Nearshore Software Development

Nearshore Software Development – what you should know about it?

June 8th, 2021

As internal resources are always limited, businesses face the “make or buy” problem when launching new projects. Due to their digital nature, software projects open prospects for remote work and usage of human resources all over the globe. Moreover, software development is an area where the local talent pool tends to get quickly depleted due to the rising demand nowadays. Hence the popularity of “offshoring” – hiring suppliers offering lower costs in remote regions. In this article, we focus on “nearshoring” – offshoring to locations a short flight away.

Remote business arrangements come with all the disadvantages resulting from the lack of face-to-face contact. Purely remote communication – which has its strong sides and can become exact and efficient as written documentation replaces oral messages –lacks important parts of intention or emotion. It is not as efficient when it comes to transferring the tacit knowledge typical to insiders.

Nearshore development is a compromise merging the benefits of collocated and remote development. As business parties are only a short flight away, it is easy for the client to visit the supplier frequently. It is possible to collocate suppliers with in-house employees temporarily. Teams work together day to day in similar time zones and address emerging issues more synchronously. And though the costs of nearshore vendors can be higher than in further locations, financial savings still stay in the picture while the quality of collaboration increases.

Should I consider nearshore software development?

It would help if you considered nearshore software development when:

You have all the internal resources required for offshoring – your in-house team knows how to integrate and manage a remote team
Your project comes with a lot of uncertainty, and a lot of close offline collaboration with a supplier is required frequently to forge solutions
You want the supplier team to be available as much as possible during your regular business hours
You want to build up a lasting relationship between your team and the supplier team
Cost savings are an important but not the most important factor for your decision

Nearshore location

Your desired nearshore location depends on where you are. It would help if you considered your local airline connections and typical supplier rates in the targeted areas. It might be difficult to find a location where you could make a day trip for your meetings but finding places easily reachable for a regular 2–3-day session should not be that hard if your base is in a well-connected place.

It would help if you also thought about the general comfort, public infrastructure, and – especially – the overall security in the place where you want to go or send your people frequently. If you have insiders from your potential destination in your organization, their involvement can reduce the initial strain on the communication with the supplier and help build up trust.

Advantages of nearshore software development vs. global offshoring

A lot of face-to-face contacts
Informal contacts between all team members, in-house and remote
Easy ad-hoc collocation of team members
Similar time zones

Disadvantages of nearshore software development vs. global offshoring

Higher rates compared to some global offshoring options
Additional spending on travel and collocation
Reduced focus on formalized documentation

COVID-19 and nearshore development

The recent COVID pandemics have restricted business travel as well as impacted the office presence of in-house employees. Remote collaboration has replaced a large portion of live contacts. It is not certain that the resulting situation generally negatively impacted software project delivery quality and efficiency. The effects might have even been adverse. If the latter is true in the long run, which is yet to come, some of the benefits of nearshore development may prove overrated.