countries.
The nearshore software development strategy is an excellent means to get the talent you need at a fair cost. It allows firms to subcontract product development to professionals who are close by. Nearshore software development is rapidly growing, with the global IT outsourcing market expected to reach $397.6 billion by 2025.
What is Nearshore Software Development?
Nearshore Software development is a strategic outsourcing process of distributing software development jobs or projects to organizations in a nearby region. It offers both geographical and time-zone proximity.
It is one of three models for outsourcing development companies:
onshore, offshore, and nearshore.
- Onshore outsourcing involves hiring a team within the same country or region
- Offshore outsourcing involves hiring a team in a distant country with a different time zone.
- Nearshore outsourcing is popular in countries like the UK, Western Europe, Australia, and North America.
Common business processes include marketing, software development, manufacturing, and research and development.
Examples
IBM: IBM has a development facility in Costa Rica, while Microsoft has partners in Brazil, Costa Rica, and Mexico.
Dell: Dell has chosen to nearshore to Latin America to improve product quality.
Slack: Slack’s unique interface was created through outsourcing, with designers from Canada working on the platform’s appearance
Characteristics of the Nearshore Software Development
Nearshore IT development reduces costs and provides access to a large talent pool. With over 1 million IT graduates each year, it decreases time zone gaps and promotes real-time collaboration. The technique achieves a balance between onshore and offshore methodologies, ensuring greater communication and project success through cultural commonalities and decent English.
Small Time Zones Difference
Smooth communication should be a priority when you want your team to understand your requirements. Given that nearshore developers are located close to the customers, they have the same working hours, and therefore can quickly react to any arising issues.
Close Geographic Proximity
In most cases, nearshore software development teams are located within close geographic proximity to the customer. This fact grants smooth communication and quick-fix solutions to potential challenges.
Lack of Cultural Differences
Even though your team is located abroad, with nearshore outsourced development you can rest assured there will be minimum cultural differences. For example, IT professionals from Eastern and Western Europe have result-oriented mindsets and share very similar approaches to work.
Tips for Hiring Nearshore Software Development Team
When hiring a nearshore development team, consider the following factors:
- Choose a partner with technical expertise, communication skills, cultural fit, established business, proven track record, and verified customer references.
- Define your goals and treat the outsourced team with respect.
- Implement agile approaches such as Scrum, Kanban, Extreme Programming, Crystal, and Lean Software Development.
- Signing an NDA with the company will protect your proprietary rights and data.
- Perform risk assessments, remote monitoring, due diligence performance, and security policies, and implement a role-based access system.
- Make collaboration official by establishing ongoing contacts like SOW, PSA, and NDA to protect both parties and ensure a smooth vendor relationship.
Key Difference Between Nearshore and Offshore
Here we will discuss the key difference between nearshore and offshore. It will enable you to make an informed decision on the most suitable model for your organization.
| Nearshore | Offshore |
| Nearshore is often geographically close | Offshore is mostly overseas |
| There are work culture and practice similarties | There are major cultural differences |
| Similar time zone approximately 1 to 3 hour difference | Approximately 6 to 13 hours difference |
| Moderate english proficiency | Wide range from low to high across European and Asian countries |
| Talent pool limted if you are only considering your timezone | Talent pool is unlimited if you decide to go global |
| Costs are lower than in the US but can be higher than say in Asia | A wide variety of rates very low in some outsourcing destinations |
How Nearshore Software Development Works?
Nearshore software development allows you to increase your access to development teams in surrounding nations while still sharing the day’s work with your team. Nearshore software development businesses provide a gateway for you to access resources located outside of your immediate geographical area. These development partners manage and supervise teams across Latin America, guaranteeing effective communication, efficient processes, and cultural awareness.
Nearshore software outsourcing companies situated in the United States often provide Errors and Omissions (E&O) Insurance. They also provide risk management tools that are not commonly found in Latin American countries. This form of insurance offers you with both the necessary safety and the peace of mind to focus on your project.
The UK and Western European countries frequently outsource software development to the Baltics or Eastern Europe. For Australians, nearshore locations include China, Vietnam, and the Philippines. For North American businesses Latin America, Eastern Europe, and Southeast Asia. Countries with the majority of experienced development teams include Colombia, Mexico, and Brazil, as well as smaller countries such as Chile, Uruguay, and Costa Rica.
Nearshore Software Development Benefits and Drawbacks
Nearshore software development offers quality at lower rates than US-based developers, but limited companies offer services. Similar work times benefit both parties, but hiring may be more costly. Cultural differences help maintain communication, but 24-hour help can be difficult due to timezone differences. Following are the pros and cons of nearshore software development which you should keep in mind if you are thinking about it.
| Benefits | Drawbacks |
| Nearshore software development offers good quality for lower rates than what you’d pay for a developer in the US. | There are limited number of companies offering nearshore services and findings best vendors could be a problem. |
| Working at a similar time is a huge benefit for both parties, the customer and the outsourced team. | Hiring a nearshore company could be more costly than offshore. |
| Having less cultural differences help to maintain good communication. Any cultural differences are more likely to be handled with respect and understanding. | It’s more difficult to find 24-hour help. Engineers in the same timezone may refuse to work odd hours or charge double the hourly rate for 24-hour coverage. |
Conclusion
Nearshore software development provides a strategic benefit for firms wishing to improve development capabilities while remaining cost-effective and communicative. Companies that engage with nearshore teams can gain access to high-quality people, benefit from cultural alignment, and ensure timely project delivery. If you’re thinking about nearshore software development, examine possible partners based on their competence, communication skills, and cultural fit. Contact Leed Software Development to know more about nearshore development services.
FAQs
What are nearshore software development services?
Nearshore software development services involve outsourcing software development tasks to companies in nearby countries, usually within the same or similar time zones. This allows for easier communication and collaboration due to geographic proximity.
What is the difference between offshore and nearshore software development?
Offshore software development involves outsourcing tasks to distant countries, often with significant time zone differences. Nearshore software development, on the other hand, refers to outsourcing to neighboring or nearby countries, which typically share similar time zones and cultural practices, making communication and collaboration smoother.
What is nearshore vs in-house software development?
Nearshore software development involves outsourcing to nearby countries, offering cost savings and access to a broader talent pool. In-house software development means that all development work is done within the company by its employees, providing greater control over the process but potentially at higher costs.
What is a nearshore project?
A nearshore project is a software development project outsourced to a company in a nearby country. This approach leverages the advantages of geographical proximity and cultural similarity to enhance project management and team collaboration.
What is an example of a nearshore company?
An example of a nearshore company is BairesDev, which provides software development services from Latin America to North American clients, offering the benefits of geographic proximity and similar time zones.
