What is nearshore software development and why is it important?

August 10th 2023

What is nearshore software development?

Nearshore development is where your software development is outsourced to development teams in neighbouring countries or in the same region. Currently, nearshoring is playing a major part in the global rise of software development outsourcing. Forbes has found that the worldwide market will be worth more than $425 billion by 2026. At the same time, Forrester’s research has indicated that 39% of technology leaders are intending to increase their use of nearshore services, and take full advantage of the cost, skill and geographical benefits available.

This blog highlights how you can take advantage of nearshore software development for your next projects. You’ll learn how nearshore development works in practice, the biggest benefits it can bring to your business, and how to avoid the potential pitfalls along the way.

How does the nearshore development model work in practice?

When you partner with a nearshore development company, they’ll detail their approach to work and operational practices at the outset. Normally, this means that they’ll follow one of two principal outsourcing models. The benefits and availability of these two models will depend on the outsourcing company you choose to partner with.

Integrated teams 

Under this model, the nearshore software development company will be providing staff members to work as part of your in-house team, albeit remotely. Hiring an integrated team is most beneficial for filling-in gaps and supporting your in-house development team. You will take responsibility for directing their work and ensuring they collaborate smoothly with your existing developers. Integrated team support is chargeable either as a fixed monthly cost, or on a time-and-materials basis.

Dedicated teams 

This is the more ‘turn-key’ option, where you hire nearshore development teams in their entirety. The benefit of this model is that the team will assume all key requirements of the project or workloads in question. They will generally work as a self-contained unit, separately from your in-house team. 

A dedicated team can be deployed as required, for a fixed project or period of time, resulting in a faster time to market. The biggest advantage of this model is that your internal key resources will not be disrupted for the successful project completion. 

16_9 - Integrated vs Dedicated

What is the difference between nearshore and offshore development 

The main difference between nearshore software development and offshore outsourcing is geographical proximity. 

The basic principles of the two remain the same. You’re working with development partners in another country to support you with your projects. However, nearshore software development companies will be based in a neighbouring country, or a nearby country within the same region. They’ll be operating in similar time zones to you and may well share cultural similarities, making the collaboration process easier.

Offshore software development, on the other hand, means working with development teams in a completely different part of the world. For instance, you can be based in the EU and outsource your software development with IT partners in Ukraine. 
This could be highly beneficial for the business in terms of cost savings and accessing top tech talents. The boundary between nearshoring and offshoring is often placed at four time zones, but depending on the countries and cultures around you, this can vary.

Benefits of nearshore development 

When you adopt nearshore software development, the changes it can make to your next software development project can be transformative:

1. Cost-effective development 

Nearshore development can be used to make substantial savings in software development, depending on the nearby countries available to you. For example, if you’re based in continental Europe or the British Isles, you have the ability to choose a nearshore partner in a country in Eastern Europe. Development teams in countries like Ukraine, Romania, and others have been known to offer competitive rates while consistently delivering high-quality work.

2. Similar time zones 

The importance of working with development partners on similar time zones can’t be overstated. Principally, it widens the time range during which both you and they are working, making it easier to collaborate over video calls and messaging tools. If something needs to be changed or a problem needs resolving, then contact can be made in real time, rather than having to wait for an offshore outsourcing partner to pick it up several hours later.

3. Geographical proximity 

Connected to the previous point, working with nearshore software development companies in neighbouring countries also has its advantages. It makes it faster, easier and cheaper to visit them for in-person meetings, or for them to come to you if needed. It also makes it more likely that their culture and approach to work will be similar to yours, making for easier integration between their development teams and your in-house team.

4. Access to a larger talent pool 

Using nearshore software development services breaks down the geographical barriers of the skills and expertise available to you. Instead, you can cast your net much more widely to find the development teams with the knowledge you’re looking for. That could be experience with projects in your industry, or proficiency in certain coding languages that you want to use.

5. Increased in-house productivity 

Software development outsourcing is an excellent way of lightening the load on your in-house team. Without the pressure of new projects combined with core business tasks, they can avoid burnout and maximise their productivity and creativity instead. You can also choose a nearshore partner to take care of your back-end development, so that your in-house team can focus on more value-adding work.

6. Similarity in regulations 

All types of software development are subject to a range of regulations, including cyber security and data protection. These regulations can vary from one country and region to another, but nearshore development partners are more likely to be working from the same regulations as yours. For example, all European businesses are required to comply with the General Data Protection Regulation, which would give you some common standards with your nearshore development teams.

Pros & Cons

Disadvantages of nearshore software services

There are some potential pitfalls of nearshore development, but the good news is none of them are insurmountable. With careful planning, you can mitigate the risks of disruption caused by the following:

1. Difficulty with legal matters 

Your nearshore development partners will be operating in a different jurisdiction to you. If everything runs smoothly, then this won’t be a problem, but it can cause complications if issues arise. Any legal disputes will be complex to deal with across multiple territories at the same time.

2. Project timelines 

If communication isn’t smooth, then project management and sticking to timelines can become difficult. Without regular reporting and progress meetings, nearshore development teams may drift away from the main business objectives of the project.

3. Ongoing monitoring

Similar to the issue with timelines, nearshoring can pose some practical problems in collaborating with development teams. If you don’t pick a partner that is  well-located geographically, it can take too much time and money to travel to their premises.

In summary

All over the world, businesses like yours are having great success with their nearshore development partners, making their software development easier, faster and more cost-effective. While there are some potential pitfalls to steer clear of, the benefits clearly outweigh them, especially if you work with the right development teams for your needs.

Wherever you are in the world, Ciklum can be your perfect nearshore development partner. That’s because we have a global workforce of more than 4000 development experts, helping you get local, cost effective support for your next software development project. Find out more by getting in touch with us today.


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