Nearshore Software Development: Your Complete Guide

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This (shockingly insightful!) article will discuss the basics and benefits of nearshore software development. Knowledge is power—when you understand all of your options, you’ll pick the one that will keep your software dev team riding the big waves.

Let’s get started!

Table of Contents

What Is Nearshore Software Development?

Nearshore refers to offshoring software development to a region close to where your company is located.  So what nearshoring looks like for you depends on where you are. 

If you’re in the US or Canada, your nearshore hubs might be Mexico or Latin America. But if you’re based in London or Milan, your nearshoring options will have you hiring in Eastern Europe. Closer time zones are nearby, hence the term.

Many small and medium-sized businesses choose nearshoring due to the lower cost, yet still have access to top software development talent. In addition, nearshore locations can help cut down on travel expenses for those times where in-person collaboration makes the most sense.

Reasons to Choose Nearshoring for Businesses

Here are several reasons why businesses might consider nearshoring software development:

  1. Time Zone Alignment: Nearshoring usually involves countries that are in the same or closely related time zones. This can make collaboration easier, with teams being able to work in real-time or with minimal delay.

  2. Cultural Similarities: Countries that are geographically closer often share cultural, historical, or social similarities. This can reduce misunderstandings and improve collaboration.

  3. Cost Savings: While not as cheap as some offshoring options, nearshoring can still provide significant cost advantages compared to keeping operations domestically, particularly in terms of labor.

  4. Reduced Travel Times and Expenses: If onsite visits are necessary, nearshoring destinations are generally quicker and cheaper to reach than far-off locations.

  5. Quicker Response Times: Proximity can result in faster decision-making and responsiveness to changes or emergencies, as information doesn’t need to traverse half the globe to reach decision-makers.

  6. Regulatory and Compliance Ease: Neighboring countries sometimes have trade agreements or similar regulatory frameworks, which can simplify business operations and reduce bureaucratic red tape.

  7. Supply Chain Advantages: For manufacturing or physical goods, nearshoring can mean reduced shipping times and costs.

  8. Increased Control and Oversight: Being closer can make it easier to visit and audit the nearshore location, ensuring standards are met.

  9. Risk Diversification: Nearshoring can serve as a risk diversification strategy, especially if domestic operations are at risk due to political, economic, or environmental factors.

  10. Enhanced Security: Closer oversight can lead to better intellectual property protection and data security if the nearshoring is for tech or software development.

When is the Right Time to Consider Nearshoring?

  1. When Quality Issues Arise: If offshoring has led to quality concerns, nearshoring might be a solution to ensure closer oversight.

  2. Changing Costs: If the cost-benefit analysis of your current offshore operations is changing (due to rising costs, for instance), it might be time to look into nearshoring.

  3. Communication Challenges: If time zone differences or cultural misalignments are causing productivity issues, nearshoring can help resolve those problems.

  4. Expansion Plans: If a business is planning to expand its operations or tap into new markets, nearshoring can be a strategic move.

  5. Supply Chain Disruptions: If your business faces frequent disruptions due to long shipping times or geopolitical issues, nearshoring can offer a more stable alternative.

  6. Evolving Business Strategy: If there’s a strategic shift in the business, such as wanting to be closer to certain markets or resources, nearshoring should be considered.

  7. Local Market Insights: If understanding the nuances of a regional market becomes critical, having a local presence through nearshoring can provide invaluable insights.

Advantages of Nearshore Software Development

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  • Easier on the Budget. Nearshore software development saves you a considerable amount of money compared to creating a new arm of your in-house development team. You can save on everything from salaries to taxes to health benefits and more.
  • Highly Flexible. If you want to build out your product and company in phases, nearshoring can help. More than anything, it gives you optionality. You can scale the team up or down –adding or subtracting teams – as the business needs evolve over time.
  • Minor Time Zone Differences = Better Communication. The nearshore team operates on nearly the same time zone, which gives you the ability to do more all at once (without having to find more office space). Indeed, if your team can't communicate in a timely manner, you’ll spend hours waiting when you all should be working.Since nearshore developers are located close by, reaching them, getting deliverables on time, and having significant overlap in working hours is the norm.
  • Close Geographic Proximity. Most of the time, nearshore software development teams are located close to the customer, if you’re in the US, we’re talking Mexico or Latin America. When you’re working, they are, too (for the most part). And when you call, they are there to pick up.
  • Less Cultural Differences. Nearshore teams are located abroad (but not far from your country), so this type of software development model eliminates some of the cultural differences that can happen when you’re hiring from a more remote destination.
  • Greater Access to Talent. Hiring a remote development team to take on your project is a great way to enhance your in-house development team if they're swamped, lacking the niche specialty skills, or if you need to scale without overloading your in-house team.The globe is full of amazing talent—nearshoring allows you to take advantage of it!

Need More Specialized Talent But Don’t Have Room to Grow Your In-House Team? Nearshoring Could Be The Answer.

