What is Nearshore Software Outsourcing?

Developing a business is a challenge, and sometimes things get stuck at the moment of building your own software services, portals, and websites, as it takes an overwhelming amount of time, money, and resources. When all of your internal developers are busy with higher-priority projects, outsourcing is a great idea. And yes, it is cheaper, easier, and faster than you might think, particularly when you choose nearshore outsourcing. Let’s dive deeper into what nearshore outsourcing is, and why it is worth trying.

Let’s get all the terms straightened out. It is clear that onshore means usual outsourcing in the same country, and offshore means hiring abroad. So what’s the difference between offshore and nearshore?

Offshore software development is a broader term meaning that the product development is ordered abroad.

Nearshore software outsourcing refers to the development model when businesses choose service providers from the closest countries with cheaper services but the same timezone and straightforward communication.

Knowing the difference between nearshore vs. offshore is great, though some deeper comparison of the pros and cons of every option can help you to make a more informed decision. Let’s add onshore outsourcing to them and take a closer look.

	Pros	Cons
Nearshore outsourcing	— More cost-efficient than the nearshore one — Similar regulations and laws — Geographical proximity — Similar cultures — Great protection from market disruptions	— Still more expensive compared to offshore outsourcing — Risks of privacy loss — Competition Risks
Offshore outsourcing	— The most cost-efficient option — Great protection from market disruptions	— Different regulations — Different language — Far away, additional costs can be big
Onshore outsourcing	— The same time zones. — The same regulations — Easy and cheap travels — No cultural issues	— Usually very expensive — Limited choice of experts — Limited choice of staff on the same market

The main goal of outsourcing is saving costs and hiring a team from far away may reduce your software cost by twice or more. While it seems that the cheaper services are better, we truly believe that there are many more things to consider when deciding between nearshore outsourcing and hiring a team located far away. Let’s look at the reasons to outsource the nearshore team.

While we all live in different countries with our own cultural peculiarities, languages, and laws, it is pretty standard that the nearby countries have similar regulations and cultures, leading to more accessible communication as people know what you mean and what you want. Moreover, for most countries, you likely have similar languages (like Spanish companies outsourcing from Portugal or vice versa), which reduces misunderstanding.

Besides easier communication, being close leads to greater customer support, better use of best practices (tried and tested by both countries), and no potential cultural conflicts between your internal team and an outsourced vendor.

When developing whatever you need, the greatest result always comes after many discussions, smooth feedback flow, and constant experience exchange. All this is hard to do if your developers work when you sleep due to time zone differences. Discussions also may be inefficient when you speak too different languages or have different cultural views. The development process becomes long and ineffective due to broken discussions; sometimes, fixing a few simple bugs or explaining a small idea takes months.

Similar (or close) time zones allow for real-time interaction and smoother project execution, which leads to getting your task done faster.

Often, hiring senior-level professionals in your country looks cost-prohibitive, though you definitely need some. There is always an option to outsource a team of juniors and teach them what to do, though, there are some risks in such a decision.

This is a standard rule: when hiring a junior, be ready to spend much more time than you planned. This means not only active mentorship and constant training but also the experience of your developers and their trend awareness. While senior teams can create some great ideas on code optimization, juniors will likely use the longest paths to reach the goal.

If you have unlimited time and want to save your budget, outsource junior teams. But there is a better option: as the general level of costs is often lower in the nearby countries, you can put the same budget into working with a higher-level team and get your project delivered in the best quality and much faster for the same price.

Choosing between the service provider located far away and the one from the neighboring country, many choose the one with lower prices, even if they are really far away. But don’t get into the «total cost» trap.

When you are saving millions of dollars on outsourcing far away (large enterprises sometimes do), it works. But when your project is not that expensive, it’s time to account for other factors besides direct pricing.

