Your Ultimate Guide to Nearshore Software Development: Everything You Need to Know

What is Nearshore Software Development?

Nearshore software development is the model of outsourcing tech projects to external providers or expanding your in-house teams with remote developers from vendors located in nearby countries, usually in the same or small time zone difference between them and you (up to 3 hours difference).

One major benefit of nearshore software outsourcing is the capacity to assign the technical components of your company to expert software developers. This not only enables your internal team to concentrate on essential business duties but also relieves you from handling important responsibilities like HR procedures, project management, and quality control.

Besides, similar time zones allow for real-time communication which brings more efficiency to the project implementation and management. Nearshore outsourcing also allows for cutting costs compared to hiring developers locally. This model opens access to a diverse pool of skilled experts in various sophisticated technologies at more affordable hourly rates than onshore developers.

Examples of Nearshore Software Outsourcing

Nearshore IT outsourcing is a strategic step both for small and large-scale businesses all over the globe, especially for those located in countries with high hourly rates like the USA. By hiring top web developers from nearby countries at lower costs, companies can significantly reduce project budgets and accelerate time to market.

Imagine your business is based in Italy and you are developing an eCommerce platform. This project demands senior developers proficient in Adobe Commerce but your in-house team is already stretched thin. Local hiring costs for short-term contracts and asap are skyrocketing. Besides, you’ll need to handle multiple interviews and training sessions before choosing the right candidate with the required technical skills. Instead, you can partner with a nearshore outstaffing agency from Eastern Europe, like Drupfan, and easily scale your team up with the necessary expertise for competitive rates. With a time difference of 1-2 hours, you can effectively work together in real time. Besides, the best developers have already been thoroughly vetted for you and are ready to step into your project in 1-2 business days after all the details are agreed.

For the US or Canada, nearshore outsourcing includes cooperating with external agencies in Latin or Central America.

What Web Development Services Can Be Outsourced to Nearshore Vendors?

Nearshore outsourcing services encompass every stage of the software development process, such as:

• Analysis and planning for business: Keeping business and data analysts on board can become expensive. It is wiser to partner with an outstaffing digital agency and delegate the business analysis and strategy planning for your software product to professionals.
• Website development: Developing websites through nearshore outsourcing gives you the opportunity to tap into a skilled pool of experienced web developers with expertise in various advanced technologies. Therefore, you will receive a website with modern layouts and scalable functionality, created using the latest technologies and industry standards.
• Support and maintenance: Your in-house experts may find it overwhelming to monitor and update websites or applications on a daily basis. Delegate software support & maintenance to a team of nearshore experts and eliminate concerns about downtimes, security vulnerabilities, and bugs.
• UI/UX design: It can be difficult to find a seasoned UX/UI designer. Nearshore outsourcing agencies have finalized the hiring procedures on your behalf, providing top-notch web designers to transform your project vision into reality.
• Native mobile app development: Creating mobile apps for specific operating systems by outsourcing the development process is a common service that removes the necessity of employing and keeping a team of internal mobile developers.
• Web application development: Select the technology stack you like or let the team of professionals choose the best option for your project and delegate web app development to a team of highly skilled web developers from a nearby country.
• Cross-platform application development: The development of applications that work on multiple platforms is the latest trend in creating custom business apps. Enhance your company's mobile presence by choosing a mobile solution that is visually and functionally cohesive on all platforms.

This list can be further continued, as software development services are numerous. For example, you can also outsource Quality control, web hosting, web security, SEO, and many other services to a nearshore vendor.

What is the Difference Between Onshore, Nearshore, and Offshore Software Outsourcing?

Outsourcing engagement models, alongside nearshore, also offer offshore and onshore services. While you already know the key points of nearshore outsourcing, let’s review other models in more detail.

Offshore software outsourcing is a collaboration with a team located in a distant country, typically in a location with a significant time zone difference. This model can provide cost-effective alternatives to onshore or nearshore hiring, particularly when opting for countries like India or Romania with lower labor costs. However, offshore engagement comes with its own difficulties. The time zone gap can complicate real-time communication and smooth operations between both teams.

For instance, working with an Indian team as a U.S. company can result in significant cost savings, but you will also have to manage the time zone difference of 9 to 12 hours. This means that meetings could happen at unusual times, or you may encounter tardiness in replies due to time differences. Although offshore outsourcing allows for cost-effective access to a larger talent pool, it is crucial to anticipate and be ready for possible communication challenges and cultural differences that may impact operations.

Collaboration with development teams from the client's country or region is a part of onshore development.

How Can Nearshore IT Outsourcing Benefit Your Business?

Now that you understand what nearshore outsourcing is, it is high time to review its key advantages.