Disadvantages of Nearshore Software Development

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Lack of Standardized Quality

There is a wide range of competencies when it comes to nearshore software development firms. Just because they do “everything” doesn’t mean they do it well. 

This means you need to do your due diligence—find a reputable firm who can in turn help you find the high-quality talent you need.

Periodic Monitoring

There are inherent issues when you have a team that works outside of your in-house location. You don’t have eyes on your team, so you have to make sure they’re keeping their eyes on the prize. Video meetings, scheduled check-ins, and using technology in other ways to your benefit will keep your teams in touch and on point.  

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Offshoring vs. Onshoring vs. Nearshoring

Need a chart to summarize for your boss (or your noisy uncle at family gatherings)?  Here is a cheat sheet on the major differences:

ParameterOffshoringOnshoringNearshoring
LocationOverseasWithin your countryGeographically close
Time Zone4+ time zones away0 time zones away1-4 time zones away
CostsCost-effectiveExpensiveCost-effective
Communication SpeedManageable FastEasy
Cultural DifferencesBroad variances (depending on the country)Same cultureCultural similarity

In this article, you can find even more details on the differences.

What Country to Choose For Nearshoring

Your nearshoring partner selection depends on your location. Here are a couple of the most popular destinations that are considered the best for nearshoring.

Latin America

Latin American countries have become the primary location to find app developers for US-based companies because of their proximity to the United States.

This region has a huge population of developers and a strong secondary education system to pump out even more.  Indeed, Latin America graduates 350,000 developers each year across more than 50 elite technical universities.

For good reason, experts predict that millions of new software development jobs will be targeting Latin American talent by 2025.

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Eastern Europe

Eastern Europe is the nearshoring destination of choice for Western European countries. 

Eastern Europe has some of the best software developers in the world. Not only do they have specialty skills and expertise, they (for the most part) have an intermediate English level or higher.

Moreover, Eastern and Western Europe have many shared cultural and economic ties and similar cultures, making collaboration transparent.

Another advantage is that if you’re in Western Europe, you can reach most Eastern European tech hubs in less than two hours. 

Whether You’re In Western Europe Or The West Coast Of California, Nearshore Software Development Is An Option For You. Find Your Nearshore Bliss.

How to Create the Ideal Nearshore Development Experience: Yourshoring!

The best way to create an amazing experience is to find a nearshore development partner that knows what they’re doing—and knows what you want to accomplish. 

The best partner, in our not-so-humble opinion, is us! TurnKey created the unique methodology of Yourshoring to deliver exactly this type of amazing experience.  It’s offshoring and nearshoring, but in the best way—YOURS. 

To create a team that achieves your goals, in your way, and under your guidance, we help you assess the gaps that need to be filled. Then we custom recruit the best specialists we can find in the region you’re looking to hire in. We also implement all the project management processes that will help your new development team shine. 

If you’re aiming to secure skilled software developers in LATAM without breaking the bank, TurnKey stands out as the top pick. Here’s the reason.

Consider a global software enterprise that adeptly handled the hurdles of differing time zones. But, by choosing the nearshore model, they guaranteed uninterrupted communication, punctual achievement of milestones, and a harmonious work-life dynamic for their developers.

Their strategy? They collaborated with TurnKey to form a nearshore software development squad in LATAM.

Merely a month after formalizing their agreement with TurnKey, they introduced the inaugural team for their innovation hub. The integration process was swift and hiccup-free. Spurred by these initial triumphs, they’re now expanding their vision for the innovation hub, effectively sidestepping time zone discrepancies.

We started with 8 hired deelopers and there have been no problems with any of the hires. We are currently monitoring them as we do all engineers but there is nothing to report that would make us consider this arrangement with TurnKey anything but successful. The transparent pricing up front as well as the gunuine desire to continue improving with each hire we make is a big difference maker for us.
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FAQs

What is nearshore software development?

Nearshore software development is a form of offshoring–it’s just closer to wherever your home team lives and works.   So Ukraine would be nearshore for a German company, and Mexico would be considered nearshore for a company based in the U.S.

Why do companies nearshore their software development?

Advantages of this software development approach include lower cost, easier communication thanks to closer time zones, and quicker time to market. 

What is the difference between offshore and nearshore software development?

Location, location, location. “Offshoring” is hiring further away from home. “Nearshoring” is hiring closer to home (but not in your same country, which is then called “onshoring”).

What is the nearshore software development model?

Nearshoring allows companies to hire remote software development talent and teams close to home. It eliminates big time zone variances which means the in-house team and the nearshore team have more overlap in working hours and more opportunity for collaboration.

 

When you live in a country that is in closer proximity to countries that are jam-packed with technical talent, nearshoring becomes a super attractive hiring option. Those benefits along with the lower price tag attached make it a no-brainer for any high growth software company.

January 6, 2024

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.

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