What Is Nearshore Software Development: Benefits and Best Practices

Nearshore software development, which involves outsourcing tasks to neighboring countries, is highly valued by world-famous companies. Microsoft, IBM, Intel, and HP (Hewlett-Packard) employ nearshore programming as a profitable solution for their tech needs. And you can join these successful industry leaders in optimizing your business efficiency.

At Cleveroad, we’ve been helping businesses across the US and Europe build nearshore development teams with proven experience in full-cycle software engineering for over 13 years, offering top-tier talent from our delivery hubs in Estonia, Poland, Norway, the US, Ukraine and Latin America (LATAM). In this post, we’ll disclose the essence of nearshore development and its benefits, the top countries for nearshoring and their IT consulting hourly rates, as well as provide advice on selecting the best nearshore software team.

Key takeaways:

• Nearshore development gives access to skilled teams nearby, with small time zone differences enabling smoother collaboration.
• The right nearshore partner helps cut costs, support Agile delivery, and meet compliance needs.
• Cleveroad offers flexible nearshore software development cooperation models tailored to your goals, from IT staff augmentation to full-cycle delivery.
• Estonia, Poland, Mexico, and Colombia stand out in 2025 for talent quality, rates, and tech maturity.

Nearshore software development is a kind of outsourcing model when you delegate software creation or certain IT tasks to companies located in geographical proximity to your country (Source: CIO Insight). For instance, for business leaders from North America, this means partnering with development teams based in Europe or Latin America: both offering convenient time zones, strong technical expertise for their project accomplishment, and cultural alignment.

According to European Journal of Information Systems research, nearshore outsourcing for software development is a practice of globalization, pushing back the boundaries and allowing organizations to operate internationally. This model enables business executives to make use of global tech expertise while maintaining minimal time gaps and excluding communication barriers with a tech contractor. That's why, when you hire an IT service company, the difference between you and the contractor should be from 1 to 3 hours.

The good point of this practice is that personal visits are no longer an issue. Let’s say, you live in Berlin and hire developers from Tallinn (Estonia), a sought location for IT outsourcing. This way, a flight from Berlin to Tallinn takes two hours. So, if you’re hiring a nearshore software development team from Europe, it’ll take you a day or two to take a plane to Estonia, discuss project tasks with the team, and return home.

This growing preference for geographical and operational proximity in nearshore collaboration is also emphasized by Gunjan Gupta:

Nearshore development enables you to scale your engineering capabilities by accessing tech resources in the adjacent countries. The model serves as a bridge joining your team with skilled experts while preserving time zone compatibility and cultural similarities.

Now, let’s briefly overview what steps you typically go through to initiate nearshore collaboration:

1. Needs analysis for business. Indicate your development goals, product requirements, budget, and timetables for nearshore working
2. Tech partner selection. Choose a vendor based on geographical borders, competency level, reputation, and cultural fit
3. Cooperation setup. With the vendor, determine team roles, scope, communication flow, and delivery milestones
4. Modernization or development. Your solution is modernized or developed through the team employing Agile or other relevant techniques, updated regularly
5. Quality Assurance. QA specialists check usability, performance, and functioning to detect and fix defects early
6. Delivery and support. You get the finished product together with after-launch support to ensure that it remains stable and scalable for long periods

The above nearshore software development outsourcing is one of the IT outsourcing models. However, you won't have a broad picture of outsourcing if you miss information about its other alternatives:

• Onshore software development
• Offshore software development
• Hybrid software development

Let's check them out.

Onshore outsourcing is the practice of hiring a firm situated in your own nation to offer services or carry out specific activities on your behalf. A bright example of the onshore destination is whether your company is based in Atlanta and your service provider would be from Chicago.

The closer the hired team is to your business, the simpler it will be for you to monitor the project's development and all connected operations. But remember that a strategy like this is only appropriate if a budget issue is not a concern. Onshore development services generally come at a high cost.

Nearshore development, in contrast, means hiring a team from a nearby country, often with minimal time zone difference. This gives companies access to a wider talent pool and more cost-efficient rates, while still maintaining smooth communication, shared business culture, and real-time collaboration, making it a balanced alternative to onshore development when both quality and budget matter.

