Top 15 Advantages of Nearshore Software Development
Success for software development startups and high growth companies relies heavily on having a strong and efficient development team in place, which is why many firms choose to leverage the many benefits of offshoring.
But my experience says that depending on your company and the way you operate internally, offshore locations that are more than a few time time zones away can present some communication challenges thanks to limited time overlap and cultural differences, leading to frustration or project delays.
So what’s the right solution?
Enter nearshoring—a subset of offshoring that simply means your software development team is located in a country in the same or similar time zone as you. It’s a solution that brings teams physically closer together, adding ease to collaboration, and a reduction in time zone complications.
Like offshoring in general, one of the most widely known advantages of nearshore software development is cost-effectiveness. Rather than competing with countries with lower labor costs, nearshoring enables startups and high growth companies to tap into top talent at a more affordable rate compared to hiring onshore.
In addition, nearshoring allows for more face-to-face meetings and a deeper understanding of each team member’s individual skill set. This leads to a smoother workflow and improved productivity overall. Plus, having teams in a similar time zone allows for more seamless communication and efficient project management. Ultimately, nearshoring is quickly becoming a preferred option for many startups and high growth companies looking to streamline their software development processes.
This article aims to provide a comprehensive overview of the key advantages of nearshoring, including shared time zones, an extended talent pool, fewer cultural barriers, better return on investment, tax savings, intellectual property protection, transparent costs, reduced travel expenses, operational efficiency, expansion into new markets, and increased infrastructure and political stability. Drawing from my extensive research and practical experience, I will shed light on the significant benefits that nearshoring offers to companies in building cost-effective remote software development teams offshore.
Table of Contents
Ready to just skip to the end and build an amazing nearshore team now? We’ll make it quick and easy for you.
What's Different About Nearshoring VS Offshoring VS Onshoring? Let's Compare.
Nearshore software development involves locating some or all of a startup’s software development team in a neighboring country (or at least one in a similar time zone). It is a specific subset within offshoring as a whole, which is used to describe any effort that leverages offshore resources for software development. Finally, onshoring means using software developers from the same country where the company is based.
For clarity purposes, this means that for an American-based company, having their developers in a Latin America country (like Mexico, Colombia or Brazil) would be considered “nearshore” and having developers in one of the Eastern European countries (such as Poland, Ukraine or Romania) would be considered “offshore.”
But for a Western European company, it’s the reverse: having developers in Latin America would be “offshore” and having developers in Eastern European would be considered “nearshore.”
- NearShore vs OffShore. The main difference between nearshore and offshore software development is that nearshore developers are located in nearly the same time zone as their clients, while offshore developers are potentially located in vastly different time zones. With nearshoring, communication can be more fluid and there will be less lag time when it comes to responding to requests for changes or updates.
- NearShore vs OnShore. One of the main benefits of nearshoring is being in the same or a similar time zone, making communication and collaboration much smoother, and software development more cost-effective. However, onshoring in some cases gets a leg up since there is less of a language barrier and a shared understanding of norms and expectations. Data security is a significant consideration for some industries, and it may be easier to ensure compliance and physical premises security with onshore teams too. But if you want talent at home, chances are you’re going to have to pay hefty sums for it and there will be a long recruiting lead time.
Top 15 Advantages of Nearshoring Explained
From my standpoint, nearshoring allows startups and high-growth companies to access top talent at more affordable rates compared to hiring locally, increasing their global competitiveness. Overall, nearshoring brings a beautiful bounty of benefits, which TurnKey’s clients such as Headspace, Glorify, and BellXCel are already leveraging, including:
#1. Shared Time Zone
When planning work tasks and coordinating with team members, time zones can be a major consideration for startups and high growth companies that offshore their software development. If your headquarters and offshoring location(s) are in different time zones, scheduling meetings or delegating tasks properly requires additional effort and experience to do it properly, avoid communication delays, and reduce stress for managers and developers.
