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Dissecting Nearshore Outsourcing: A Comprehensive Overview

The COVID-19 pandemic left organizations and businesses with no choice but to ask employees to work from their homes and hire people who were compatible with working from home and could deliver. That wave also blew a breeze to, if not originated, the concept of handing over the whole project or some chunk of the project rather than hiring and getting into managing employees working from home.

Rather than businesses and companies undergoing a hiring process and managing the hires, they started to contract companies and agencies located in the same country as their own, their neighboring countries, and, lastly, very far from their location in some other country in a very distant region.

This blog is the only write-up that you need to read to familiarize yourself with nearshore outsourcing. We will start by understanding what nearshore outsourcing is and how it is different from offshore and onshore outsourcing, its benefits, what a nearshore outsourcing company is, and much more. We will also include some examples of countries with respect to other countries so you can understand the difference between nearshore, onshore, and offshore outsourcing.

So, without further ado, let’s first break down what nearshore outsourcing is and how it is different from offshore and onshore outsourcing.

What is Nearshore Outsourcing?

Nearshore development is actually a practice that involves contracting a third-party vendor, generally a software development company or an agency, and outsourcing/giving out software development tasks, be they an app or a website, in a location that is geographically closer to the client’s country, typically within the same or a nearby time zone. This can be in any country in the same region as the client’s. This model is popular for striking the right balance between the advantages of onshore and offshore development.

Below are the key characteristics of nearshore development that create a disparity between it and the other two: onshore and offshore.

  • Proximity: Nearshore outsourcing/development occurs in nearby countries or regions that make communication and collaboration seamless and more convenient compared to offshore outsourcing, diminishing factors like language barriers and time zones to a great extent.
  • Similar Time Zones: As it happens to be in the same region or neighboring countries, the nearshore company and client’s country often share similar or overlapping time zones that kind of turn out to facilitate real-time collaboration and reduce communication delays.
  • Cultural Compatibility: Due to being in the same region as the client, both parties happen to be more culturally aligned and familiar with each other, which fosters better understanding between both parties. Whether it is related to business practices, expectations, or communication styles, both parties understand and already have some familiarity.
  • Cost Savings: Though not effective and as different as offshore outsourcing with respect to countries like America, Canada, or European countries, due to disparity in economies, nearshore development can still offer cost savings compared to onshore development, making it an attractive option for clients seeking a balance between cost and proximity.
  • Skilled Talent: As nearshore countries usually happen to have low costs of living and large populations, especially when talking about the vendor’s country, it makes nearshore destinations offer access to a pool of skilled IT professionals, providing clients with a large pool of professionals, amateurs, and exports possessing diverse skill sets and expertise that they can get at fairly cheaper rates compared to their own countries.
  • Project Control: So because of all the factors mentioned above, clients have slightly better control over the project progression and its development as compared to offshore development. Clients have better, easier access to the development team.

As we mentioned in the introductory paragraphs, we will incorporate examples for your better understanding, so here are a few examples of common nearshore outsourcing locations.

  • So, for countries/clients in Western Europe, Eastern Europe would be considered nearshore locations.
  • For countries and clients in North America, Latin America would be deemed a nearshore destination.

How Nearshore is Different from Offshore and Onshore

Below, you will learn to distinguish the top three models of outsourcing: onshore, nearshore, and offshore. 

Onshore Development

In onshore development, the software development teams are operating within the same country as the client. This level of proximity fosters direct communication, similar working hours, and cultural alignment. Here, there are time zone issues, no language barriers, etc. Both pirates understand the communication style and are familiar with it, as they both reside in the same country.

So you would rather go out of your country looking for an outsourcing company; you contract an agency or a company in the same country. So, if the client is in the USA, the development team would also be in the USA, and a U.S. company might engage a local development team for a new software project, ensuring high communication efficiency.

Nearshore Development

Nearshore development involves outsourcing to a neighboring country or region and sharing a similar time zone with the client. While not within the same country, the allure lies in a balance between cost savings and geographical proximity. You get the job done at comparatively lower rates than in your country, but you don’t have to face the set of problems and challenges put up by outsourcing, such as distant locations, language barriers, massive differences in time zones, etc.

For example, a UK-based company may choose a nearshore team in Poland, which is booming in the tech realm, and such a level of balance will facilitate real-time collaboration despite slight time zone differences. Or, if you take the USA as an example, a USA-based company may choose a third-party service provider in Mexico or European countries.

Offshore Development

Offshore development entails contracting with a team that is located in a significantly distant country from the client. Let’s say the client is based in the USA, and the offshore company is operating from some South American countries like Brazil or Colombia.

The potential for substantial cost savings comes with challenges of different natures, such as significant differences in time zones, communication barriers, etc. In a bid to achieve benefits in the bigger scheme, your communications impact and collaboration become harder to keep up with.