Offshore outsourcing entails hiring an experienced software building provider with a location outside of your own. For instance, you are located in the US when your IT vendor is from Estonia. Most companies consider offshore mobile app development as the most beneficial one according to the row of advantages (e.g., cost-cutting opportunities, access to the tech talents worldwide, etc.).

Nearshore development, unlike offshore, offers closer time zone alignment and cultural affinity while still lowering costs, making it easier to maintain daily communication and faster iteration cycles.

Cleveroad offers scalable offshore and nearshore cooperation models with Estonian and Norwegian delivery centers so that US and Western European businesses can lower development costs without losing quality. Our teams ensure seamless Agile teamwork through time zone overlap, mature development processes, and proven tech skills.

Hybrid outsourcing is a combination of a few models, e.g., keeping product ownership and core competencies (like CTO, PM, or UX lead) onshore, but engineering projects work offshore with a nearshore team. This model is more flexible because a company can blend more control, lower costs, and speed of delivery.

Compared to nearshore development, the hybrid model offers an extra layer of control over strategic roles while still benefiting from the cost-efficiency and time zone alignment of nearshore teams.

Cleveroad supports hybrid models of outsourcing cooperation through smoothly integrating our nearshore teams into the existing in-house infrastructure. It becomes possible for companies to extend their delivery capacity through perfectly aligned engineers, having effortless communication, precise reporting, and shared project responsibility.

Let’s sum up all the distinctive features of all the outsourcing models to help you make a decision.

Nearshore software outsourcing offers the perfect balance between cost-efficiency, real-time collaboration, and reliable talent sources. Let's discover the core benefits of this model highlighted by our clients.

Deloitte studies reveal that over 70% of executives offshore information technology functions for cost-reduction and the speedy availability of qualified skills. With nearshoring, companies can optimize Total Cost of Ownership (TCO) through infrastructure cost reductions, lower hiring overhead, and speedy delivery. Cleveroad helps businesses evaluate project expenses and offer ways to meet planned budget even prior to the contract level, giving insight into pricing, expenses, and ROI from the beginning.

When launching a software development project, you must comply with laws like GDPR (EU), CCPA (California), HIPAA (healthcare), or SOX (finance). A reliable nearshore development company understands how to meet these requirements. At Cleveroad, we build solutions compliant with ISO 27001, GDPR, and industry-specific regulations, helping you launch across multiple markets.

With tech expertise across the industries, we, at Cleveroad, have a framework for working with different industry and region-specific laws. So, we know how to ensure your software complies with different legislative demands.

Compared to offshore outsourcing, nearshore agile development minimizes timezone friction. U.S. clients benefit from 1–3-hour differences when working with Latin American- or Europe-based teams, which allows for real-time syncs, rapid feedback loops, and effortless progress monitoring.

Whether you are from New York or Chicago, working with nearshore developers from Mexico City or from Oslo means that you are able to manage meetings without delays or long-distance travel.

Collaboration with nearshore software developers improves team responsiveness and speed of delivery. Because nearshore teams work in adjacent time zones, you gain more overlapping hours during the workday. This makes it easy to run daily standups, review tasks, and iterate quickly, allowing your in-house team to focus on strategic work while the nearshore partner delivers with synchronized communication and workflow.

Nearshore development significantly expands your hiring pool beyond local limitations, giving access to a wider range of skilled professionals. Instead of competing in an overheated local market, you can tap into qualified talent across regions with strong tech expertise.

At Cleveroad, we help you close talent gaps fast: our specialists can join your project within 1–2 weeks and integrate smoothly into your workflows. Thanks to proven Agile experience and domain knowledge, they start delivering tangible results without delay.

There are two regions that remain the top destinations for nearshore outsourcing software development for the USA and European countries: Europe and Latin America. These regions offer the optimal mix of overlapping time zones, strong technical education, and cost-effective services, making them ideal for nearshore agile collaboration. We studied both markets through the lens of IT nearshoring and selected the most promising countries, so you can make an informed decision when choosing your tech partner.

If you run a business, for example, in the US, or any Western European region, countries in Europe (especially Central and Eastern part) are reliable choices for nearshoring software development. Here are the best contenders for nearshoring IT services in Europe.