Nearshoring operates within a similar or same time zone, which eliminates this issue altogether. Not only does a shared or overlapping time zone make day-to-day operations easier, it also encourages healthy work-life balance (no 5am meetings!), and more time throughout the day for the whole team to gel.
#2. Larger Talent Pool
When it comes to hiring top talent in the tech industry, I found offshoring and nearshoring offer a major advantage. By opening up the job search to the global market, it allows technology startups and high growth companies to access a much larger pool of skilled developers, designers, and QA engineers. This can mean lower costs, as wages may be lower in certain offshore or nearshore locations, as well as higher quality hires.
Onshoring, on the other hand, limits the talent pool to just those individuals living within the startup’s own country. This can result in increased competition for top talent and ultimately higher salaries in order to attract and retain employees.
At TurnKey, we have also seen that a large talent pool means quicker scaling. This client case is an excellent example:
Turquoise Health, a venture-backed company experiencing rapid sales growth and product expansion, faced the challenge of augmenting its engineering team with highly skilled developers. To address this need, Turquoise partnered with TurnKey to hire in Eastern Europe and Latin America. The results have been remarkable. On average, TurnKey was able to fill each position in just 23 days, presenting an average of 2 candidates per position for technical screening. This efficiency in the staffing process speaks to TurnKey’s ability to identify and attract top talent quickly. Furthermore, the partnership between Turquoise and TurnKey has been characterized by exceptional employee retention, with a 100% retention rate since the beginning of their relationship in September 2021.
The TurnKey team has taken on the crucial responsibility of handling all the backend operations of Turquoise’s platform. This successful collaboration showcases the value of partnering with an offshore provider like TurnKey, enabling companies like Turquoise to scale their engineering teams effectively and support their rapid growth and expansion.
#3. Fewer Cultural Barriers
Although nearshoring destinations may be located in different countries, they likely have a shared understanding of each other’s culture. For example, in the U.S. and Latin America, there may be more overlap in knowledge of politics, culture, and popular brands and style influences including television, music, and fashion. These cross-cultural influences bring about opportunities for broader team exchanges, compassion, and understanding. As international relationships continue to grow and evolve, it’s important to acknowledge the interconnectedness between nations and the role that culture plays in bringing us together–including your dev team!
#4. Effective Communication
Miscommunication can result in flawed code, missed deadlines, and frustrated team members. Nearshoring allows for smoother communication between team members from different countries, resulting in more efficient and higher-quality work. For example, many people in the U.S. have some level of proficiency in the Spanish language, and English is a second language for many professionals in Latin America. So it makes perfect sense that many U.S. startups and high-growth companies consider nearshoring their software development projects to that part of the globe.
#5. More Influence and Control
Nearshoring offers the potential for maintaining just as much control over the software development team and processes as onshoring, provided the right steps are taken. Hiring a fully dedicated team from an experienced nearshoring partner ensures that a high level of attention and accountability can be maintained. In addition, setting clear expectations and establishing open lines of communication with your nearshore team can help to ensure that everything runs smoothly.
Ultimately, nearshoring can provide cost savings and access to diverse talent without sacrificing control in the software development process.
#6. Lower Cost, Better Return On Investment
Nearshoring benefits include cost savings, largely due to the lower cost of living and thus correspondingly lower salary needs in nearshore countries. Talking numbers, startups can save an average of 38% or 48% when nearshoring to Central and South America.
However, it is important to note that this doesn’t mean nearshore programmers are not well-paid; most actually earn a higher salary relative to their peer group in their own country.
Overall, nearshoring can provide significant cost benefits without sacrificing talented and skilled programmers. And you can maximize your ROI by reducing the resources and effort needed for collaboration, which helps you work faster towards a successful outcome with less stress on all parties involved in the development process!
#7. Tax and Infrastructure Savings
Not only does nearshoring allow startups access to a global pool of talent, but it also presents the opportunity to minimize their tax burden as local governments support and foster the technology industry through incentives.
As an example, let’s check out Brazil as a nearshore destination for the United States.
Similar to other Latin American countries, Brazil fostered the technology industry by implementing successful federal government initiatives and tax incentives, which enabled the country to make big leaps in developing information technology infrastructure and unleashing tech talent potential.
