Software development outsourcing is an arrangement in which a third party contractor is hired by a company to conduct software-related work that could have been done in-house. Nearshore software development, an example of an outsourcing model, helps businesses focus more on their core competencies without the need to spend too much time or money.
There are three types of software development outsourcing models: nearshore, offshore, and onshore. The rise of software development outsourcing as a way to gain a competitive edge has led to much debate over which of the models would work best for the long-term goals of companies in the US.
In this blog, we will take a closer look at nearshore development and how it stands out as the top option for businesses.
What is Nearshore Software Development Outsourcing?
Nearshore outsourcing refers to the process of delegating tasks, particularly those related to software development, to neighboring countries in an effort to have more control over operational expenses. Some of the well-known benefits of nearshoring include similar language, cultural proximity, and convenient time zones and location.
For example, Ukraine serves as a nearshore country for the Middle East (UAE and Israel) and Western/Northern Europe (Germany, Netherlands, Sweden, United Kingdom, Finland, Denmark, and Norway).
Nearshore software development services emerged to fill the need of companies who want to reduce the offsets from different distances and time-zones. These organizations discovered that working with a nearshore company allowed them to save on costs and obtain resources for specific tasks that could not be handled by in-house staff.
Nearshore VS Offshore: How is Nearshoring Different from Offshore Software Development Outsourcing?
Offshore software development is defined as outsourcing IT services to distant countries in order to have more streamlined hiring and budgeting process. When looking for a suitable vendor, companies generally prefer countries with a huge talent pool and lower hourly salaries or rates.
Time zones also plays a crucial role in the selection process. In-house and remote teams are required to have at least a few hours of overlap to conduct calls and online meetings.
One of the primary functions of offshore development is to cut costs while still hiring first-class developers and engineers. If you take the right steps and are careful with your selection, an offshore team can offer you a high-quality product and still cut your expenditures at the end of the project.
The only factors that determine offshore development are the quality and costs of engineers. Most of the time, offshore companies are located in another part of the world. For example, a company in the Ukraine can be an offshore company to one in the US. One in Germany would be an offshore company to one in Mexico.
On the other hand, nearshore software development is the opposite as it pays more attention to a much closer location. There are some instances when the time difference between the two involved companies is larger than usual but as long as the vendor is near enough to the employer, it’s classified as nearshoring.
Related Content: Offshore VS Nearshore Software Development - A Comparison
The Advantages of Partnering with a Nearshore Software Development Company
Nearshoring is good for your business due to a number of reasons. Here are a few of them:
1. Access to the latest technology and a huge talent pool
One of the main reasons why companies are opting for nearshore software development is exposure to a huge global talent pool. This is a major advantage from nearshoring because expertise in each technology and skill is generally hard to find in-house.
When you outsource, you obtain access to a skilled workforce in other parts of the world—thereby expanding your horizon and technical capability. It also gives you peace of mind knowing each step in the development process is handled by an expert team without the need for additional guidance or training.
2. Lower operational costs
When you outsource software development, there is a considerable difference in wages in developed and developing countries. You save a hefty amount of money in the form of employee salary and benefits when you outsource.
So, software outsourcing to developing nations results in greater economies of scale and makes it cheaper for a firm to outsource software development and operations than to carry it in-house.
3. Improved security
There is a chance that your software’s security is not in safe hands, assuming your in-house team does not really specialize in IT. When there are security flaws, your company and its reputation are always at risk.
Nearshore software development offers more comprehensive coverage against security breaches on the IT front. There is a software team that will make sure the code and processes included in the development are safe and secure at all times.
4. Access to a scalable team
In any business, there will be times when demand is at its highest. This usually results in redistribution of available in-house resources to processes and operations they do not specialize in. It may also require you to hire new employees to ease the load. Unfortunately, both solutions lead to decreased efficiency and increased costs.
Nearshoring, however, allows you to hire a scalable team for a fixed time period without the need to hire full-time employees permanently. Once the workload is balanced, you can save big bucks and encourage productivity.
5. Less time to market
Companies around the world have recognized the importance of speed in operations and how it can be used as leverage against the competition. With nearshore outsourcing, there’s no need to depend only on available in-house resources to launch a product.
You also have greater control because you can dictate timelines according to your preferred schedule, as dedicated developers are ready to provide IT services based on that specific timeframe.
6. Effective risk management
In the process of investing, experts suggest diversifying your investment portfolio instead of putting all of your eggs in one basket to reduce risk. The same concept can be applied to nearshore outsourcing. It is very volatile—you need an effective risk management plan to ensure long-term viability.