You can save a few dozens of thousands of dollars when choosing development teams located far away. At the same time, you will spend more on communication, work travels, deliveries and logistics, localization, legal documentation, and more. Let’s take a detailed look at these points:

1. Communication. Let’s imagine that you have made an order from a country with a language you don’t know. While almost everyone speaks English today, there still can be miscommunication sometimes. In this case, you will probably need an interpreter, some translation services, or any other language help. Remember that specialized translation and interpretation may cost a fortune, and if your teams don’t understand each other, it will become your routine need. Moreover, unclear communication can lead to mistakes, and you’ll have to recreate your solution in the end.
2. Localization. Adding to communication, non-native speakers may build a great solution. However, they will never be able to localize it as well as native speakers can. While it seems to be easy, like «simply changing a language», do not get into this trap. Words have different lengths in different languages, and you can get a solution that is totally unable to use another language in its UI. Another option is to ask your vendor to localize the solution and offer the correct UI version. The trap here is that you can get completely wrong translations.
3. Work travels. As we discussed already, personal communication is always the best. Remember that you will probably have to travel to your vendor or pay for their travels to discuss important things. Always account for the cost of travel to the vendor you are choosing.
4. Deliveries and logistics. While it seems that the development cooperation doesn’t require any deliveries, that’s wrong. You will inevitably send any samples, documents, references, or hardware to explain what to do. Check out how much it costs to send to nearshore and offshore countries.
5. Legal documentation. Legal documentation. Whatever vendor you choose, you will sign a lot of documentation. And while with the nearshore companies, you will have similar legislation, most possibly, you will need some lawyer help with the vendors from far away. And remember to translate these documents and legalize them!

Sometimes, businesses realize that they have to spend hundreds of thousands to cover everything needed besides the direct development cost. The great tip here is to account for the maximum total cost before comparing the development pricing only.

It’s great when you trust your outsource team to do whatever they think will work! However, regular personal visits and direct communication usually provide a more robust understanding of the task and reduce misinterpretation. Having your outsourcing partner nearby allows you to address everything you have to and ensure better control, not only at a reasonable price but also faster.

This is not about money (though traveling to the neighboring country is cheaper than flying over half of the world). Geographical proximity allows you to decide on the working travel quickly, and it takes only a few hours (instead of days) to come and discuss everything personally.

For businesses of all sizes, stability is a core need. However, stability is always at risk of being broken by faster competitors, economic changes, and even natural disasters. Whatever happens, the one who puts their eggs in different baskets always wins.

By keeping a part of your development abroad, you can keep your business safe from disruptions. In essence, international diversification in development is not merely an operational choice; it’s a strategic imperative for safeguarding your business’s future.

All in all, besides the primary goal of software development outsourcing (saving money), it’s also done to free up your in-house team’s time to do something more meaningful. It’s a great chance to hire a nearshore outsource team to do the routine or time-consuming work and pay more attention to your primary goals. There is no labor shortage and no strict deadlines: outsource, and you’ll have time to do everything your team has delayed for a long time.

The idea of nearshore outsourcing is to select a development partner abroad, in a neighboring country. But it doesn’t always mean having common borders with it! To get all the benefits, you have to choose the vendor wisely. Here are some insights on choosing the region:

1. About the distance. The key idea of nearshore outsourcing is not the short distance itself but the corresponding time zone and easiness of reach. So, never look at the map: what you need is to ensure that the flights are regular and easy and that the time zone is convenient. For example, Orbitsoft is located in Wyoming, which means that all businesses located in GMT -7 can consider the software development company to be a «nearshore» vendor.

2. Geographical area. In case no cultural differences or time zones stop you from hiring your direct neighbors, it’s always a great idea to choose the countries from your own or neighboring economic region as usually all these countries are regulated by the same or similar laws, which makes it easier to start. For example, if you are headquartered in the UAE, it is better to choose one of the EMEA countries. Argentinian businesses better look at the LATAM, and so on. The only exception is the USA: businesses located here, like Orbitsoft, are universal as strong regulations used in the USA fit most countries.

The key idea is that there are no «regions» in nearshore outsourcing actually. All you have to do is to ensure you and the chosen vendor fit each other.

Another question to consider is about how to choose a software development team in our outsourcing model. After we have chosen the «region,» it’s time to think about which one of the nearshore software development companies to outsource. Here we go with some helpful steps:

Step 1. Compare your needs and the vendor’s capabilities.

Assess your needs and learn about the technical expertise and experience of the vendor team. Of course, the selection of the vendor starts with their capabilities. The first thing to do is to realize what your business really needs. Choosing the team to develop your new solution ensures that they have worked on similar projects before, have experienced members who know how to reach your goal, and provide expert support after the solution is done.

Step 2. Try to learn how the vendor works.

