What is Nearshore Outsourcing in Software Development?

Encora | November 01, 2022

If you’re wondering, “What is nearshore?”, or “What is nearshore software development?” you’re likely looking into expanding your software development team. You know you have the main options of hiring more employees to work in-house or outsourcing software tasks or projects to an outside source. You are not the only person thinking about what is nearshore software development. The global IT outsourcing movement has been growing in popularity for several decades and is projected to grow to more than $425 billion by 2026.

What Is Nearshore Outsourcing?

What is nearshore? Nearshore is one of the most popular outsourcing methods. It involves hiring external teams of software engineers who live in other countries but are close to you geographically, in the same timezone, or close to it. It generally includes having similar cultures. For example, many U.S.-based companies use nearshore software development by working with teams in Latin America. For companies in countries like Japan, or Australia, they would have Asia-based nearshore options available to them.

1. Nearshore vs. Onshore vs. Offshore

The other types of outsourcing are onshore and offshore. We recommend looking closely at each option and your organization’s specific needs at this moment. While there are differences between nearshore, onshore and offshore, each could be the best choice, depending on your current requirements.

We’ve already looked at nearshore, so let’s define onshore and offshore. 

  • Onshore is when you hire or outsource a team of software engineers here in America or the same country as you. So they may be in a different time zone, but it won’t ever be a huge gap the way it would with a team on the other side of the world.
  • Offshore is the exact opposite of onshore; it’s where you hire a team of engineers in another country, usually a few timezones away. For example, offshore would be when an American organization works with a team from eastern Europe or India. 

How Does Nearshore Outsourcing Work?

When it comes to what is nearshore outsourcing, the answer is simple. Nearshore outsourcing is right in the middle between onshore and offshore outsourcing. At its essence, it is the process of hiring an outside team of software engineers–in a similar timezone–to take on part of (or all) of the work of a current project. For example, you might delegate mobile application development work to your nearshore team. 

Advantages of Nearshore Outsourcing

Here are some of the advantages of nearshore outsourcing.

  1. Nearshore outsourcing saves your organization time and money. Face-to-face meetings are essential for any project, and the lost time and money spent on a 10+ hour flight to meet the Asia team is unpleasant. With a nearshore team, flights to have meetings will be far shorter and less expensive.
  2. One of the biggest complaints about offshore outsourcing is dealing with time differences. Often in these cases, one team’s work day starts shortly before the other team’s ends. With only a limited number of shared working hours, this can make collaboration and coordination more challenging. With nearshore, you are in the same timezone, or one very close, eliminating the hassle of working across very different schedules. 
  3. Another common issue with offshore is the cultural differences and language barriers it may present. With nearshore outsourcing, these barriers are either reduced or mostly eliminated. Most often, with nearshore, many of your new team will speak English, and for LatAm countries, you may even have a few people on your team who speak Spanish. While LatAm and American cultures are different, there is enough mutual exposure for familiarity on both sides. The same is true for countries like Brazil, where they speak Portuguese, but English is common as well. 


Is Nearshore Software Development Right for You?

Nearshore is right for you if you’re looking for:

  1. A larger pool of talented engineers.
  2. A team located close to you.
  3. A team with the same or similar time zone.
  4. Fewer culture and language differences.
  5. A cost-effective option.

Nearshore may not be the best option for you if you’re looking for the cheapest rates or a large pool of experts available immediately. There are workarounds if you’d prefer nearshore, such as starting with a smaller team and gradually hiring more experts as they become available. And, if the price is your biggest concern, nearshore is only slightly more expensive than offshore, which may make it worthwhile, given the many advantages of nearshore outsourcing. 

Nearshore Software Engineering Teams from Encora

Are you ready to leverage nearshore outsourcing? We are the premier resource for software engineering teams in LatAm. Broaden your skill pool with talented development teams in your time zone. Here at Encora, our global talent pool and proprietary Agile Engineering capabilities help our clients improve their speed to impact. Nearshore software engineering teams from Encora improve your odds of success. Questions? Ready to get started? Reach out to us today; we’d love to hear from you. 


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