One good example of Brazil’s investment in infrastructure is 5G. In October 2021, Brazil held an auction for the 5G spectrum deployment within the country. The economic impact of implementing 5G is expected to reach .2 trillion by 2035, according to this study by Nokia and Omdi. Brasscom also notes that there’s an annual 17% increase in investment in data centers (estimated at $850 million).
#8. Protected Intellectual Property
It’s important to have peace of mind when trusting someone with the development of your software product. One way to ensure your intellectual property (IP) will be protected is to work with a nearshore software development team that operates under strong IP laws. This means that any and all aspects of your project, from the initial plans and designs to the finished product, legally belong to you.
When thinking about transferring product development to a distant location with a different culture, it’s worth considering the potential risks involved in intellectual property and legal ownership. When in doubt, go with a trusted nearshore software development vendor like TurnKey to be confident that your hard work and ideas are safe and secure.
#9. More Transparency
A nearshore team working within a similar or same time zone and physical proximity allows for greater transparency in billing and communication, reducing the risk of overcharging or surprise fees.
At TurnKey, we believe that transparency is key in any business relationship. That’s why we make sure our clients are fully informed about all salaries, fees, and expenses. Unlike many of our competitors, we never try to hide or sweep this information under the rug. We understand that being open and honest about billing helps build trust between us and our clients.
Plus, robust transparency ensures you are never at risk of unexpected expenses. Our dedication to transparency sets us apart from the competition and helps make TurnKey your trusted choice for any nearshore development effort.
Benefit from 100% transparency across every aspect of your software development efforts.
#10. Reduced Travel Costs
As I delve deeper into the world of building cost-effective remote software development teams offshore, my research has led me to an intriguing discovery: Holding at least occasional in-person meetings with a nearshore team can help facilitate collaboration, contribute to the remote team culture and boost overall productivity. Moreover, gathering team members together in the same room creates a stronger sense of camaraderie and enables the exchange of ideas in a more efficient manner. When putting together meetings for remote teams, nearshoring not only can make the logistics of planning easier but also reduces travel time, thereby maximizing the amount of time available for productive collaboration.
#11. Deep Experience with Agile As a Development Methodology
I have discovered a fascinating trend taking place in Latin America. In recent years, software development methodologies like Scrum and Agile have gained widespread adoption throughout the region, becoming the new norm rather than the exception. In Latin America, software development methodologies like Scrum and Agile have become heavily adopted in recent years and are now the norm rather than the exception. These approaches favor flexibility, constant communication, and adaptive problem-solving, allowing teams to quickly respond to changing conditions and produce high-quality results.
As a result, Latin America countries are fast becoming known for their innovative software solutions and attractive opportunities for developers.
#12. Improved Code Quality
When teams are located close to one another (at least from a time zone perspective), they can better understand common goals, culture, language, and values. This allows software developers to work with more focus and intention which then leads to higher-quality code. In addition, being physically close allows for opportunities for collaboration and face-to-face meetings that contribute to efficient software problem-solving and decision-making.
#13. Quick Onboarding of New Developers
Developers need to quickly integrate with other team members and feel like they’re making valuable contributions from day one. We here at TurnKey understand this deeply, which is why our nearshore software development includes enhanced team member onboarding. By building cohesive teams early on, startups and high-growth companies create better working environments where people collaborate much more quickly than if you slowly integrate them over time.
#14. Happier Workforce
Nearshoring can alleviate the stress on your onshore development team and help deliver product faster, which will please your executive team. Moreover, because your development team is all in the same or similar timezone, there is no need for late night or early morning Zoom meetings. Such ease of working can result in higher quality product and happier and more motivated software developers.
#15. Enhanced Legal Stability
When choosing a nearshore software development partner, make sure you pick one that provides developers from countries with robust and clear legal systems. Countries with a stable legal infrastructure offer an attractive compromise—they provide amazing talent while also offering predictable and strong legal protection. This ultimately ensures peace of mind for your business.
