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What is Nearshore Software Development - Complete Guide

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The nearshore software development model is becoming more popular among customers who want to receive high-quality results from software engineers based in countries located within a small-time difference. 

Google, Tesla, Porsche, Johnson & Johnson, EY, and IBM, and many other world-famous companies choose nearshore software outsourcing as the ultimate solution for their needs. They set an example to other companies that are still considering nearshoring solutions for their businesses.


What Is Nearshore Software Development?

Nearshore software development is a cooperation model between a customer and an organization or a team of software engineers from the nearby countries, located within a 1-to-3-hour time difference.

Types of outsourcing: onshore, offshore and nearshore software development models

Types of Outsourcing

This type of cooperation implies that the engineers are based in another nearshore country, and usually ensures lower costs with the same quality of work. It is also helpful when a customer faces a significant talent shortage in their own country, so looking for outside talent becomes inevitable. For many, this type of cooperation is a go-to solution as it enables flawless communication, cultural similarity, and cost-effectiveness.

Many international businesses are building nearshoring centers because they want to stay competitive in their market. 

Some customers have concerns about hiring software development engineers from distant countries, so many opt for nearshoring solutions.

Although nearshore software outsourcing is similar to the offshore and onshore models, the core difference lies in the timezone. If the contractor and the software development company or team are closer, it leads to better communication and outcomes. 

The global tech talent shortage has recently become a significant issue, so many companies are looking for qualified software development engineers abroad.

The shortage amounted to 40 million unfilled jobs in 2020. By 2030, the shortage is predicted to reach 85.2 million workers. During these 10 years, the skill shortage will cause an $8.4 trillion loss in revenue for companies worldwide.

Features of Nearshore Development Model

The nearshore development model is a perfect fit for companies worried about significant geographical differences. It allows them to hand over product development to experts who are not too far away. This model is a middle ground between onshore, which poses minimum risks, and offshore, which separates the customer and the team by more than four time zones.

2-4 time zones difference

Smooth communication should be a priority when you want your team to understand your requirements. Considering that nearshore developers are located close to the customers, they have the same working hours, enabling them to react as quickly as possible. 

Close geographic proximity

In most cases, nearshore software development teams are located within close geographic proximity to the customer. This fact grants smooth communication and quick-fix solutions to the potential challenges.

Lack of cultural differences

Even though most nearshore teams are located abroad, this type of software development model ensures minimum cultural differences. You can be certain that, for example, Eastern and Western Europe have very similar approaches to work and result-oriented mindsets.

How Does Nearshore Location Work?

Nearshore software development is a type of outsourcing model involving a software development team that is geographically close to the customer (2-4 time zones away). Nearshore location is the second-best option after onshoring, which provides you with the same quality of tech experts while being more cost-effective.  

All these benefits enable customers to hand out the tasks, organize online meetings, and carry out processes necessary for effective team management and result generation.  

Another benefit of nearshore software development is that the contractors can easily meet their teams personally. Short distances make air flights less time-consuming and help customers clearly communicate their needs and generally improve the teams’ performance. 

Models Comparison

Onshoring, nearshoring, and offshoring are the three most common outsourcing models, suitable for different needs. 

Nearshore vs Offshore

Offshore software development is a cooperation model between a customer and an organization or a team of software engineers. This model implies that the engineers are based in another country "offshore" from the employer, and usually ensures lower costs with the same quality of work.

Outsourcing model type

Nearshore 

Offshore

Location, time zone

Geographically close
(2-4 time zones away)

Overseas (4+ time zones away)

Costs

More expensive

More cost-effective

Communication speed

Speedy communication

Standard communication

Cultural differences

Similar cultures

Different cultures

Nearshore vs Onshore

Onshore software development is a cooperation model between a customer and an organization or a team of software engineers located in the same country and usually with no time difference.

Outsourcing model type

Nearshore 

Onshore

Location, time zone

Geographically close (2-4 time zones away)

Within your own country

Costs

More cost-effective

More expensive

Communication effectiveness

Standard communication

Speedy communication

Cultural differences

Different cultures

Similar cultures

Ukraine as a Big Nearshore Software Center in Eastern Europe

Your company can rely on Ukrainian experts due to their high level of expertise and reasonable prices. Ukraine, Poland, Romania, Hungary, Bulgaria, Belarus, Czech Republic, Austria, and Slovakia, on average, expect an hourly rate of $30-$65.

On average, a Ukrainian developer’s hourly rate is typically between $30 and $60.

  • Junior Software Engineer Hourly Rate: $19–$25 
  • Middle Software Engineer Hourly Rate: $26–$38
  • Senior Software Engineer Hourly Rate: $39–$60

 

Ukraine continues to be a hotbed of growth and a sweet spot for software development outsourcing, offering the best price-to-quality ratio.

