A Complete Guide to Nearshore Software Development: Strengths and Weaknesses

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23 Mar 2020
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8 min
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Oleksandr Sh.
Technical writer

It's official: in-house teams are becoming less vital for businesses. Modern companies are open to hiring outsourced development teams. In fact, they often delegate some projects to freelancers, not only other companies. Outsourcing helps them save costs, time, and stay productive.

On the other hand, outsourcing may bring some troubles — language barrier, timezone issues, and poor management. In this post, you’ll learn the pros and cons of nearshore software development and ways to deal with possible issues.

What Is Nearshore Software Development?

Nearshore outsourcing means that you delegate software development or certain tasks to companies located in geographical proximity to your country. When you hire a nearshore company, the difference between you and the contractor should be from 1 to 3 hours. This way, you have minimal time difference and no communication barriers with a contractor.

Besides, personal visits are no longer an issue. For example, a flight from Berlin to Kyiv takes two hours. So, if you’re hiring a team from Eastern Europe it’ll take you a day or two to take a plane to Ukraine, discuss a project with the development team, and return back home.

What is Nearshore Software Development

Nerashore software outsourcing examples for diffrent regions

Why Consider Nearshore Software Services

Despite obvious advantages, nearshore outsourcing may not suit every company. Underneath, I’ve spelled out the indicators telling that your company should consider nearshore outsourcing.

Budget Limitations

If you’re on a budget, nearshore software outsourcing is a great option for cutting some expenses as there may be no affordable providers in your region.

On the contrary, if you’re not limited in budget for hiring software engineers, you may want to consider expanding an in-house team with more talents. In any other case, nearshore software development companies will be the right choice.

Plans for the Future

Sometimes it’s better to have your own team of developers. If you’re planning to build several applications, teamwork gained during the first project can play a vital role throughout the development process. However, a single project doesn’t require you to keep a full team under the roof of your office. A nearshore development team can build an application and maintain it as long as you need. So, there’s no need to spend costs on office rent and salaries.

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Here’s the post that will help you decide what’s better for you: in-house or outsourced development team

Location

Among all of the outsourcing approaches, nearshore development depends on your position the most. While choosing an outsourcing company, you should take into account the number of qualified specialists in the country.

For example, if you’re an entrepreneur from Norway and looking into outsourcing, you’d be better off hiring a Ukrainian nearshore team rather than some Indian or Philippine offshore company. The reason is that Ukraine is only an hour ahead of Norway, while India is 5 hours, and the Philippines 7 hours.

Lack of Developers

When working on a huge and fast growing project, chances are you’ll need more developers. Nearshore outsourcing is a good option in this case. You can delegate a part of the project to an outsource company for taking the load off your main team. Outsourcing was key to the success of some well-known companies. I’ll cover some examples later on.

Reasons for Choosing Nearshore Software Outsourcing

Points to consider before choosing nearshore software development

Advantages of Nearshore Software Outsourcing

As you can see, nearshore software outsourcing has great potential and can be a way out for a number of companies. So it’s high time to outline the advantages of nearshore software outsourcing.

Cost-Effectiveness

That’s not a secret that businesses apply outsourcing methods to cut expenses. What’s more you don’t have to hire developers, pay wages, rent an office, and provide employees with hardware and software. Due to the fact that common outsourcing countries are developing ones, the pricing can be significantly lower than in developed countries.

Closer Collaboration

Another advantage of cooperation with a nearshore software company is a short distance between both of you. With the development of technologies, the world’s becoming smaller and you can solve most of the problems via phone. But sometimes your physical presence may be required, so there’s no other choice but to book a flight to your partner. However, Western European entrepreneurs can take a flight to Eastern European associates in 2-3 hours.

In addition, nearshore companies are a great option for those who want to hold meetings or arrange online conferences often.

Similar Regulations

While building an application, you will face some regulations you have to comply with. For example, if you are focused on the European market, you’ll have to follow the GDPR (General Data Protection Regulation). There’s another set of rules for residents of California called CCPA (California Consumer Privacy Act).

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Remember: make inquiries if the company knows how to comply with the required policies!

