Nearshore vs. Offshore Development (for US companies)

What’s Best for Your Business?

You have a need for software development.
You’ve got a backlog, but your team is struggling just to keep up with maintenance.

or

You’re an entrepreneur that has a business plan for an application, but no staff to build it.

or

You’re in charge of procuring an outsourced team or contractor for an initiative, so you need to find a solution that will look good and deliver results.

Whether you’re one of the folks from above or anyone in between that happens to be looking for help with software development, you should consider the advantages of seeking Nearshore vs. Offshore development resources.

What is meant by nearshore and offshore?

Let’s take a very simple view of what is meant by nearshore and offshore. We’ll let nearshore refer to outsourcing from another country that shares the majority of their work hours with you because they are roughly in the same longitude. Offshore will refer to outsourcing from countries whose typical work hours have very little overlap with yours.

Clearly, there are some subtle differentiations for business relationships in each of these two categories, and it’s not just time zones. Let’s take some time to look at how you might evaluate which type of outsourcing and what will give you and your business the best results for your situation.

Advantages of Nearshore

Working alongside you as a partner
In an agile environment, shared work hours between you and your software development team are especially beneficial. When you choose to work in an agile manner, you’re acknowledging that plans change and you must be reactive. The faster you can react, the faster your product iteration reaches its optimal state. Working with a team that shares your work hours allows stakeholders to react in real-time at every stage of development and gives the team the ability to update, modify, and validate assumptions immediately rather than waiting for an entire cycle. Over time, this reduces wasted effort and increases overall efficiency.

Nearshore partnerships often provide a direct line to the team, enabling clear, two-way communication. When both sides can speak directly, fewer cycles are lost to misunderstandings and missed requirements. The result? Faster delivery and fewer bugs.

Visibility and control

Having a bi-directional active line of communication gives stakeholders more visibility and, ultimately, control of the product. In other words, the team can reach out to the stakeholders, and the stakeholders can reach out to the team. With nearshore, the response time in either direction can be near to real time rather than waiting for an entire day. You can jump on a call and eliminate assumptions, which are huge time killers. In software development, you’ll always have to make painful decisions about what to include and what to exclude. However, when you utilize nearshore partners, you’re setting yourself up to include more of what you really want within a limited number of cycles.

Advantages of offshore

Working throughout the night
Let’s say the work that needs to be done is predictable, repeatable, and needs little oversight. In such cases, waking up to the end of a development cycle each day has a nice rhythm. Requirements can be gathered, user acceptance testing conducted, and backlogs adjusted all while the team preparing to knock out the next days’ work is catching some z’s. It can also work well for products that need to do maintenance or deployments overnight.

On the flip side, anyone who’s worked in this rhythm understands the handful of difficulties that come with it. Prepare for early and late meetings that can become high-pressure operational syncs rather than low stakes touchpoints.

Price per cycle

Companies often find costs per billable cycle to be lower in offshore partnerships, although it’s not always the case. Finding ways to pay less per cycle can help enable some companies to get started on work in early stages of their revenue journey. It may also serve as a strategic cost saving effort for work that is consistent and predictable. In this scenario, it’s important to consider how incorrect assumptions per cycle will affect your ROI.

What approach will be best for you?

Every situation calls for careful consideration; it’s not a “one size fits all”. It may be that you need a mixed approach. Perhaps you have some service level agreements, so you need teams working around the clock. Or maybe you’re working on a new product and your product managers are local to you, so you need the shared working hours of a nearshore team. Maybe the tool that needs engineering resources is an internal tool that has a backlog full of well-defined maintenance tickets that is perfect for an offshore setup.

Regardless of which shore…

Make sure you’re looking out for some key factors, regardless of where you source your partnership.

Partners that Push Back, not Obsequious Order Takers

In any industry, but especially software development, it is critical that the people on the ground doing the work have the courage and freedom to express dissent from a stated plan. An endless number of pitfalls await any well-thought out plan, and if your development team isn’t empowered to point those out, the product, your end users, and your budget are going to suffer. Don’t compromise on your vision, but also don’t settle for “yes men”.

Shared Mindset

Find a partner that understands why you need to accomplish your goals. If they can truly relate to the need, they will act more as a partner than a vendor. You want someone that feels the successes when you succeed and despairs in the failures.

Outsourcing software development is not just a trend; it’s a proven strategy that offers tangible benefits. It’s choosing whether you prefer offshore or nearshore. The statistics speak for themselves: 80% of North American companies are considering nearshore, while nearshoring is set to contribute $78 billion to Latin America’s export sector in the coming years​​. But really it’s about choosing what fits best for you and your business. I hope these advantages and disadvantages helped you make your decision.

If you would like to talk more about outsourcing using nearshore development teams, please give us a shout.