The high demand for software development services for startups keeps growing. Neither the economy nor public health challenges deter this upward trend.
High demand means a continual shortage of good IT talent for fulltime work onsite.
Outsourcing software development services provide a proven and powerful option for large and small businesses alike. They all benefit from:
- obtaining needed expertise
- paying lower hourly rates
- avoiding tedious and costly recruitment and onboarding
Which “shore”?
There are several ‘-shore’ options popular among businesses going digital.
Onshore. Offshore. Nearshore.
Where is the division line between ‘-shores’? Usually, this is the distance between you and an outsourcing development company.
- Close
- Onshore
- Not close at all
- Offshore
Nearshore software development means you work with a team from a neighboring country.
Is that all? No.
Nearshoring is divided into tangible and intangible: geographical and cultural.
Some outsourcing companies fall into both categories. Some do not.
Nearshore software outsourcing is about geographical proximity. Cultural nearshoring is, obviously, about cultural similarities. Being culturally close is an essential part of any search for a reliable partner. Often, a nearshore-like experience is possible with an offshore team—and vice versa. It’s about cultural similarities.
This guide analyzes different elements of nearshore software development. The goal is to help you get a perfect balance between price, timeline, and quality when choosing nearshore software outsourcing.
Check it out!
What is nearshore software development?
What is a nearshore software development company? A software development company in a neighboring country to the business seeking a software company. Nearshore software outsourcing takes a geographically middle position between onshoring and offshoring. When going onshore, a business hires a team in the same country. The term “offshore software development” describes a scenario when the development team is located in another part of the world.
Here is an illustration:
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Onshoring
same country -
Nearshoring
neighboring country -
Offrshoring
distant land
Nearshore software development can be total and partial. The same as other software development models. Businesses often prefer to delegate their in-house IT department for specific work. They outsource an entire software development project to one or more software development teams. Or they use the hybrid model. They outsource a single activity (e.g., back-end development) to an external team. The in-house team remains responsible for another part of a project.
How different are offshore and nearshore software development models?
The division is based on geographic principle. But there’s more.
Technically, the term “nearshoring” derives from offshoring. It describes a situation when businesses opt for services in nearby, low-cost countries.
What are the similarities?
In both cases, businesses retain indirect control over the team. They manage a remote team in another company. The contractor’s office is still located in a different country. Communication and regular meetings between the team and the client are digital and virtual.
Why do businesses do this?
By outsourcing to a neighboring country, businesses hope to benefit from a lower cost of hiring for the same high level of professional skills and a higher level of predictability compared to an offshore country. This approach is possible through speaking the same language, sharing cultural practices, and historic links from a common past.
What are the pros and cons of nearshore software development?
As with everything in the world, nearshore software development has its pros and cons. In the case of nearshore software outsourcing, businesses benefit from understanding the mentality of contract developers and the ability to react instantly due to a negligible time difference. Associated risks seem lower. But they do exist.
Pros of nearshore software outsourcing include:
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Access to a wider pool of technical experts
If you are thinking of nearshore software services, you expect to reach highly skilled professionals at an affordable price: local professionals are either not available or too expensive leaving slim to no ROI. Yet, nearshoring grants access to a wide talent pool of skilled professionals. Your business can pay a reasonable price for a development team able to work with no micromanagement and deliver its promises on time and on budget.
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Travel proximity
Unfortunately, this applies to a no-COVID world. But as soon as travel restrictions are permitted, personal, face-to-face communication will be back on the table.
In an open world, there are regular direct flights between you and your team’s country. No visas or special permissions are required to visit each other. It takes only 3 – 4 hours to get to the destination point (unless you plan to travel from the USA or Canada to South America). Therefore, it does not require much planning from your side when you are going to visit your team or your team comes to visit your office. Also, jetlag is not a factor.
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Sharing same or similar views, values, and lifestyles
With nearshore software services, there is a higher degree of probability the team shares the same working habits and attitudes as you. Cultural understanding means you are working from the same or similar “cultural page”:
- the team understands where you are coming from and your goals
- correctly interprets software development requirements and processes
- works with the same managerial approaches
- outsourcing team will synch-up faster with your in-house team.
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Insignificant time differences
It is easy to stay in touch with your team during your business hours. You have no problems organizing daily meetings with them. None has to stay late at work or arrive early in the morning to synchronize schedules. For the same reason, there is no inconvenience on either side on urgent questions knowing you are in similar time zones. Burnouts caused by an uncomfortable schedule are less probable.
