Businesses prefer to outsource their development needs because outsourcing is a better option than building an in-house team of experts. However, hiring developers from a distant country with a different time zone sounds inconvenient. This can be due to a multitude of reasons, like delays in communication, difficulty in collaboration, cultural and language barriers, and differences in work ethics. 

Nearshore development has become the go-to alternative to traditional in-house or offshore solutions. It is ideal for companies that don’t have in-house teams but want to create high-quality products at affordable prices. 

You get skilled developers, faster project completion, and lower costs by working with teams in nearby countries. For instance, if you are working in America, then you can hire a nearshore development team from Latin America.

Businesses want efficient and cost-effective products, and what’s a better option than hiring a nearshore development team? According to a Bloomberg report, around 80% of businesses in North America are actively considering outsourcing the development requirements of nearshore developers. Do you wish to know this outsourcing model? Then, this blog post will cover all aspects of nearshore development, and you can make a decision accordingly.

What is Nearshore Software Development?

Nearshore software development means outsourcing your software projects to companies in nearby countries. It combines the benefits of offshore outsourcing (lower costs) with the advantages of onshore outsourcing (working with teams in similar time zones). 

There are around 2 million software developers in the LATAM (Latin America) region, and the impact of the pandemic and war in Ukraine on the US labour market and supply chain disruption has led to the emergence of Latin America as a pool of talent software developers who shape the technology that is used in our daily lives. 

Nearshore development sits in the sweet spot between in-house development and offshore development. With a nearshore development model, businesses can get expert teams at cost-affordable rates and work in a timezone with little difference. 

Usually, companies distribute teams in countries with the same or similar time zones, ideally between 1 and 3 hours. This approach allows businesses to leverage skilled IT teams while maintaining geographical and cultural proximity.

Difference Between Nearshore, Offshore, and Onshore Development

To understand why and which outsourcing model is ideal for your business, here we have compared the top of them. Let’s take a look at the comparison between offshore, onshore, and nearshore software developers:

Working of the Nearshore Software Development

The process associated with nearshore development is similar to that of offshore outsourcing. To begin the process, identify potential nearshore software development companies when you need to access resources outside your geographical proximity.

However, there are three standard outsourcing models from which you have to choose for your requirements. The choice mainly depends upon your business requirements, and the type of nearshore development service you require can be understood once you understand the three models.

Here are three models through which you can benefit from nearshore developers:

• Staff Augmentation

Staff augmentation means integrating developers into your team. It fits perfectly well when you are trying to fill the gaps, whether skill or personnel, in your existing IT staff. The nearshore outsourced developers will work alongside your team to streamline the development process and meet the delivery timeline.

However, to make this model work, you will have to provide the outsourced developers the direction and you will own the outcome of the project. The contracts will be structured in either time and materials or fixed monthly costs per member.

• Dedicated Agile Teams

This model focuses on hiring a dedicated nearshore development team which follows a structured and iterative process with defined roles, like Scrum Master and Product Owner, methodologies, like daily stand-ups and sprint reviews, and artifacts, like user stories and backlogs.

With you have a dedicated agile team, you do not have to spare any of your resources and your projects will execute without any disruption. The contracts are either structured in fixed monthly prices or outcome-based models because the nearshore development team will work in an autonomous nature with outcomes focused on meeting your expectations.

Nonetheless, this model provides a consistent experience with a shorter time to value and the ability to scale up or down as per business needs. 

• Outcome-Based Projects

As the name says, outcome-based projects focus on achieving specific business objectives. There is a strong emphasis on delivering the desired value. Hence, the structure can be more flexible. The methodology can be less rigid, and there can be potential changes in strategy, tools, and processes to achieve the desired outcome at cost-effective prices. 

Nearshore Software Development: Pros and Cons

If you want to boost your company’s software delivery process, nearshore software development can be a boon for you. However, it is best to assess the pros and cons to see if it actually contributes any value:  

Pros of Nearshore Development

Here are some advantages that businesses can enjoy while adopting nearshore development: 

• Effective Team Scaling

In the quick-shifting tech industry, a company should have its team of developers. However, if a company wants to build multiple software or applications over time, then nearshore software development should be a must-opt solution. It enables companies to manage and scale up their software teams effectively during the initial stage of the project.

