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04 Aug 2020

Benefits of Software Development Nearshore

Outsourcing software development is becoming common practice, and while the methods may vary, the objectives are usually the same. Companies are outsourcing to Latin America to lower costs and solve capacity issues, which frees up in-house teams to focus on core business functions. 

In this article, we examine the advantages of nearshore software development as opposed to offshore or onshore, to help you decide which option best suits your organization. 

Different Outsourcing Options

Let’s start by looking at onshoring, which is the practice of outsourcing to a company located in the same country as you. The benefit of onshoring is that your outsourcing partner will likely share close geographic and cultural proximity, but these benefits come at a cost. Of the three options, onshoring is the only one that doesn’t always provide a clear cost-benefit.

Then you have offshoring, which is when you outsource to a company located in another country, typically one on the other side of the globe. Offshoring offers lower rates, but the language and culture barrier can be significant. Not to mention the time difference, which in some places, like the Philippines or India, can be as much as 12 hours.    

Outsourcing nearshore, or nearshoring, provides a middle ground where you can still see significant cost benefits without sacrificing convenience or efficiency. Outsourcing to a nearby country allows you to collaborate in real-time, with minimal effort.  

Let’s examine the benefits of outsourcing nearshore in detail, starting with one of the main reasons to choose outsourcing in the first place: cost-efficiency.  

Cost efficiency

One of the significant advantages of outsourcing nearshore is lower labor costs. US-based companies save, on average, 38% to 48% by outsourcing development to Central and South America.

Nearshore software developer salaries, North America compared to Latin America

Return On Investment

Nearshore development reduces the resources and effort needed to collaborate effectively helping you maximize your ROI.

Reduced Travel Costs

In-person meetings can help facilitate collaboration and increase productivity among remote and distributed teams. Outsourcing nearshore, as opposed to offshore, will make it easier to plan and less expensive to organize in-person meetings. Closer geographic proximity means your team will spend less time in the air and more time collaborating in person.

Operation efficiency

Cultural parity helps foster an efficient and collaborative work environment among remote and distributed teams. It’s difficult to put a dollar sign on, but cultural alignment is an important factor in nearshoring’s growing popularity. Companies who have experience with offshoring know cultural barriers and communication obstacles can lead to missed deadlines, projects going over budget, and other complications.

Effective communication

Much like cultural barriers, language barriers can negatively impact your bottom line. Miscommunications and having to wait several hours between communication windows can drastically slow down your project, many times forcing you to push back delivery dates. With nearshore partners, on the other hand, you won’t need to wait for hours to receive a response making it easier to plan and meet your deadlines. With nearshore outsourcing, the communication style and quality expectations are comparable to onshoring but at rates similar to offshoring.    

Similar work practices

Latin America has heavily adopted software development methodologies like Agile and Scrum. Due to the popularity of outsourcing software development nearshore, a considerable percentage of Latin American developers already have experience working with US companies. 

More influence and control

Shared borders, common language, and close time zones make it easier for you to maintain full control of your development project. With nearshoring, you get many of the same benefits of onshoring but at a lower cost. Your partner is nearby, they can communicate effectively, and are available to collaborate in real-time. 

In conclusion, by outsourcing development nearshore you’re gaining the cost benefits of offshoring without the need to fly to the other side of the world to meet your team, avoiding heavy language barriers, and time zone differences. You also benefit from most of the same advantages of onshoring, but with a larger talent pool to choose from and at a lower cost.

If you’re interested in finding out how outsourcing can benefit your business, contact us today for a free outsourcing evaluation.     

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