Cons associated with nearshore software development include:
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Cost effectiveness
Nearshoring appears to be more expensive, less cost-effective solution. Nearshore software services are less expensive compared to hiring an in-house team or an onshore development company. But do not expect them to be the cheapest. However, lower hourly rates do not mean the lowest overall project total. (Of note: proper IT expertise is never cheap, even in the least costly locations.)
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Control
Business always face the risk of losing control over its processes. When no in-house specialist understands how software works, a business can become too dependent on a software development company and lose its stability in the future. Advice: always keep a reliable product owner in-house to maintain transparency on the project.
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Confidentiality
When a contractor resides in another country, confidentiality can be an issue. The only advice: do not buy cheap. Ask an outsourcing company what security precautions they are going to apply to your project. Choose a provider that cares about its reputation and can harmonize its security practices with yours.
Always ask for an NDA. Remember, a verbal promise is only as good as the paper it’s written on.
What industries demand nearshore software development the most?
Many companies keep growing despite economic and public health challenges. Digital solutions save user’s time and efforts. They also make it possible to work, train, enlighten, and entertain from any location around the world.
Below are the main industries that benefit the most from nearshore software services:
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Healthcare and fitness
Telemedicine and fitness apps are among the most popular trends. Distant consulting prevents spreading COVID. Using telemedicine, you can make an appointment from a convenient place. No more waiting in a hospital queue.
Fitness apps help users remain motivated to carry out their daily workout program and achieve their fitness goals at home.
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eCommerce
More and more people prefer online shopping. Development teams help businesses prepare for seasonal sales and promotional campaigns when user demand skyrockets. They also provide website maintenance ensuring safe purchases and uncompromised user experience when interacting with an ecommerce solution e.g., b2b order management software.
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eLearning
Demand for online learning solutions keeps growing. eLearning opens up opportunities for people worldwide with access to expertise and newest best practices. Nearshore software developers help launch relevant elearning solutions, wide-audience and niche, B2B and B2C.
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Business process automation
There are proven practices to help businesses replace outdated software with modern systems. What is the main benefit of choosing nearshore software outsourcing? Few local developers want to spend a couple of years sorting out an old, badly documented code base. Far better for them to apply for a position at a FAANG company. Or join the next-unicorn startup where they either work with or on cutting-edge technologies. When using nearshore software outsourcing, the developers share the load and spread the tedium.
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Logistics
A pandemic appears to be the best time when logistics companies can update software and introduce new systems in their workflow. The workload decreases and the cost of an error becomes less expensive. For example, some airports started updating software because it was not possible previously because of such constant, high loads. Outsourcing software development team can help automate workflow inside a warehouse. Supply chain management can also be improved.
How to find the best nearshore software developers in five steps?
Finding a development team that fits in with your aims and expectations is challenging. Whether you search for offshore or nearshore software development, the journey is often long and laborious.
Challenging but not impossible.
Below is a five-step path to help you navigate through nearshore software services:
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1 Determine a time zone and destination best suited for you
Some countries (e.g., Canada, the USA, Brazil) lie in several time zones. The time difference between Vancouver, B.C (Canada) and Rio de Janeiro (Brazil) is five hours. This can be hardly called nearshoring software development. On the contrary, there is no time difference between Vancouver and Tijuana (Mexico), and three-hours difference between Vancouver and Quito (Ecuador) which sounds nearshore.
Hence, either look in which part of the country the provider resides when searching for a truly nearshoring experience or broaden your search parameters.
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2 Make a list of requirements
Compose a feature list ranking the features from the most to least important. Also, determine the desired timeline. Save the feature list until you have your shortlist of possible companies (step four). Based on this information, companies will offer you an implementation path and a rough estimate on budget.
No idea how to compose a list of requirements? No problem.
Write down your aims and what you envision then ask the companies to estimate them. Be as specific as possible.
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3 Search for top ten providers
After you have chosen your destination and have a feature list, make a list of top ten companies. To do this, use Clutch, Upwork or LinkedIn. Study feedback from clients and company profiles. Look at their websites to read about their portfolios and services. This helps you understand each company’s experience and strong points. Write down ten companies you like the most.
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4 Shortlist five and schedule interviews
Reduce your list from ten to five. Send your list of requirements from step two to the remaining five companies on your list. Schedule an interview with each company. Study their reaction. How quickly do they respond? Do they provide a free estimate? Do they want to schedule a call for more precise requirements? Do they show interest in your project?
Send the same set of requirements to all companies ensuring you can compare results. (Refer back to Step 2.)