Estonia

While it’s sometimes unnoted due to its small size, Estonia is a powerhouse for nearshore software development due to its highly skilled workforce. The country possesses the highest percentage of Information and Communication Technology (ICT) graduates compared to other EU countries.

Estonia is renowned for its advanced digital infrastructure and e-government services, making it an attractive destination for nearshore collaboration. The government submits many programs to favor the development of digital transformation and invests in individual IT university programs.

The country also offers an appealing price-quality ratio, clearly distinguishing it from the competitors. On average, custom software development services cost around $55 to $85 per hour. Cultural similarities with Western Europe as well as high English proficiency, minimize possible misunderstandings during collaboration, making it transparent and reliable.

Here’s what our client from the United Kingdom says about their software development nearshoring experience collaborating with Cleveroad. You check the review on our Clutch profile.

Poland

Poland has a vast pool of skilled IT professionals, including software developers, solution architects, and designers. The region’s central location in Europe, coupled with its cultural affinity and language proficiency, caused the increasing popularity of Poland for nearshore outsourcing due to its proximity to Central and Western Europe. In 2023, there were 400,000 specialists in Poland, ranking the country first in the CEE region as to the access to ICT experts.

Ukraine

Ukraine is widely known for its strong expert pool in different engineering and technical fields, including software development, cybersecurity, and aerospace engineering. In 2023, the country counted 200,000 software engineers, placing third in Central and Eastern Europe after Poland and Estonia. Despite recent events, the countries hold the position of popular nearshoring destinations due to a large pool of skilled developers and good regulatory environments.

Additionally, Ukraine is one hour ahead of the Western European countries, making it an ideal destination for nearshore software programming. The IT outsourcing hourly rates don’t exceed $50 - $80 per hour. To compare, Germany and UK-based IT firms charge $80-$100 for an hour of their technological services.

Bulgaria

Bulgaria has experienced growing in the IT sector and now fosters its position as a good destination for foreign investments. It is home to approximately 10,000 IT companies, 70% of which are export only, making this country a promising location for nearshore outsourcing software development.

Note: If you’re thinking of nearshoring IT outsourcing to Europe, contact us. We have a network of skilled software developers across Northern and Eastern Europe and help you form the perfect team for your company’s tech needs.

If your business is in the USA, nearshore companies based in Latin America may be a preferred option for your nearshoring tech needs.

Brazil

Brazil has a robust IT sector and is a good choice if you are looking for a highly tailored and specific skill set. For companies from North America, it may be an attractive option due to cultural compatibility and similar business practices. The country has offices for globally-recognized firms, like Google, Uber, Amazon, and Airbnb. The IT market is spurred by security, data management, and artificial intelligence (AI), and is expected to reach $9.98 billion in revenue in 2025.

Mexico

Mexico is now swiftly gaining popularity as a nearshore software outsourcing option. The hourly rates for developers in Mexico vary from $35-$60. The IT sector in Mexico is on the path to growth, activated by a shift towards service-oriented offerings. The value of the digital economy has already gained $60 billion as of early 2024 and tidbit belongs to IT outsourcing. The government’s stimulation of the development of IT hubs and the USMCA’s digital focus (Agreement between the United States of America, Mexico, and Canada), reinforce the region’s allure for IT export.

Colombia

Colombia is a reputable player in the international outsourcing market and the Latin American tech market. The Colombia ICT market was worth $20.54 billion in 2023 with a rising potential of $35.56 billion in 2028. The region has many successful tech startups, such as Rappi, Nubank, and MesaVerde and globally known tech companies, including Google, Oracle, and Microsoft, which have R&D centers and commercial operations in the country. Software engineers from Colombia are proficient in mobile and web engineering, IT consulting, and nearshore team augmentation services.

Note: If you’re looking for a reliable nearshore development IT partner in Latin America, write to us. We have software engineers in Latin America to start working on your software in the shortest time.

Here’s a comparison of top nearshore software development destinations in Europe and Latin America to help you choose the right region for your tech partnership.

If we look at the whole, outsourcing itself is the cost-effective solution in terms of expenses for software development compared to in-house development. However, the nearshore software development model is cheaper than onshore development. It has to do with lower labor costs in some regions and the standard of living. For example, software engineers in Germany charge $80-$120 per hour while IT consulting hourly rates in Estonian are around $55-$85 for the same tech services.