Before drawing up a contract you have to make sure that company knows how to follow the rules defined by your region. Violating CCPA and GPR can lead to heavy fines, so take this point very seriously.

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Find out more about CCPA rules and how to avoid violations with this article

Minor Timezone Difference

Alongside geographical location comes a difference in the timezone. If you ever heard about offshore development, then you should know that the time gap may become a problem. Clients from the USA often can’t get in touch with Project Managers from India or the Philippines.

When the clock shows 9:00 AM for the US citizens, Indians are already leaving their working places because it’s 6:30 PM for them. Thus, communication issues may happen.

Things are completely different with nearshore software development services. Washington, DC, is only two hours ahead of Mexico city. Difference is even less for Сentral and Western European countries with the difference in time with Kyiv of only one hour. Thus, you can hold online conferences in a suitable time for both sides, and you won’t experience jet lag after long flights.

Comparison of Western European to Ukraine Timezones

Time difference between Ukraine and European countries

Experienced Talents in No Time

Actually, this advantage can be applied to any outsourcing type, but still. The point is you don’t have to spend weeks looking for qualified talents among all of CVs. These actions require you to have an HR department.

The nearshore software development means that the provider already has a team of nearshore software developers who have worked on multiple projects together. It kills two birds with one stone: communication between team members and working experience.

If you need more programmers for development of additional features, nearshore software companies will allocate more talents as you scale.

Benefits of Nearshore Software Outsourcing

Main advantages of nearshore software development

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Disadvantages of Nearshore Software Services

Despite all the positive sides of nearshore software development, there are some drawbacks as well. But, nothing can be flawless, right?

Offshore Outsourcing Is Cheaper Than Nearshore

Leaving all the negative points of offshore aside, it still provides the lowest rates. Depending on your location, you can still find affordable options that can match the price of an average, but this will rather be an exception than a rule. So, if there are no cheap providers in your region, you should think about hiring an offshore software development company.

Lack of Companies

If nearby countries aren’t IT-oriented, you won’t be able to hire experienced service providers.

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Don't know how to choose an outsourcing company? Explaining everything you should know in this post.

Sure, any country has its software development companies, but the quality that no-name companies deliver will be quite different from well-known outsourcing destinations like Ukraine or India. That’s why it’s better to choose an offshore company with a number of reviews than a questionable nearshore provider.

Periodic Monitoring

That’s a common flaw for outsourcing. Since you’ve hired a remote group of developers, you have to get in touch with a contractor from time to time. Luckily, it’s relatively easy to hold meetings with nearby countries. At Cleveroad, we always arrange our conferences on the time appropriate for our customers. However, if some issues require your physical presence, flights can still be exhausting and time-consuming.

Cons of Nearshore Software Outsourcing

Top 3 disadvantages of nearshore software development

Top Favorite Examples of Outsourced Software

Outsourcing is a universal practice. Even the world-leading companies hire outsourcing companies to save funds and properly distribute the load on in-house developers.

Skype

Back in the days when Skype was taking its shape, founders used a nearshore software development model for backend and website. Features we love the most, like video conferences, message, and file transferring were actually developed by the Estonian group of developers. This approach made Skype the primary tool for business and personal conferences over the world.

Slack

Another outstanding example of nearshore outsourcing is Slack. This software simplified corporate messaging for a number of companies, but it lacked an attractive design. So, it was decided to hire a Canadian design company for creating a logo, web, and mobile app design. Now Slack is considered to be the app that feels, looks, and sounds different. The combination of delightful design and useful features resulted in a global revenue of $401 million.

Opera

Opera originated as an internal project of the Norwegian telecommunication company — Telenor. Soon after the release in 1994, it became a standalone project with its own company and rights. The most interesting thing is that Telenor didn’t focus the efforts of the main office on this project. Opera was written in C++ by developers from 24 different locations all over the world. Telenor used outsourcing to cut the losses in case of failure. But it turned out quite the opposite, Opera became one of the top-rated web browsers in the world.

Wrapping up

It’s clear that nearshore software services reached far into the IT industry. The advantages of nearshore development are too significant to ignore. The only thing you have to do is to find a reliable provider that’ll fulfill your expectations.

Don’t know where to start?
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