For single, short-term projects, maintaining a full-time in-house team can be unnecessary and expensive. That’s why nearshore development teams can help businesses reduce costs by hiring external teams only when required for specific projects.

However, this approach will not work in the long term because you will have to maintain a team for months or, rather, years. 

• Reduced Communication Gaps

The most prominent advantage of nearshore development is that it connects a company to the development teams. A communication gap is a major issue when employees from different cultures work together on the same project. 

That’s where nearshore outsourcing plays a vital role by offering video conferencing, instant messaging, and project management software, allowing seamless communication among teams and businesses as well. This ongoing communication and collaboration improves decision-making capacity and makes necessary changes as per the project requirements.

• Small Time Zone Difference

One of the unique features of nearshore software development is the negligible time zone difference between the client and the developer. For instance, if you consider offshore development, the timing is the major issue. If the client is from the US and hiring a software developer from India, there’s a huge time difference between them. 

However, in nearshore development services, there’s very little time difference. For instance, if the client is from the US and the nearshore software developers are from Mexico, there’s only a 2-hour time gap, which enables real-time communication and cooperation to resolve problems and keep the project moving.

• Reduction in Hiring Costs

One of the common benefits of nearshore software development services is that there is a significant reduction in labor costs. They are usually less expensive than onshore software development while slightly more expensive than offshore development services due to their higher geographical proximity and potential economic parallels.

For instance, nearshore development can save several million dollars on a single project. That means it can be an ideal choice for small businesses or startups with limited budgets who want to save money without compromising business needs or quality of work.

• Faster Talent Hiring

A nearshore development service enables you to expand your reach and hire the best talents for your nearshore development team, which can work efficiently on your projects. As they are experts in their work and have experience spanning many years on several projects, there is very little chance of time being wasted.

For instance, countries like Argentina and Brazil have world-class software developers for technologies like machine learning and blockchain. Another advantage of this talent hiring is that it brings skilled workers with excellent communication skills together.

• Flexibility and Scalability

Nearshore developers offer the flexibility to scale teams up or down as per the project requirements without the hassle of long-term commitment and the cost of hiring more domestic teams. This helps organizations respond promptly to project changes, preserving their competitive advantage. 

That means companies can use nearshore development services to save money and access various benefits, such as the ability to hire high-quality talent pools and manage the team as per your requirement. 

Cons of Nearshore Development

Here are some disadvantages associated with hiring nearshore developers: 

• Cultural Differences

While some of the nearshore development developers share a common language, we still can’t deny that there are significant cultural variances, like language barriers. If you miscommunicate or the team misunderstands your objectives or requirements, it can become a hurdle for both while sharing business strategies.

• Less Reliant Infrastructure

Another significant challenge is the less-reliant infrastructure. This implies that if you are working with a nearshore development team in a country where they may face higher power outages or lower internet speeds, it may affect your teamwork and project deadline.

Wrapping Up

Leveraging nearshore software developers has both benefits and drawbacks. The benefits include effective communication, low cost, and hiring high-quality talents. However, the downside is that developers may face language barriers and less-developed infrastructure issues, which can affect communication and collaboration during the project.

Hence, it is suggested to choose a reliable nearshore development company that has the desired expertise, talent pool, infrastructure and technology, necessary data and security protocols in place, and reputation in the market. Some other things to consider are their communication strategy and channels, professional culture and work ethic, experience and portfolio. All these factors will help you sort out the options and choose a desired company.

While you are looking to boost operational efficiency, hiring either offshore or nearshore developers is a hectic and time-consuming task. However, Hyqoo can make this process streamlined as our AI-powered platform analyzes your needs and we aim to fill the vacant positions within 3-4 days. Fill in the form and you can connect with Hyqoo experts to get your nearshore developers easily.