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What is Nearshore Software Development

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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, IBM, and many other world-famous companies choose nearshore software outsourcing as the ultimate solution for their needs. They set an example for other companies that are still considering using nearshore software development services for their businesses.


What is the Nearshore Model? 

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

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

Types of Outsourcing

This type of cooperation usually suggests lower costs without compromising the quality of work. It is also helpful when a client is experiencing a significant talent shortage in their own country, and thus looking beyond the borders becomes inevitable. 

Since the global tech talent gap has become a significant issue, many companies started looking for qualified software development engineers abroad. The shortage amounted to 40 million unfilled jobs in 2020. Over the next decade, it is predicted to reach 85.2 million workers. By 2030, the skills gap will cause an $8.4 trillion loss in revenue for companies worldwide.

For many, hiring nearshore developers is a go-to solution as it enables flawless communication, cultural similarity, and cost-efficiency. A lot of international businesses are building nearshoring centers because they want to maintain their competitive edge in the local market. 

What Are the Features of the Nearshore Software Development Model?

The nearshore development model is a perfect fit for companies worried about cultural and geographical barriers. It allows them to hand over product development to experts who are not too far away. 

Although nearshore software outsourcing is similar to the offshore and onshore models, the core difference lies in the timezone. As the contractor and the software development company or team are closer, it results in better communication and delivery outcomes. This model, thus, provides something of a middle ground between onshore, which poses minimum risks, and offshore, which separates the customer and the team by more than four time zones.

Small time zones difference

Smooth communication should be a priority when you want your team to understand your requirements. Given that nearshore developers are located close to the customers, they have the same working hours, and therefore can quickly react to any arising issues. 

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 potential challenges.

Lack of cultural differences

Even though your team is located abroad, with nearshore outsourced development you can rest assured there will be minimum cultural differences. For example, IT professionals from Eastern and Western Europe have result-oriented mindsets and share very similar approaches to work.

Software Development in CEE: Closing the Tech Gap for Western Europe and the USA

Why Central and Eastern European countries are a sweet spot for global companies seeking high-end tech at a sensible price.

How Does Nearshore Model Work?

Nearshore software development is a type of outsourcing model involving a software development team that is geographically close to the customer (2-4 hours 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 advantages enable customers to hand out 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 clients 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. 

How to Choose the Right Outsourcing Model: 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, where tech specialists are based in an overseas country. The geographical distance and time difference imply the development unit is "offshore" from the employer.

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

Advantages of Nearshore Software Development Services

Considering that the client 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 as it best suits their needs. Below are some reasons why companies opt for nearshore software development.

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 $81,7K a year with taxes; in the Netherlands, you’ll have to pay $88K. Meanwhile, the average nearshore software development rates in countries like Ukraine are $40K–45K a year for a middle developer.

Offshore Developer Rates Guide

Get outsourcing rates in Eastern Europe, Asia, Latin America, Africa as well as tips on how to choose the country for offshore development.

Highly skilled experts

Eastern Europe is home to around 1.3 million software engineers and other tech experts, so customers can choose from a wide range of potential candidates to suit their needs. In fact, some CEE countries have more science graduates than some of the nations widely prized for innovation, such as Japan, Sweden, Norway, the Netherlands, and Belgium.

English proficiency

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

Time zone proximity

Those companies that prioritize speed-to-market 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. Since some projects may require the physical presence of the contractor, companies like to work directly with a team of software engineers.

Using Nearshore Software Development: Success Stories

Many companies choose this model because it is cost-effective, poses minimum risks, and solves the problem of talent shortage in the contractor’s 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 budding startup was looking for a trusted nearshore software development solution for their iOS and Android mobile apps. The company 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. That’s why they chose nearshoring to solve their problem. Through the partnership with Grid Dynamics, they hired a team of full-stack developers that helped to build the web version of Pricena.

Lamina Technologies

Lamina Technologies is another company that placed confidence in the nearshore software development model. The constantly expanding business was looking for a trusted partner to support their projects, so they opted for outsourcing their product development operations to Ukraine, reaping the benefits of such a decision, e.g. one-hour time difference, cultural similarities, and strong work ethic.

Guide to Nearshore Software Development in Eastern Europe

Software development market statistics of the tech countries — Poland, Ukraine, Romania, Czech Republic, Hungary, Bulgaria, Belarus, and Croatia.

Vive

The founders admit that cooperation with nearshore developers was flawless and that they faced no difficulties establishing their team. Sharing the same goals with the engineers they hired was a positive sign that helped to establish a special team bond. 

Vive appreciated all the benefits of nearshore outsourced development: cultural similarity, reasonable costs, availability of skilled developers, and their substantial technology stack.

Nearshore Development Center: Where to Start

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 decide to go ahead with hiring nearshore developers, analyze your desired product and understand what software programming languages and frameworks are needed to develop it. If you are looking for highly-experienced and qualified nearshore engineers, create a list of requirements and crucial details to pass on to the nearshore software development service provider. 

  • Prepare the processes in your company

Several fundamental details need your attention. Start by asking yourself: What is the language of your project documentation? What is the language of your nearshore team? This way, you will be able to assess whether the team will manage to clearly understand your needs.

To ensure that all the processes work correctly, you will also have to check if you have all the remote tools you need for effective work. Additionally, you will have to establish mechanisms and procedures for online onboarding.

  • Provide your business partner with details of your needs

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

Grid Dynamics as Your Nearshore Software Development Service Provider

Grid Dynamics is a digital-native technology services provider that accelerates growth and bolsters competitive advantage for Fortune 1000 companies. The company has 15+ years of experience in digital transformation and software innovation, most notably with open-source cloud-native programs. 

Grid Dynamics has offices throughout Eastern Europe and Central Europe and Latin America, making it one of the top nearshore software development companies on the market. With us, you will not have to worry about the common challenges businesses face when hiring a nearshore software development team. We ensure smooth cooperation, and select candidates most suitable for your needs while letting you have full control over the hiring process. 

Here is what partnering with Grid Dynamics looks like:

  • Grid Dynamics collects 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.

Nearshore Software Development: FAQs

  • What problems can you solve with nearshore software development?

Nearshore software development can address challenges such as cost-effective development, access to a skilled talent pool, as well as cultural and time zone alignment. It allows for smoother collaboration with remote teams, enhanced flexibility and scalability in project management.

  • How to choose the best nearshore company for software development?

When choosing a nearshore IT service provider, look for technical expertise, cultural fit, communication skills, and proven development methodologies. Prioritize companies with experience in your industry and the ability to scale teams and solutions.

Don’t know where to start?
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Marta Kravs

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

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