Indeed it's tricky to compare the cost of all types of outsourcing models due to the region's geographical location and economic conditions. So we presented an overview of software development hourly rates by tech specialists assuming that your business is in the USA.

Even large global corporations utilize nearshore engagements to speed up delivery, manage development risk, and benefit from specialty technical expertise. The engagements prove the right nearshore partnership unleashes long-term value far in excess of short-term cost savings.

We'll give examples of famous companies' collaboration with nearshore software programming vendors and how such collaboration resulted.

Skype is one of the earliest nearshore success stories. The company had outsourced the engineering of its leading product to a collection of software developers in Estonia, famous for their top-notch technical education and startup mindset. The Estonian developers were the ones building Skype’s original features like video calling, instant messaging, and file sharing, which later became the standard of online communications worldwide.

TransferWise (today Wise), the fintech startup that has millions of customers worldwide, established a nearshore agile development team in Estonia and Lithuania to achieve platform scalability. This tactic allowed it to keep strict control of the product quality, decrease expenses, and enhance velocity. The nearshore model assisted it in providing uptimes, handling payment infrastructure, and meeting the requirements of compliance.

Basecamp, a web development as well as project management company, employed nearshore teams in Poland and in Ukraine to provide engineering capacity. Doing so enabled the company to keep the strategic direction in-house yet deliver quickly through the right nearshore development setup. The cost-effective model allowed cost savings without compromising collaboration, illustrating the true benefit of nearshore software development as well as how to pick the right nearshore IT company.

These examples demonstrate that software nearshore is more than a cost reduction strategy; it can be a global software company's strategic lever. It does not matter if you're increasing capacity, accelerating time-to-market, or decreasing delivery risk; choosing a nearshore partner judiciously can help you scale more quickly and more wisely.

Before handing your software project to the nearshore software outsourcing team, you should strictly outline your requirements to collaboration. To simplify this task for you, here are 6 aspects to pay attention to before diving into work with a nearshore tech partner.

Evaluate the team's previous software delivery experience and general capabilities to ensure they perfectly match your unique project requirements. First of all, look for specific skills relevant to your project (e.g., programming languages, frameworks, AI engagement, etc.).

Thoroughly consider the team structure. Your IT vendor will help you choose the right mix of developers, QA engineers, project managers, and other specialists needed for your project.

You can also utilize staff augmentation, in case you don’t need the whole team of IT professionals. This model allows you to quickly onboard the specified specialists, making it easier for them to get acquainted with your business goals and brand identity.

Choosing the right delivery model is essential for project efficiency, scalability, and control. A reliable vendor should be able to recommend a cooperation model based on your team structure, business goals, and product specifics, not offer a one-size-fits-all approach.

At Cleveroad, we offer tailored collaboration formats to match your product requirements and budget:

• IT staff augmentation services. You expand your development capabilities with external experts who work under your management and focus exclusively on your product. This model gives you maximum control and flexibility, while you only pay for the hours actually spent on tasks.
• Dedicated development team. We provide a self-managed nearshore team that integrates closely with your processes, taking over delivery responsibilities while aligning with your internal workflows. Ideal for long-term engagements and scaling delivery capacity.
• Project-based collaboration. Cleveroad handles the entire development lifecycle: from discovery to release, as a fully managed service. This model works best when you need a turnkey solution with minimal involvement on your side and clearly defined deliverables.

With this flexibility, you only invest in what delivers tangible value to your business, whether it’s speed, predictability, or deeper integration.

Even though you can still meet with the software experts comparatively quickly, nearshore software product development is mainly remote cooperation. So, it’s vital to establish mutually convenient communication channels with your team. Besides, it’s convenient to set up virtual meetings via Skype, Zoom, or Google Meets to exchange project-related information instantly without the need for physical interactions or a strong attachment to a time zone.

At Cleveroad, we align overlapping working hours and tailor meeting schedules to fit all stakeholders. Our teams stay in close contact through dedicated Slack channels, ensuring fast feedback loops, transparency, and continuous progress tracking throughout the entire development cycle.