Advantages of Choosing Nearshore Software Development

Considering that the contractor and their nearshore software development team are not separated by a significant distance and time, it is much easier to ensure smooth communication and receive more control over the processes and other critical details. Many businesses choose this model to suit their needs, so here are some reasons they choose it:

Cost-effectiveness

Many companies that do not want to sacrifice quality to save money choose nearshoring. For example, hiring a developer in Germany will cost you $81,657 with taxes; in the Netherlands, it will cost you $88,058. Meanwhile, if you hire a developer in Ukraine, you'll pay $40,000–45,000 a year (including taxes) on average for a middle developer.

Highly skilled experts

Eastern Europe accounts for around 1.3 million Eastern European software engineers and other tech experts, so customers can choose from a wide range of potential candidates to suit their needs.

In fact, some Eastern European countries such as Ukraine have more science graduates than countries prized for innovation like Japan, Sweden, Norway, the Netherlands, and Belgium.

English proficiency

Another benefit of nearshoring is that most IT experts can easily communicate with their contractors, ensuring a great understanding of the intended goals.

Time zone proximity

Those companies that prioritize minimal time difference between them and software developers choose a nearshore model to satisfy their needs. Although it might be more expensive, many businesses are ready to pay more to ensure that tasks are completed promptly. Some companies’ projects require the physical presence of the contractor, so they need to work directly with a team of software engineers.

Companies That Already Use Nearshore Software Development

Many companies choose this model because it is cost-effective, poses minimum risks, and solves the problem of talent shortage in the contractor’s own company.

Pricena

Launched in 2013, Pricena is now a leading price comparison website that allows online shoppers in the UAE, Saudi Arabia, Qatar, Egypt, Kuwait, Nigeria, and South Africa to make informed purchasing decisions.

This company was looking for a trusted nearshore software development outsourcing solution for developers for their iOS and Android mobile apps.

They faced a significant talent shortage in their own country, but did not want to hire freelance developers to work on their projects due to the negative experience in the past.  They choose nearshoring to solve their problem—a team of full-stack developers through Daxx helped the company with the web version of Pricena.

Lamina Technologies

Lamina Technologies is another company that placed confidence in the nearshore software development model. They chose Ukraine because of our culture, time zone, and our mentality. The constantly expanding business was looking for a trusted partner to support their projects, so they opted for a nearshore product development and reaped the decision’s benefits.

Vive

The founders admit that cooperation with Ukrainian developers was flawless and that they faced no difficulties establishing their team. Having the same goals with the developers they were hiring was a positive sign, and it created a special team feeling.  

Vive appreciated all the benefits of nearshore software outsourcing: high level of cultural similarity, reasonable costs, availability of the developers, and their substantial technology stack.

Process of Work With Nearshore Development Center

If you’ve never worked with a team of nearshore software developers, here is the list of steps you take to get the most out of it:

  • Understand your business needs

If you decided to go ahead with nearshore developers, thoroughly analyze your desired product and understand what software programming languages and frameworks are needed to develop it. If you are looking for a highly-experienced and qualified nearshore engineers, create a list of demands and crucial details to pass on to the nearshore software center. They will then manage to provide you with a list of suitable candidates.

  • Prepare the processes in your company

Several fundamental details definitely need your attention. What is the language of your project documentation? What is the language of your nearshore team? You also have to assess whether the team will manage to clearly understand your needs and if you have all the remote tools you need for effective work. To ensure that all the processes work correctly, you also have to think over all the tools for online onboarding.

  • Provide your business partner with details of your needs

In most cases, you receive full control over most processes—from pre-screening of the potential candidates to the hiring processes. Find a partner that ensures transparent processes and lets you monitor hiring mechanisms.

Daxx as Your Nearshore Software Development Service Provider

Daxx is the Netherlands-based nearshore outsourcing company offering software development and technology consulting services. Daxx once started working as a nearshore software development company. Our founders understand that the goal of our company is to help customers hire experienced and skilled developers nearshore, for example, in Ukraine. Daxx has been ranked among the top 25 IT outsourcing companies and one of Ukraine’s top web and software developers, according to Clutch.

European countries choose nearshore software developers for their European approach to work, company values, transparent processes, and substantial experience in working with other European customers.

With us, you will not have to worry about the many challenges a company faces when hiring a nearshore software development team. We ensure smooth cooperation and look for candidates suitable for your needs while letting you have control over all processes.

  • Daxx collects the information about the desired candidates.
  • Then we go through the list of suitable candidates and analyze their qualifications to ensure that they are suitable for your project.
  • We help you run the interviews to shortlist only the best candidates.
  • After the interviewing stage, you can make an offer and get to work with the selected software developer immediately.
  • We're keeping in touch with you to receive all the details necessary to satisfy your business needs.

name

Marta Kravs

DIGITAL CONTENT WRITER AND MARKETER

Marta Kravs is a Content Writer at Daxx with a broad experience of working in the information technology and services industry.

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