By dividing operations and components and delegating them amongst different vendors, you can dramatically mitigate risks. Just be sure to conduct some research, contact your vendor’s existing clients, rate their experience in the industry, and then decide if they are the company for you.
7. Greater focus on core business
In today’s cut-throat tech industry, companies need to find ways to innovate and expand to stay relevant. Nearshore software development outsourcing not only improves concentration on core processes but also keeps your in-house staff from being overwhelmed with tasks that don’t match their skill level. This enables them to prioritize strategic goals in alignment with the company.
As a result, your business processes are streamlined and resources are allocated to more important areas.
8. Less time on support
A software requires regular support and maintenance. A dedicated team is necessary to deal with ongoing modifications and bugs after product deployment. With nearshore software development, you are already paying your software team for support and maintenance.
If you happen to be really lucky, you may find a vendor with a significant time-zone difference from you. This can be an advantage as it helps your business enjoy the perks of round-the-clock business operations that not every company has.
Related Content: Proven Advantages Of A Nearshore Software Development Company
How to Find the Best Nearshore Software Developers for Your Company
Now that we’ve determined the benefits of switching to nearshore software development, it’s time to discuss how you can find a reliable service provider for your company. Below are some factors to consider when selecting a nearshore company for your software needs.
- Commitment to Security
More companies are turning to third-party vendors to safeguard their products from cyberattacks. As a result, you need to know how a service provider plans to build security into your software project.
A good nearshore partner should be able to show you their commitment to cybersecurity by offering a proper overview of their strategy. They must also demonstrate their way of handling sensitive data, backups, and storage. An effective security plan starts in the planning stage and should go on through the testing phase.
- Good Track Record
Before fully committing to hiring an outsourced partner, it’s imperative to carry out due diligence and research their reputation in the industry. One great place to look at is the vendor’s official website. Are there testimonials from verified former clients that attest to the work quality they provide?
It’s also wise to check their portfolio and the projects they have completed in the past, as well as the outcomes of those projects. Reliable nearshore software development companies can proudly discuss their previous projects with confidence. This serves as proof that they were able to deliver a solution that reached the client’s standards.
- Open and Clear Communication
A trustworthy nearshore company puts communication at the top of their priority. Through the use of project management tools (i.e. Trello, Basecamp, Hira, etc.), a company shows its commitment to ensuring clear communication with clients. Communication platforms allow remote and in-house teams to collaborate better. These channels also enable teams to directly reach out to clients.
With open communication channels in place, you'll have an overview of how the project is progressing at each stage. You can see who is responsible for certain tasks and when they are scheduled to be completed.
- Tech Expertise that Complements Your Skill Gaps
Outsourcing software development to a neighboring country increases the number of highly-skilled professionals you can select from. After evaluating your in-house team’s skills, you need to outsource for the expertise that it does not have.
- Structure of Governance
It’s usually a sign of best practice when a nearshoring partner operates in accordance with ISO, ITIL, or other principles. However, if you want to check if they are a suitable match for your company, check if their governance structure mirrors yours.
Examine how they approach stakeholder management, independent testing, issue logging, and risk registers. Find out the company’s perspective on transparency and reporting, as well as the amount of control you can have over the development process. The more aligned your company is with the service provider, the more efficient the process of development will be.
Just like any other project, software development usually comes with its own set of challenges. However, with better architecture, tackling these obstacles will be much easier. When non-functional requirements like scalability, data migration, performance, and security are accounted for at the outset, you will end up with a more efficient and cost-effective development process.
Is your nearshore software development partner capable of adapting to change when necessary? Do they excel at adopting various working practices? Are they experienced when it comes to applying certain approaches to software development? Those are a few of the questions you need to ask before settling on a service provider for your software development project.
Related Content: Best Practices To Hiring Quality Nearshore Software Developers
How Bydrec Can Help
Nearshoring benefits such as reduced traveling and operating expenses are quite obvious, but is this alone sufficient reason to switch to this outsourcing model?
With Bydrec, your company can take on more work and delegate entirely different projects to workers in countries with significantly lower wages. You also have the option of delegating the most tedious tasks while giving the most important projects to in-house professionals.
And as you substantially reduce costs, you still have higher responsiveness and control, as well as the freedom to choose a nearshore company with a team that clearly understands your market.
Our team at Bydrec is committed to streamlining your business processes as you avoid time-zone differences. This translates into greater motivation and improved work quality since the outsourced workers don’t need to adjust their schedules to the employer’s business hours.
Finding the right nearshore software development partner is a critical decision for any kind of business, and Bydrec is a name you can trust if you are looking to maximize productivity and reduce costs while maintaining high industry standards. Get in touch with our team for more information on how we can help you efficiently reach your business goals through outsourcing.