Ensure that the nearshore development team's work ethic and values align with your company culture, which can influence project management styles and overall collaboration. Look for touchpoints of connection and operational alignment to ensure successful remote collaboration.

Remember to check the chosen team's willingness to adapt to your company's internal processes and working style to foster a smoother collaboration experience and minimize occasional misunderstandings.

There are multiple ways to check if your potential nearshoring development is trustworthy. Check if the company has certifications, industry-specific awards and general market recognition. Verify the company’s clients' reviews and testimonials on platforms like Clutch or Goodfirms. Additionally, look through the vendor’s portfolio to see how their team helped businesses solve their specific challenges and whether their experience aligns with your needs.

To find the most profitable service offer, thoroughly evaluate the company’s overall value proposition. While cost is the prior factor for most organizations looking for nearshore software developers, it’s essential to balance the project budget and the value that your partner gives you. Consider the level of responsibility, involvement in the process, and the quality of delivery, including reports, workshops and demos: all these activities form the value proposition.

Eventually, the quality of the product is impacted by the firm’s commitment and industry knowledge, not just the price of the tech services. Lastly, check if the provider has a clear and transparent pricing structure with no hidden fees.

Cleveroad is an experienced nearshore software development company headquartered in Central Europe, Estonia. We have R&D centers in Estonia, Poland, in the US, and Norway. Our team encompasses 280+ in-house software engineers backed by 1,200+ tech experts in our talent pool across Latin America and Europe. We have earned industry recognition, appearing on the ratings of leading B2B tech service providers: Top 1000 Service Providers with us being at the 7th place, Clutch Global and Fall Champions, Clutch Premier Verified status, Clutch 1000, Clutch Global Leaders.

Since 2011, we’ve been assisting startups and all-scale businesses in delivering top software solutions in diverse domains, including Healthcare, Logistics, FinTech, E-commerce, Education, etc., using battle-tested technologies. Along with IT services, we offer dedicated development team services, including on-demand staff augmentation, to swiftly provide you with needed tech proficiency.

By choosing us, you are ensured with a row of benefits:

• Trusted technology partner in software engineering services and IT consulting, certified with ISO 9001 and ISO 27001 standards for quality management systems and security management
• Free Solution Workshop stage to connect your business needs with technical implementation
• Pool of software engineers operating innovative technology stack for your projects: web: (React, Angular, AWS, Azure, .Net, JS, TypeScript, etc.) and mobile (Flutter, Swift, Kotlin, GraphQL, ARKit and ARCore) as well as AI tech stack (Amazon Bedrock, Google Vertex, Azure OpenAI)
• Project Management Office to oversee your project to deliver desired outcomes on time, in line with your business requirements, and staying within your budget
• Cooperation with a team with knowledge of diverse domain laws and regulations like HIPAA, GDPR, HITECH, HL7, CCHIT, etc.
• All guarantees for your business information security and NDA signing per your request

Our team has delivered a lot of nearshore outsourcing projects, and you can get acquainted with the most recent and vibrant examples below:

• Telemedicine management system. The UK-based vendor of healthcare consultations applied for our nearshore software development services to deliver a solution for providing and receiving medical services online.
• E-banking software for an investment bank. The investment bank located in Switzerland leveraged our nearshore software development services to build an eBanking software system from scratch.
• Health habit tracking platform. The Swedish healthcare startup company partnered with Cleveroad's nearshore software development team to build a health habit tracking application with engaging gamification elements.
• Location-based marketplace for pubs (El Tab). The UK-based company trusted our nearshore software development experience and ordered us to build a subscription-based app for drinks in London bars and pubs.

This is what Oliver Carew, founder of El Tab, says about the collaboration with Cleveroad:

Having successful cases in nearshore software development, our team possesses the knowledge and experience to create or modernize your software while adhering to the regulatory requirements of your region. Whether you need to scale delivery capacity, accelerate time-to-market, or cover domain-specific expertise, we can tailor our approach to your business priorities.

With overlapping time zones, strong communication workflows, and domain-aligned teams, we ensure smooth cooperation at every project stage. Let's start our cooperation and aim to succeed together: from discovery to deployment and ongoing support.