Guide to Nearshore Software Development

Gimena Aguerreberry
March 30, 2021

It's official — it is becoming less necessary for firms to keep all employees under the same roof.

This trend is especially evident in software development services. The combination of high demand and a consistent shortage of great IT talent has made outsourcing a no-brainer for software engineering departments.

By hiring an outsourcing company for custom software development, companies will save time, costs and stay productive.

The three models of outsourcing include:

  • Onshore Software Development

  • Nearshore Software Development

  • Offshore Software Development

However, everything isn't sunshine and rainbows with outsourcing. Issues such as language barriers, poor team management, and time zone differences can derail a project or affect productivity.

In this guide, we discuss nearshore software development and how an outsourcing company can be of help. We'll explore the pros and cons of nearshore software development teams, so you can decide if this outsourcing model works for you and your team.

What is Nearshore Software Development?

Nearshore software development is an outsourcing model where companies outsource software development projects or technical activities to teams in nearby countries with similar time zones.

For example, suppose your company operates in the United States. A nearshore software development company would let you outsource your projects to software development teams situated in neighboring countries such as:

  • Colombia

  • Uruguay

  • Canada

The 'nearshoring' model allows companies to access the right technical skill, save time, and cut costs. It also lets them stay focused on other projects. In most cases, the work culture, time zones, and languages overlap. These elements make it easy for the client team to collaborate with the nearshore outsourcing company.

These factors significantly improve the project's success, as seamless communication and collaboration are crucial to the success of any outsourcing model.

The Difference Between Offshore and Nearshore Software Development Models

Simply put — the difference depends on geographical proximity. Offshore software engineering involves working with providers in countries far from your operating base. Nearshoring is where your business works with providers in nearby countries.

Technically, the concept 'nearshoring' is relative to offshoring.

Are there any similarities? Yes, there are. For instance:

  • The provider's office is in another country.

  • Meetings and most forms of communication are virtual/digital.

  • Your team indirectly manages the provider's team.

Nearshore Software Development: Pros and Cons

Software development teams apply their knowledge of programming languages and engineering within software development. You may outsource web development or mobile apps development among other projects.

They keep in mind ease of use for end-users throughout the development process. Nearshore outsourcing has quickly become the go-to option for developers across the globe because of its high-performing results. However, like every other model, it has its pros and cons.

Consider the following advantages and disadvantages before hiring an outsourcing company:

Advantages of Nearshore Software Development

Here are some of the instant benefits your team can gain from nearshoring:

1. It's Cost-Effective

One significant benefit of an outsourcing company is cost reduction.

You can achieve substantial savings on wages, office space, recruitment costs, employee benefits, and the cost of hardware and software. The cost effect is generally more affordable in countries known as outsourcing hubs.

2. Better Collaboration

Another significant benefit of outsourcing software development teams is geographical proximity.

While digital technology means you can solve most issues over a video call, you sometimes want to be physically present with your remote team. For providers in far-flung locations, the flight time can be discouraging for even the most frequent fliers.

3. Comparable Regulations

Regulations are another thorny area for software developments.

Plus, violating any of these regulations, such as the GDPR (General Data Protection Regulation), can come with heavy fines. When setting out a contract with contractors, you need to ensure they understand the various regulations that define software work within your region of operation.

This issue is never a problem with nearshoring. Most outsourcing companies, freelancers, or software development teams you work with know and understand the various regulatory compliance factors.

4. Little or No Time Zone Differences

Anyone who has used an offshore software development partner understands the perils of time zone differences, especially when you have an urgent issue requiring immediate attention.

Imagine trying to get on a call with project managers that are about nine hours ahead and already sleeping while you battle with a buggy server.

With nearshore software development teams, this isn't the case. Most times, there is little or no time difference — which guarantees seamless communication and collaboration.

For example, Montevideo is just one hour ahead of New York City. Your in-house team and the outsourced partner can co-host meetings, run brainstorming sessions together, and jump on code libraries to debug any issues.

