What Is Nearshore Software Development

by Anna Khrupa on Mar 7, 2022

Nearshore software development is one of the three location-based outsourcing models in the IT industry. Usually, the nearshore software development definition implies having all employees in different locations, collaborating in real time, based in places within a small-time difference, but not under the same roof.

Nearshore software development is a way of cooperation that allows a client to delegate tasks and responsibilities to software service providers in nearby countries within no more than four time zones away.

Nearshoring, Onshoring, and Offshoring

Outsourcing is represented by three models – onshore, offshore, and nearshore.

Onshoring is selecting a vendor in the place where the client is (different states but one country). Offshoring involves hiring a provider, which is far away from the company. In this case, the client has to manage operations performed in different time zones. Nearshore outsourcing means engaging an outside organization, which is geographically close to the company and provides services within no more than four time zones away. When we speak of nearshore software companies, we mean IT talents from neighboring countries. A client in Austria may have a provider in Poland or Ukraine.

Features of Nearshore Development

Nearshoring is perfect for clients who want to try outsourcing, but are afraid of cultural barriers and long-distance locations. Among the best features of nearshore development is the ability to meet face-to-face with developers within a short flight period.

2-4 time zone difference. Shared standard time and the same working hours help the team perform as a unit and provide support faster. It enables real-time interaction and better coordination that make nearshoring the second-best model after onshoring.
Lack of cultural differences. A smooth process of sharing knowledge and ideas as well as clear project coordination and collaboration within a company are the keys to efficient software development and quick problem solution.
Close geographical position. Service providers are close to clients, thus frequent visits are possible. Face-to-face meetings build trust and transparency between in-house and nearshore teams.

Advantages of Nearshore Software Development

A few significant features help decide on the appropriate remote collaboration model in software development – price, capacity, and access to skills and resources.

There are five advantages of nearshore software development that make it such an appealing task delegation model.

Geographical proximity is a major advantage. Low travel time and costs provide easy access, short distances, and quick time frames to go to and from both locations. If there are any problems and the physical presence is required, an employee can reach the company in an hour or two. Face-to-face communication provides clarity to work conversations without any statement or idea being misconstrued. Personal visits from/to the nearshore team create positive synergy and establish trust between colleagues.
Efficient and speedy communication between teams directly depends on time-zone similarity that is only 1-4 time zones away in the nearshore model. Working cross border is easy because of fewer cultural and linguistic barriers. If a company invests in providers overseas, it is more than four time zones away, which does not allow the client to engage with developers during normal business hours. The shorter the time difference is, the more overlap hours between a client and a customer will be.
Cultural affinity is a common thing for people in the same region. Thus, the values, the work organization process, and the way of thinking are similar. Teams from geographically close areas have a smoother working environment. They communicate easier than teams from far away places. For example, people who provide nearshore software outsourcing services in Eastern and Western Europe have more in common in the approaches to work than those from Europe and Latin America. Cultural affinity increases project agility and velocity.
One of the main reasons companies decide to nearshore is minimizing labor cost, even though it has a higher price than offshoring. The providers are based in the counties that require a lower level of expenses but have a skilled and highly-trained workflow to offer, ready to progress and grow continuously. For example, hiring a developer in Ukraine is two times cheaper than hiring a developer with the same knowledge and experience in France or Germany if working in one of these countries following the onshore outsourcing model.
The quality of developers a company can invite to a remote team is high. Nearshore development is having access to a bigger database of potential employees and candidates with greater experience and skills, ready to provide services based on the needs of a specific company. Contrary to onshoring, a company is not limited to one country only.

The beneficial geographical situation, efficient communication, cultural similarities, lack of language barriers, access to new technologies, and cost-effectiveness of the nearshore software development model provide an ideal environment for big and small projects. The best world-known case studies of successfully implemented nearshore practices are giants like Johnson & Johnson, Opera, Slack, Skype, and WhatsApp.

The Biggest Nearshore Software Centers in Europe

Eastern Europe is famous for having a number of professional nearshore teams based in Hungary, Ukraine, Romania, and the Czech Republic. The IT industry in these countries has been actively growing for the past couple of years, especially in Ukraine. It is the capital for nearshore development with an enormous talent pool, reasonable prices, and quite a good level of English proficiency available.

The key factors why clients choose nearshore software developers in Eastern Europe are access to a bigger talent hub in the region and cost reduction with an optimized budget.

Process of Work with Nearshore Development Team

Building a foreign talent team is quite a simple process. There are three main steps to follow.

A company outlines goals and needs. The desired product is analyzed. The client decides on programming languages, frameworks, range of knowledge, and expected salary to help a nearshore partner find a proper candidate for a project.
The client prepares for the work process. He/she defines the technology stack and remote tools and ensures everything works correctly.
The company provides a partner with details of the business needs. The client screens potential candidates sourced by a vendor and monitors the hiring process.

Applying nearshore development allows transferring the process to neighbouring countries and getting reduced business costs and improved quality (due to availability and range of talent) without losing a high level of engagement and integration of a team.