Benefits Of Developing Software Nearshore vs. Offshore

Gimena Aguerreberry
July 13, 2021

Software outsourcing is an option increasingly used by companies that want to cover the lack of technical skills of their businesses. Outsourcing is, for any company, a strategic decision that implies the incorporation of an external supplier into its value chain.

Outsourcing software development has presented itself as a viable option for managing more than just back-office tasks, and more and more businesses are subscribing to this seemingly efficient and effective solution to optimal productivity.

The delegation of competencies allows organizations to improve their performance by focusing their efforts on the activities of their core business. In the specific case of software and application development, it means leaving the conceptualization, design, implementation, and maintenance of specific technological solutions in the hands of others.

The global outsourcing market earned $76.9 billion in revenue and is expected to grow at a rate of 6.7% from 2015-2025. IT companies, in particular, have demonstrated their interest in outsourcing web and mobile application developers from abroad, along with other tasks.

Why should a company outsource

Companies all over the world have their own reasons for why they prefer outsourcing to hire in-house app development teams. Here’s a list of the top reasons more and more companies opt for outsourcing:

  • Limited pool of in-country developers

  • Need for specific skill sets

  • Lack of scalability and flexibility

  • Need to increase productivity

With the growing popularity of software outsourcing, Latin America has become a top destination for outsourcing app development services for the US and Europe.

Nearshore Outsourcing

Outsourcing the operations of the company to an adjacent or nearby country having similar culture and language skills. Nearshore outsourcing offers some cost savings over onshore and has the added benefit of proximity for more frequent site visits while retaining a highly-skilled labor pool.

Nearshoring has lots of benefits to offer—minimal time differences and much shorter travel time in case you need to hold some face-to-face meetings. Usually, companies are situated within the same time zone or have a 1-3 hour difference. This means better communication and prompt changes if needed.

Offshore Outsourcing

Outsourcing the operations of the company to other companies that are located in a foreign country, and most likely have a different language and culture. Offshore outsourcing offers benefits like higher cost savings and access to highly skilled labor.

Offshore outsourcing gives access to a larger talent pool and lower rates when compared to the United States or Canada.

Major Reasons Why US Companies Choose Nearshore Outsourcing

A Nearshore company will give you access to highly experienced developers who possess the same in-demand skills and workflow efficiencies as onshore outsourcing, at a better value.

1. Cost-Efficiency

For a process like outsourcing web and mobile application development, reducing costs is often the priority. In fact, a Deloitte survey revealed that 59% of businesses that outsource did so for cost-cutting purposes. In the IT sector, this number jumped to 87%.

Utilizing a nearshore outsourcing option for mobile and web development is cost-effective. Meaning this method provides advantages from both the initial cost standpoint and in its risk-averseness.

Additionally, nearshore outsourcing avoids the quality concerns associated with offshore software development. Nearshoring outsourcing in Latin America is especially attractive for US companies seeking cheap outsourcing options.

2. Skilled Labor

Nearshore outsourcing can provide the skilled, foreign web development team a company requires. And it is at the same level of onshore labor but at a fraction of the cost. Latin American nearshore outsourcing, in particular, has the resources and development necessary to cull a team of experienced developers.

Latin American is an appealing option for hiring skilled software developers that are becoming increasingly capable due to domestic conditions.

For the 28% of businesses that rely on outsourcing for core business functions, offshore software development is probably not the right choice. Ensuring a high standard of education and experience is difficult when working with a company so far away.

3. Location

The role geography plays in outsourcing is often overlooked for the cost benefits. However, how near or far a region is manifested in differentials like time zone, culture, and language. These factors play a major part in determining the overall effectiveness (and pleasantness) of software development outsourcing.

Nearshore outsourcing addresses all three implications of geography in the outsourcing procedure. To begin with, most of Latin America is in the same or very similar time zone as the United States. Being in the same time zone allows communications to occur on the same schedule. As a consequence, it encourages greater cooperation throughout the development process.

Conclusion - Benefits Of Developing Software Nearshore vs. Offshore

Nearshore Development offers access to highly experienced developers who possess the same in-demand skills and workflow efficiencies as onshore resources – at a better value. The geographic proximity significantly reduces or eliminates time zone and travel issues. Time zone alignment also enables real-time, collaborative Agile development.

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"Benefits Of Developing Software Nearshore vs. Offshore" by Gimena Aguerreberry is licensed under CC BY SA. Source code examples are licensed under MIT.

Photo by Austin Distel

Categorized under software development.