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5 Pick up the best offer
When you receive feedback from all candidates, note down your impressions. Compare interviews. Assign points for each component (elaboration of requirements, understanding of your project, feedback, budget and timeline, level of interest, etc.)
Choose the team with the most points. Ensure they can handle your priorities. (deadlines? budget? quality?) Also, ensure you choose the best quality-for-the-price ratio.
Keep your list. Your first choice might not be able to start soon enough. Or, worse, starts but falters. Switch to the next provider on the list.
Do you want help finding the right team?
Get a no-cost, templated checklist for hiring software developers. This includes interview questions and evaluation activities. It ensures you ask all the necessary questions to all the companies.
What factors should you consider when looking for nearshoring software developers?
What you can expect from a reliable nearshore software outsourcing company:
Expertise
The development team has already successfully completed many similar projects. They know how to handle requirements while keeping your priorities in mind. They know what is possible and what is not. They know where possible pitfalls lie and how to avoid them.
Cultural fit
The development team understands you and your goals. They know what you value and what you expect from an established workflow. You save time not having to explain basic things.
Transparency
There are no hidden costs for you. The team is clear about project progress. You get what expected, when expected, for the agreed price.
Flexibility
The team does not follow blindly the set of requirements when the client needs a pivot. Instead, they help the client reach his or her goal and switch to what is really wanted.
What makes IT Craft a reliable nearshore software development company?
There are three things: technical expertise, cultural awareness, and positive attitude.
This makes IT Craft a go-to nearshore software development company for the EU businesses and a long-term, trusted partner for many US companies.
Company culture matters.
At IT Craft, cultural nearshoring matters the most. The company offers a predictable workflow helping companies from the EU, North America, and Australia launch their software with minimum stress and lower budget.
This is how we do it:
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Immediate start
IT Craft is a large company with several departments. We can find a team that fits your project best. There is no lost time. Once we have agreed upon project scope, timeline, and payment plan, we sign a contract. The team starts working immediately.
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Adherence to promises
IT Craft cares about its reputation. We deliver on our promises to you—on time, within budget. We know at the beginning if something is not possible. In this case, we help you figure out a path to your goal.
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Instant response
You can always reach out to your project’s assigned business development manager and project manager to discuss project progress. You can ask them any urgent question; they are always available and respond quickly within business hours.
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Knowledge transfer
Every project is well documented; source code has commentaries. Several people have project knowledge ensuring nothing gets lost.
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Proactive development
The team delivers a project keeping not only ‘what’ but also ‘why’ in mind. You get source code that will be easily maintained and extended with new features in the future.
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Transparent delivery
Project progress is portioned. You get a plan before a Sprint and a report after it. You can test launch functionality. You know on what the team is really working.
In summary: choose wisely
Offshore and nearshore software development differ in distance. Offshore and nearshore have their own benefits and downsides. Still, businesses work with a team. People who work in a team are the key to success. The right team boosts to a project development. The wrong team fails to deliver promises. Choose the team!
In each case, cultural fit is crucial for a successful software launch. This saves businesses from long, tedious explanations, and clearances. This is where Eastern Europe provides an enticing destination both for the EU and for US companies sharing similar mindset and values.
What is nearshore software development?
(102 votes, average: 5.00 out of 5)
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Thanks for pointing out the cultural aspect of nearshore outsourcing. Every country is offshore to the US unless you outsource to Canada or Mexico. But even if you broaden your search, you can still find nearshoring or nearshoring-like experience at a company residing in a distant land. Look for a company with similar to yours values and complete transparency in how they deliver result. It takes time until you find the right company but this is definitely worth it.
Andy, thank you for your commentary. Totally agreed.
Here is advice for everyone who is new to the topic: choose a reliable company for your project. You might pay a higher hourly rate but the total development costs will be lower.
When you start nearshoring with a reliable provider, you have the highest chances the project delivery will be on time and on budget. Here you can read about how to find programmers for your project.
Here is a side note. Nearshore software development suits best for startup development:
costs of hiring a nearshore outsourcing company are lower than those for an in-house team;
outsourcing companies provide immediate project start and team management as a part of the package;
outsourcing teams are flexible. Workload on the project can be increased or reduced faster.
Nice reading. I think the most important point of nearshore outsourcing lies in working ethics. As a product owner, you know what you can expect from the team. You do not take your time to figure out what their responses really mean. And you hire quality specialists at an affordable price.
Thanks for the post. I think nearshore development suits best for startups and companies who have little to no outsourcing experience but lack budget for their own team or an onshore company. Both options are expensive!