An illustration would be a USA-based company outsourcing mobile or website development to an agency or a company in India, leveraging the cheap rates and high quality but at the cost of disturbed collaboration and facing communication challenges due to time zone disparities.

Each of these approaches—onshore, nearshore, and offshore—has its own set of benefits and presents distinct considerations. That is why it is really important for businesses and companies to map out their strategy very wisely and keep both sides in mind before they outsource, even onshore outsourcing, a project because that has its own drawbacks.

The right approach would be to tailor your outsourcing strategy based on factors such as budget constraints, project requirements, the importance of communication dynamics, and the client’s own skills in managing a team that is at a greater distance from it.

Benefits of Nearshore Outsourcing

So, holistically speaking, outsourcing has its own benefits, regardless of what model you take into account. The top benefits of outsourcing nearshore locations are below.

Geographical Proximity

So, unlike offshore development, nearshore development involves contracting with a service provider located in a nearby country or region. This physical closeness makes even travel for face-to-face meetings convenient and is key to having a more personal and direct relationship between the client and the development team. This ability to visit the outsourcing partner or have them visit the client’s site promotes a deeper understanding of the project requirements.

Time Zone Alignment

Because both countries, i.e., the client and service provider, are in the same region, there are usually no time zone differences, and they share similar or overlapping time zones. This level of synchronization and alignment minimizes delays and gives teams the freedom to schedule meetings easily, address issues promptly, and maintain an agile and responsive development process.

Cultural Affinity

Normally, nearshore locations have cultural similarities, and their cultures happen to be quite similar. This cultural affinity is a key to more harmonious working relationships, as both have shared values, work ethics, and communication styles that reduce misunderstandings and hiccups. This similarity and affinity make outsourcing easier and can make the process smoother compared to offshore outsourcing.

Talent Availability

As the concept of outsourcing becomes rampant and widely accepted and adopted, more and more companies in the potential nearshore destinations are opening startups and companies and recruiting the best talent to cater to international clients with the highest quality so they can make recurring and long-term clients. Every nearshore outsourcing company has accrued talent for diverse skill sets, ensuring their clients get from them when they have finally pulled over from their company.

Collaboration and Communication

Due to the close proximity in location and the very little difference in time zones between the two countries in the nearshore development, collaboration and communication remain seamless and undisturbed. Teams can engage in regular video meetings without having to sacrifice the errands running at the time, joint planning sessions, and quick problem-solving discussions. There is no replacement for the real-time communication that is facilitated in nearshore development. So collaboration and communication remain smooth, dynamic, and cohesive, reducing the potential for misunderstandings.

What is a Nearshore Outsourcing Company?

Nearshore outsourcing is a company that is located in the same country as the client’s company. Taking the example of France and the Netherlands, assume the client is located in France, and the development company is located in the Netherlands.

Why Choose Nearshore Agile Software Development?

Usually, because we are in the same region, collaboration and communication are already fostered due to next-to-nothing differences in the time zones of the client and company. Now, when a development company adopts agile methodology, that is going to take the product to market quickly and will help the product be available to its target audience.

If the company is using the iterative approach, the product will be released early, you will have a competitive advantage over your competitor, and your growth can be fueled by the agility of the company.

Outsourcing to a React Native or Flutter App Development Company

Cross-platform development is heavily in demand as it offers cost-efficient mobile app solutions that can run seamlessly across platforms, i.e., iOS and Android, with a single unified codebase that is not as costly to develop and maintain as the separate codebases for two different platforms. 

Frameworks like React Native, Flutter, Xamarin, Ionic, etc. are cornerstones of cross-platform development, and developers with expertise in these frameworks or tech stacks that include them are highly in demand, considering the hourly wages in the USA, and can dig a hole in your pocket and eat into your finances.

So it is quite the trend to outsource your projects nearshore, so in the case of the USA and Canada, it would be Mexico, which is quite a good idea. Of late, many companies are emerging from Mexico, so it is prudent that you do your research and groundwork and hand over your project to any company after deep research so you can assure yourself of getting a high-quality cross-platform mobile application.

Conclusion

Nearshore outsourcing strikes a balance between offshore and onshore outsourcing, letting companies and businesses leverage the benefits of outsourcing, such as cost-effectiveness, without having to suffer from different time zones and language barriers. Nearshore outsourcing happens in the neighboring country, so both parties are in proximity, due to which there is not much cultural difference, and you are aware of regulations better and have familiarity with the country, due to which you can’t be fooled or scammed as you happen to be familiar with their festivals, holidays, etc.

Sure, it is not 100% perfect and has some cons as well, but the nearshore development makes it a suitable option for businesses looking to outsource software development while minimizing some of the challenges associated with offshore outsourcing or even onshore outsourcing in the form of cost, quality, time, etc. And again, the success of the project always hinges on your strategy and the groundwork you do before outsourcing.

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