5. Similar Work Ethics

On-boarding can be a time-sink when outsourcing, especially if you are working on a project where you need to hit the ground running.

It can take longer to bring the offshore team up to speed with market context, managerial styles, working attitudes, regulations, and development requirements. Nearshore software development teams are likely to be knowledgeable about how your market runs.

This familiarity lets you get moving quickly. Your team and the outsourcing company can also synchronize much faster.

Disadvantages of Nearshore Software Development

The benefits of nearshore outsource software development are there. However, it does have its cons. To choose the right nearshore software development company, you need to be aware of both.

Here are the cons:

1. Nearshoring Can Be Expensive

When compared to offshore software development services, the hourly rates are higher. While you can still find nearshore companies that can match the rates you'll get from most offshore providers, this is rare.

2. Fewer IT Companies

Nearby countries aren't always outsourcing destinations. It makes it challenging to hire an experienced nearshoring service provider.

Yes, every country has a bustling IT industry, but that's quite different from having an outsourcing industry.

At sophilabs, we recruit top talent from all over Latin America. Our Latin America headquarters is located in Uruguay, the #1 software exporter per capita in LATAM, with more than 700 IT companies.

3. Confidentiality

When working with a contractor that operates from a neighboring country, confidentiality can be an issue. Not every outsourcing company can successfully keep a 'Chinese Wall,' so information gleaned from your processes can leak to another company working with the same provider.

At Sophilabs, we understand that these concerns are of the utmost importance, with that in mind we opened our Brooklyn office. This office is in the middle of the tech haven DUMBO area, easy to get to from Manhattan or any other area of NYC.

How to Choose the Right Nearshore Software Development Company

Finding reputable software development teams can be challenging. An outsourced team is a partner, and these relationships require a high level of trust and commitment from everyone involved.

Along with considering the pros and cons of nearshore software development, consider these aspects when navigating the outsourced partner selection process:


Expertise is everything when hiring software development teams.

Check if the outsourcing company has worked on similar projects. Were these projects completed? If no, find out why.

Do they know how to handle requirements gathering while keeping your strategic objectives top of mind?

Do they have detailed post-mortems of past projects? This experience gives you an idea of how detailed they are and if they learn from their failures and mistakes.

Team Size and Flexibility

Ask yourself the following questions before choosing a nearshore software development company:

  • What's the size of the software development teams?

  • Can they comfortably handle a client your size without collapsing under pressure or have multiple things falling through the cracks?

  • How many irons do they have on the fire? Will they devote enough time to your project?

  • Do they have the capacity and flexibility to work with that many clients?

  • Do they have the management skillset that allows them to be flexible enough in case you decide to pivot?

It would be best to have a nearshoring team that can scale as your company grows and works with you for the long term. You don't want to be continuously changing providers as your company scales.

Corporate vs. Freelancers

It's okay to use freelancers. However, if you plan to outsource your software development process, it would be wise to work with a formally registered company.

Plus marks if they are registered or have corporate offices in your home country. It's easier to hold a legally established company liable for damages or legal claims due to contract infringements.

Cultural Fit

Does the outsourcing company understand your team and your business goals? Do they have a firm grasp of the processes you use? Do they have an established workflow that you can synchronize with that of your company?

These questions are vital as it speeds up the onboarding process, and you can get to the business of the day. That way, everyone is clear about the expectations.

What Makes Sophilabs a Dependable Nearshoring Company?

Considering outsource software development? Three things to consider with Sophilabs: cultural fit, technical expertise, and continuous development.

Sophilabs' staff augmentation services help you:

  • Meet tight deadlines with ease

  • Focus on your product while we focus on the development process

  • Access a highly skilled talent pool

  • Shelve developments costs without giving up quality

Plus, we operate from Latin America and the United States, which makes for seamless collaboration. Try a free test software development project with us, so you can experience how we work first-hand. Contact us today!

"Guide to Nearshore Software Development" by Gimena Aguerreberry is licensed under CC BY SA. Source code examples are licensed under MIT.

Photo by Sigmund.

Categorized under software development.

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