Reducing costs without compromising quality

When it comes to nearshore development, one of the initial aspects that stands out is the potential cost savings. Labor expenses for American businesses are much cheaper in nearby countries such as Mexico or Colombia compared to employing workers locally. However, here's the main catch: talent is not being sacrificed. You still receive developers who are highly skilled, frequently having years of experience in the latest tech trends.

And what about those savings? They extend further than just the hourly rate you're paying. Consider the funds saved by not investing in employee perks, office rentals, or hiring efforts. Instead of investing in operational expenses, you can allocate those funds to grow your business, create new products, or improve customer satisfaction. It's similar to maximizing your value without compromising on quality.

A Larger, Improved Pool of Skilled Individuals

When you opt for nearshore outsourcing, you are accessing a deep pool of talent that is continuously expanding.

Consider Eastern Europe if your business is located in Western Europe, for example. This area is becoming a tech hub, with developers who possess both the technical expertise and the background of collaborating with international customers. Countries like Poland, Romania, and Ukraine are top locations that contribute to the development of such state-of-the-art technologies kike blockchain, Artificial Intelligence, Machine Learning, and cloud computing.

Optimal Time Zone: Collaborating in Real Time

One of the major challenges of outsourcing is managing various time zones, which makes nearshore outsourcing a perfect solution for businesses seeking real-time collaboration. You don't need to wait till the next day for a reply or arrange meetings at inconvenient times.

Nearshore remote developers can join your daily stand-ups, provide real-time issue addressing, and work side by side with your internal team. This, in its turn, enables faster decision-making and faster time-to-market. And let’s be honest, even one week of project delay can cost your business a fortune.

Cultural Compatibility

Cultural alignment is important for a successful project implementation. Common views on business operations and communication processes lead to faster turnaround times and, as a result, accelerated time-to-market. Thanks to common business approaches with an external team, most of the pitfalls and misunderstandings can be avoided. When everyone is on the same page, fewer project hiccups occur.

Possibilities of Long-Term Partnership

Nearshore outsourcing is not a one-off deal. It opens the door to long-term partnerships where you can easily scale the size of your team up or down as the project’s workload changes. Besides, you can hire a team of dedicated developers for ongoing software support and maintenance and forget about the daily website monitoring on your side. Outstaffing digital agencies like Drupfan has already the best developers proficient in diverse technologies to satisfy any software development need you might have.

Lower Legal Challenges

When partnering with an external services provider from a nearby country, you often deal with fewer legal and regulatory issues. Countries in regions like Latin America usually have business regulations that align with North America, while Eastern European regulations perfectly align with Western Europe, compared to offshore locations. This makes processes like contract negotiation, security compliance, and intellectual property protection much easier.

Summing up, nearshore software outsourcing gives you the best out of both worlds—cost savings and time zone alignment.

Challenges of Nearshore Software Development

Nearshore outsourcing is not a one-size-fits-all solution and can bring its pitfalls to the project implementation. It is important to understand the risks associated with nearshore software development and learn how to minimize them before delegating your project.

Slight Cost Saving Compared to Offshore Outsourcing

Nearshore software development is usually cheaper compared to hiring onshore specialists, however, it does not provide the same level of budget cuts as offshore outsourcing.

Solution: If budget is your top 1 priority, consider an offshore engagement model instead.

Risk of Talent Turnover

Nearshore markets are highly competitive, meaning developers are in high demand. This might potentially lead to high turnover rates. High turnover might disrupt project deadlines, cause knowledge loss, and waste time on another onboarding.

Solution: Choose a reputable nearshore partner with strong retention practices, and ensure thorough project documentation to minimize disruptions. Additionally, fostering strong relationships with the team and offering competitive compensation can help keep developers engaged and reduce turnover.

Lack of code consistency

Each individual has a unique way of handwriting, which is why web developers also have their distinctive styles of writing code. When several experts collaborate on the same feature, it can result in code inconsistencies, which can make it harder to comprehend and interpret.

Solution: Request that your vendor develops coding standard documents for easy pass-off to new web developers in case of staff turnover, or offer your guidelines if available.

Top Nearshore Outsourcing Regions

There are two regions that remain competitive for nearshore software development: Eastern Europe and Latin America. Let’s review the best IT locations in these regions for tech project delegation.

Best Nearshore Software Outsourcing Locations in Eastern Europe

If your business is located in any region of Western Europe, partnering with an external software services provider from Eastern Europe is your proven way to cut costs while maintaining a high code quality level. Here are the best countries for IT nearshore outsourcing.

Poland

Poland is renowned for its experienced software architects, web developers, and UX/UI designers. Its high level of tech expertise along with a fluent level of English across the majority of developers, make it a top destination for nearshore IT outsourcing. Additionally, Poland's strong cultural alignment with Western Europe and its status as a member of the European Union ensure efficient collaboration on complex projects and alignment with legal regulations.