Want to enjoy all these key benefits of nearshoring? We’re the nearshore experts.
How to Find a Reliable Nearshore Partner (Like TurnKey!)
From my research and our founders’ input, it’s clear that choosing a nearshoring development partner is a common challenge faced by startups and high-growth companies alike. Not only do you have to consider the cost and quality of a software development service, but you also want to make sure the provider has a proven track record and the right industry expertise. But with a little research and due diligence, it’s possible to find the perfect fit. (Hint: It’s us. Call TurnKey!)
Here are a few best practices for finding the right nearshore partner:
#1. Know your development goals and objectives
Are you looking for a partner that offers full product development services, or one that builds dedicated teams? It’s also important to consider whether the provider has experience working with startups and other companies in your industry. In order to get the most out of your nearshoring partnership, finding a provider that suits your unique needs is crucial.
#2. Don't skimp on quality
Choosing a nearshoring development partner is a challenge for startups and high-growth companies alike. Not only do you have to consider the cost and quality of a software development service, but you also want to make sure the provider has a proven track record and the right industry expertise. But with a little research and due diligence, it’s possible to find the perfect fit. (Hint: It’s us. Call TurnKey!)
Here are a few best practices for finding the right nearshore partner:
#3. Find a good culture fit
A potential partner’s technical capabilities, legal infrastructure, and data security measures are all important elements to vet. But you also need to look for a partner that shares your company’s values and fits your company’s culture. At the end of the day, relationships –and a shared sense of trust – matter most to a successful partnership.
Nearshoring with TurnKey offers a winning combination of all the key items above. Our offshore tech staffing approach gives you the flexibility to scale your software development teams up or down without sacrificing quality—and we do it with a focus on what benefits YOU most.
So if you need top-notch software developers that are a perfect match for your company, TurnKey is the right solution for you.
Searching for the absolute best nearshore software development partner? Look no further.
FAQ
Nearshore software development refers to using software developers in a nearby country to your home market. So for a U.S.-based company, Latin America would be considered “nearshore” whereas a Western Europe-based company would consider Eastern European countries (like Poland, Ukraine and Romania) nearshore.
Many startups or high-growth companies choose to leverage the benefits of offshore software development, including lower costs and greater access to top talent. But with this they face a decision: should they hire a remote team from halfway around the world (which is considered “offshoring”) or should they work with developers in a country with the same or similar time zone (which is called “nearshoring”). Though offshore teams offer an even bigger pool of potential talent, nearshore teams offer the benefit of closer collaboration and easy communication due to a closer time zone. Plus, nearshoring offers greater opportunities for holding meetings in-person when needed due to shorter flight times.
One of the biggest advantages of nearshoring software development to a neighboring or nearby country is the convenience of proximity. Startups and high-growth companies can easily visit their nearshore team and build personal relationships which builds trust and rapport. In addition, the time difference between countries is often minimal, making it simple to schedule meetings and work together efficiently.
In Brazil and Mexico, for example, software development professionals are highly trained and there is access to cutting-edge technology. These countries have seen rapid growth in their technology sectors, with corporations such as IBM establishing development centers in Brazil and major Mexican cities becoming global leaders in offshore software development.
The term "offshoring" is a catchall phrase that refers to using software developers in a foreign country, regardless of whether the country is many time zones away or closeby. “Nearshoring” is a subset of offshoring that refers to using software developers specifically in countries that are in a similar or same time zone as the company headquarters. While both offshoring and nearshoring offer cost savings and access to a much larger pool of talent, nearshoring often comes with additional benefits due to greater overlap in work hours and thus enhanced opportunities for collaboration.
TurnKey Staffing provides information for general guidance only and does not offer legal, tax, or accounting advice. We encourage you to consult with professional advisors before making any decision or taking any action that may affect your business or legal rights.
Tailor made solutions built around your needs
Get handpicked, hyper talented developers that are always a perfect fit.
Let’s talkPlease rate this article to help our team improve our content.
Here are recent articles about other exciting tech topics!
