What is nearshore software development and why is it crucial?

Custom software development is something that businesses increasingly take on, as they seek to find ways for more efficient and cost-effective processes. However, unless it’s a large global organisation, most companies cannot handle such projects in-house, due to a lack of resources or skilled specialists to do it. This is where a nearshore software development is rapidly gaining prominence, offering a comprehensive solution to such businesses. 

Nearshore software development explained

Nearshore software development is essentially outsourcing the project to another, skilled IT team, who works on the company’s behalf for as long as it takes to build the right solutions. The catch, however, is the “nearshoring” part - it means that the companies are usually located in nearby countries, within adjacent or the same time zones. 

For instance, North American businesses may look to partner up with firms in Latin America, whereas Central European companies might consider Eastern Europe. The geographic proximity, yet being a different country, is the key differentiator of nearshoring from the other methods of outsourcing, such as onshore and offshore: the former is located domestically, while the latter involves outsourcing to countries all over the globe. 

Why is nearshoring important?

Perhaps the most significant advantage of nearshoring is the effectiveness of communication and collaboration between the company’s in-house team and the outsourced team. Since time zones are the same or similar, the working hours overlap, meaning that teams can interact in real-time. If there are any questions or the software encounters errors, it’s crucial that the company is able to reach its IT team as soon as possible. Overnight delays are particularly common with offshore arrangements, which could mean that your business may spend a whole day unable to use the software properly. Even worse, it could lead to unhappy customers and financial losses. 

But, it’s not only about the time zone - cultural affinity also plays a vital role. Similar work ethics, business etiquette, and sometimes even shared language proficiency are all important considerations when it comes to outsourcing. This can make team integration a much smoother process, while also reducing the potential for cultural clashes. The management of nearshore teams is, therefore, easier and more productive. 

What’s more, nearshore software development ensures that you have an experienced set of professionals with all the right skills to manage your project effectively. The leading providers have extensive pools of talent, covering a wide range of specialities in the IT sector, as well as following agile methodologies. Whether it’s experts in cutting-edge technologies, like AI and ML, or less common programming languages, you will be sure to find someone that will fit that role perfectly. 

As such, nearshoring strikes a balance between skill set and cost-effectiveness, since outsourcing also offers substantial savings compared to onshore development. Onshoring is typically the most expensive option, while nearshoring provides favourable labour rates. Beyond that, with the right team of professionals, the time-to-market is faster, which also contributes to a lower total cost of the project. 

Leading nearshore software development companies

The growing demand for nearshore services has fuelled the rise of specialised providers, who partner up with businesses. They will look at your technical requirements, industry focus, project scale, and desired engagement model, which will help find the right match for your unique needs, whether it’s one professional or a whole team. Here are a few notable companies currently leading the nearshore space:

• Applica Corp: With headquarters in the US and numerous offices across Latin America, Applica Corp stands out for leveraging large talent pools in the region. They focus on providing high-value software development services, capitalising on the time zone alignment, skilled professionals, and cultural affinity. Their 450+ projects to date cover industries such as tech, finance, education, healthcare, and more.

• BairesDev: Holding over 30 awards in the industry, BairesDev is one of the largest nearshore providers, also operating in the US and Latin America region. They specialise in end-to-end software development, including enterprise-ready solutions and machine learning technology. With a promise to provide the top 1% tech talent, BairesDev are known for their rigorous vetting process.

• Encora: On the other side of the globe, Encora is one of the leading nearshoring providers in the APAC region. From digital product engineering and application modernisation, to incorporating AI automation tools into software development, the company uses agile frameworks to complete projects at scale and speed. 

When is nearshoring the optimal choice?

Nearshoring isn’t necessarily superior in every single way - onshore services may offer a closer cultural connection and ease of commuting, while offshoring is by far the cheapest option. However, nearshore software development is a well-balanced solutions between those two, offering geographical proximity and cost-effectiveness in one. It is a strategic choice for companies that need skilled IT professionals for their projects, without having to make compromises when it comes to time zone and significant cultural differences.