Request info on the project management and processes. Though most businesses prefer working by international standards, the way of working your vendor used to will inevitably affect the whole collaboration. Always choose convenience for both teams; working in the same format helps both in communication and getting a result.

Step 3. Check out the vendor customers' satisfaction level.

Most of the outsourcing teams can offer reviews, recommendations, and use cases. Read them carefully to find out if the previous real clients were happy with the nearshore software development services. In case there are no reviews available online, you can always request the names of your previous customers from your vendor. It’s OK to call them and ask for recommendations: most of them will be able to provide you with their opinion on the vendor as they have time to try and test the result.

Step 4. Request the total cost of the nearshore company services.

Always think about the total cost of services: most software companies will not tell you accurate numbers at the beginning of work, though you have to ask them if the cost they offer includes all the bug fixes, analytics, and so on. Most of the vendors include all the needed services in one, but sometimes, the total cost can be an unpleasant surprise.

Step 5. Prepare and sign an agreement satisfying the needs of both sides.

Ensure that the documents you are going to sign include a service-level agreement (SLA). This agreement will save you from potential litigations and will act as a guarantee to get what you planned and discussed. Read all the documents carefully to be able to protect yourself if needed.

Just like any outsourcing, nearshore outsourcing looks risky sometimes. However, all considerations and challenges can be quickly resolved by choosing the right vendor. Let’s look at some of the potential challenges:

1. Limited talent pool.

Choosing a vendor located nearby restricts you from selecting the team with a really needed level due to geographical scope. Though, as we discussed already, nearshore is not always a border-to-border. Look at other countries close to yours: most possibly, you will find the level of nearshore developers you need.

2. Compliance and intellectual property.

This part is related to the differences in regulations. The way to resolve this consideration is to engage with the legal expert who works with both legislations before you outsource a new team. And it is much easier to find one when the countries are located close!

3. Cost considerations.

Just like we have mentioned, nearshore outsourcing teams can seem to be more expensive. However, always count the total cost of services including what you are going to spend besides direct expenses. Hold a cost-benefit analysis, and you will likely see that the value is higher than the costs.

All in all, these challenges can quickly be resolved to outsource the right team. And now, it’s time to move to the ways you can enhance your nearshore outsourcing strategy.

While it seems challenging, starting your nearshore outsourcing campaign is easier than it might look like. Take these simple ideas on how to make it even easier:

1. Establish clear communication channels with your vendors.

Outsource people you are comfortable with. Select communication tools that support instant messaging, video conferencing, and project management functionalities. Such channels will help you to discuss everything in real-time and set clear expectations of response times and availability. Most of the companies globally use Atlassian tools like Slack or Microsoft ecosystem. However, there are always simpler options like G Suite and Zoom — free options for the basic needs of businesses.

2. Define clear milestones.

Plan what you want to get together with the vendor. Use project management tools to make the process as clear as possible. Nice options are other Atlassian tools like Trello, Jira and Confluence. If you are a beginner, try Smartsheet or ClickUp.

3. Set up regular meetings and retrospectives.

Besides clear communication, you must see clear results. Select your sprints or deadlines and assign meetings to see where the team is. This will help to deliver on time. If you want to do it efficiently, try using smart methodologies like SCRUM. It seriously helps having regular meetings and checking upщт the status of the project.

4. Prioritize security and intellectual property protection.

Implement strict security protocols and use NDAs to protect what you develop. Regularly review how the protection of security works.

5. Leverage local expertise and insights.

The nearshore team can have great practices on their side as they have a lot of similar projects in their portfolio and track all the trends. For example, look at the Orbitsoft portfolio: here at Orbitsoft, we have wide experience in mobile and web development, offer customized advertising solutions, and more. We have worked in AI and Big Data spheres, we know how to use Machine Learning and have already done what you need. Discuss your ideas with us, we are ready to collaborate on problem-solving and innovation.

Outsourcing is easier than you might think. The most important part of starting your outsourcing journey is to realize what you really need and what your business aims to. Based on this, you can make an informed decision when choosing between onshore, offshore and nearshore outsourcing.

When you know your business goals well, you can easily outsource from anyone who can do it. And in case you are unsure about where to start your work, ask your vendor.

If you are considering businesses from the USA, look at Orbitsoft: the team of experts in a wide range of industries and tasks. And you will indeed find the common ground on what you are going to get.