Romania

Romania has recently experienced a significant boost in the IT sector, attracting more and more stakeholders to this region. Here, you can find developers with a specialized skill set, as well as a deep expertise in cutting-edge technologies, like blockchain or AI.

Ukraine

Ukraine is famous for its advanced level of digital infrastructure and is the leader in IT innovations across Eastern Europe. Their banking, shipment, blockchain, cybersecurity, and Machine Learning (ML) solutions are the next level. Ukraine is recognized worldwide for its broad pool of senior experts in technical fields. Hourly rates in this country do not exceed $30-50 per hour depending on the technology.

Here at Drupfan, we have our hubs strategically located in top Eastern European locations. Contact us today to outsource your software development project or extend your team with remote developers.

Best Nearshore IT Outsourcing Locations in Latin America

If your business is based in the United States, nearshore companies located in Latin America are a top option for outsourcing.

Colombia

The IT sector in Colombia has been encouraged to expand by the government's initiatives and investments in technology education. Therefore, the nation has a youthful, vibrant, and proficient labor force while also offering cost-effective software development services.

Mexico

Mexico's close geographical location to the US makes it a great option, with little time zone discrepancies and comparable cultural subtleties. The nation has made significant investments in tech education, resulting in a rapid growth of software engineers and web developers.

Brazil

The rapid growth of Brazil's technology sector has led to a large population of software experts who have received their education from results-driven institutions. The government has invested heavily in its technology infrastructure, promoting creativity and encouraging startups to establish themselves in Brazil.

What is the Best Way to Select a Nearshore Software Outsourcing Company?

With numerous nearshore software development companies present in the market, it can be quite difficult to select the appropriate partner. Let's emphasize important factors to take into account when making your decision.

Assess possible candidates by browsing websites such as Clutch.co or Glassdoor

Unsure of where to begin? Take a look at sites such as clutch.co or Glassdoor for more information. These platforms also offer important information such as reviews from clients or team members. By reading them, you will gain a thorough comprehension of the company and establish certain anticipations. An alternative is to simply search on Google for something such as 'top nearshore software development companies' and review the latest blog posts containing lists.

Examine the digital agency's case studies or portfolio

Make sure the software development company you are considering for outsourcing has the required expertise and experience in handling similar projects before making a decision. Examine their case studies or past work to determine if they have expertise in your field or have created comparable features.

Imagine if you are a healthcare organization wanting to create a patient management platform. You should make sure that the external company has appropriate experience before you outsource. For example, ensure that their portfolio features projects such as electronic health records systems or healthcare apps. By doing this, you will protect yourself from inexperienced individuals and trial and error in your project.

Comprehend the pricing structures

After identifying potential nearshore outsourcing candidates, review their pricing structures to see if they fit within your budget. External vendors can operate under time & material, fixed price, or hourly rate structures. Inquire with the agency about any potential hidden fees they may have. Finally, how much do their services cost? Are they in line with your project's budget?

Seeking adherence and interaction, methods of working, and goals of the business

It is important to have the same work views and objectives when delegating tasks to specialists from another company. Discrepancies in workflows and work methods, along with communication and cultural obstacles, can negatively affect the outcome of your project. Before teaming up with a vendor, ensure that their core business values and perspectives align with yours. This will guarantee a more positive working atmosphere and better collaboration.

Inquire regarding Non-disclosure Agreement (NDA)

Partnering with a nearshore IT company will grant them access to the sensitive data and information of your business. Before finalizing any partnership agreements, inquire about the availability of a non-disclosure agreement.

How Much Does Nearshore Software Development Cost

The cost of nearshore software development outsourcing varies depending on the country, project complexity, and the chosen technology stack. Typically, nearshoring to regions like Latin America and Eastern Europe offers a more affordable alternative to U.S. and Western European rates, without sacrificing the code quality.

In Eastern Europe, countries like Poland, Ukraine, and Romania offer software development services at rates between $30 and $60 per hour.

In Latin America, popular outsourcing countries such as Argentina, Brazil, Mexico, and Colombia typically charge $35 to $60 per hour. This proximity to the U.S. allows for smoother communication due to minimal time zone differences and a similar work culture, which can enhance collaboration and project management.

While price is an important factor, it’s essential not to overlook other critical considerations such as the quality of work, ease of communication, and cultural alignment. Although lower rates might be appealing, investing in a slightly higher-priced, experienced nearshore team can yield better long-term results and cost efficiencies.

Drupfan — Your Nearshore Outsourcing Partner!

Drupfan provides companies with the ideal combination of technical knowledge, cost-effectiveness, and laser focus on business growth. Get in touch with us today to talk about your project. Whether you're a startup looking to develop a Minimum Viable Product or a large corporation seeking to enhance your existing platform, Drupfan offers the expertise and resources to support you in reaching your goals.