With the rise of digital technology remote work, and the surge in costs when it comes to hiring salaried employees, more and more businesses are increasingly turning to outsource to meet their staffing needs. This is especially true for the IT industry, as statistics show IT outsourcing spending is headed to increase around 22% over 2019's numbers to reach $519 billion in 2023.
Now, IT outsourcing can take different forms: onshoring, nearshoring, and offshoring - with the last two strategies being the preferred starting points for organizations new to hiring an outsourced development team. Now, while hiring onshore professionals seems like the safest bet in the beginning, nearshore development is a much better bang for your buck. This article will cover why it’s better to hire nearshore developers vs onshore developers and the different advantages and drawbacks of each of these strategies. Keep reading to learn more!
Understanding What’s Like To Hire Nearshore Developers vs Onshore Developers
First, let’s understand the primary difference between onshoring and nearshoring. To start with, onshore outsourcing is the practice of delegating specific tasks to an external company within the same country as your company’s headquarters. On the other hand, nearshore outsourcing involves partnering with companies in neighboring or nearby countries, typically within the same or closely aligned time zones as the one your company works with.
The main differences between these two types of outsourcing lie in their costs, accessibility of skilled workers, and the practicality of collaboration. Onshore outsourcing often comes with a higher price tag due to higher labor costs in the home country, while nearshore development provides a more cost-effective solution that maintains the necessary ease of collaboration due to similar time zones and cultural similarities.
5 Key Advantages Of Nearshore Development
Major cost savings.
When you hire nearshore developers, your company can access significant cost savings thanks to lower operating and developer rates found in nearby countries - more specifically Latin America. This makes it a highly attractive option for businesses looking to optimize their budgets while still getting quality IT solutions.
Physical proximity and similar time zones.
The geographical proximity of nearshore locations often results in similar time zones, facilitating faster and more efficient communication. This proximity also allows for easier travel and face-to-face meetings when needed. You can access a full listen of Latin America time zones in our latest blog post!
Cultural similarities with your nearshore development team.
Neighboring countries often share cultural similarities with North America, making remote team integration smoother and turning building trust with your new hires into an easier task as you can bond over a variety of shared customs. Shared language, compatible corporate practices, and business traditions can enhance understanding and cooperation between your in-house and outsourced development teams.
Ease of communication.
Nearshore software development allows for easier communication with your remote team thanks to the aligned time zones between LATAM countries and the US. Being geographically closer to your new hires also allows for easier operations monitoring, resulting in a simplified quality assurance process.
Access to new markets.
Nearshoring can open up opportunities to tap into new markets, providing access to new consumer bases and potentially boosting profits. This is especially beneficial at a time when it’s getting harder and harder to find the right IT hires - yes, the tech talent gap is real - and the cost of hiring from the local market has skyrocketed.
5 Key Disadvantages Of Nearshore Development
Occasional communication barriers
Despite geographical proximity, language, and cultural differences may still exist between you and your new team when you hire nearshore developers, potentially causing a few misunderstandings or miscommunications here and there.
Regulatory and political hassles.
Legal systems, regulations, and political stability can vary between countries, presenting potential risks to businesses that choose to nearshore software development if they fail to do the right research beforehand. It’s always best to read everything you need to know before choosing a LATAM country to start nearshore outsourcing to.
Intellectual property concerns.
There may be risks associated with intellectual property theft or misuse when conducting business in another country if you don’t monitor your operations or properly vet your new hires when it comes to all forms of outsourcing - but doing so in a new country amplifies this concern. Read more on how to protect your intellectual property when outsourcing here!
Dependence on external factors.
Geo-political events or economic instability in the nearshore country of your choice could disrupt operations, as there might be power outages or different holidays that overlap with working days in the US.
Limited control over the delegated tasks.
Despite the proximity, there may be less direct control over operations compared to onshoring, as there might still be some time zone differences or language barriers between you and your outsourced team.
4 Main Advantages Of Onshore Development
Greater control over outsourced operations.
Onshoring allows for more direct oversight of business processes, enhancing control over day-to-day operations. This is thanks to the way your time zone would (ideally) never differ and how the same holidays apply all over the country, with a few exceptions.
No language or cultural barriers.
Keeping operations at home eliminates potential language and cultural misunderstandings or miscommunications, as the delegated tasks will still be handled by a team within the same country as your in-house staff.
Intellectual property protection.
Onshoring reduces the risk of intellectual property theft or misuse as business operations remain under local laws and regulations. Nevertheless, you should ensure that all tasks are completed under the strictest level of cybersecurity.
Simpler quality assurance.
With direct oversight of operations, onshoring ensures greater control over quality standards compared to nearshore or offshore development. Still, there are still potential risks when it comes to quality control as the team will probably be working remotely anyway.
5 Main Disadvantages Of Onshore Development
Higher development costs.
Onshoring often involves higher labor and operating costs compared to nearshoring or offshoring, due to the more expensive developer rates coming from the local IT market.
Limited talent pool.
Keeping all operations at home may limit access to a diverse talent pool that other countries could provide, as there’s a tech labor shortage in North America at the moment complicating matters even further on what’s already a competitive market.
Time zone challenges.
If the outsourced development team of your choice resides in a different time zone than your in-house staff, coordinating operations can pose different challenges. Many think this hassle is only common with nearshore or offshore development but an onshore developer from the other side of the country can signify the same issue as one in LATAM.
Lack of access to new markets.
Onshoring may limit opportunities to tap into new markets compared with near- or off-shoring strategies. While North America tends to be among the global innovation leaders when it comes to technology, LATAM and other areas still have their unique projects that can bring a lot of unexpected value to your organization.
Infrastructure and logistical challenges.
Depending on the location, there may be challenges related to local infrastructure or logistics when onshoring, the same as it would happen with any other outsourcing operation.
Why Should Your Organization Hire Nearshore Developers vs Onshore Developers?
While both onshore and nearshore outsourcing have their merits, the advantages of nearshoring - cost-effectiveness, convenience of similar time zones and cultural similarities, and high levels of English language proficiency amidst LATAM developers - often make it a more attractive option for businesses looking to outsource their software development needs. Of course, like any business strategy, nearshoring comes with potential challenges like cultural differences or logistical issues. However, with proper planning and management, these challenges can be effectively mitigated.
If you considering outsourcing your company's software development tasks, we encourage you to consider the benefits of nearshoring versus onshoring as this is a popular outsourcing strategy that can bring immense value to your organization. While it might seem like a challenge at first thanks to the novelty of this practice, nearshoring allows you to tap into a pool of highly skilled developers at a fraction of the cost it would require to hire onshore developers.
Now, successfully implementing nearshoring practices in your business starts with finding and hiring the right nearshore developers. Research potential partners carefully, considering their expertise, reputation, and compatibility with your company's culture and goals. Looking for the right nearshore development company to partner with is a crucial step to start this journey.
Ready To Hire Nearshore Developers In Latin America with Blue Coding’s Nearshore Development Services?
If you’re ready to explore the benefits of nearshoring for your organization, at Blue Coding we're here to help. Our dedicated nearshore software development team specializes in connecting North American businesses with talented nearshore developers ready to bring your projects to life. From individual vetting to technical recruiting, our IT hiring team handles every step of the process for you, ensuring a smooth transition from in-house IT solutions to an outsourced development team. Contact us today to schedule your free discovery call and learn how we can help you hire nearshore developers!