Industry Insights 5 The Top Advantages of Nearshoring Software teams

Industry Insights


The Top Advantages of Nearshoring Software teams

by | Dec 7, 2021 | Nearshoring, Remote, Software Development

About The Author Josh Nuzzi

Josh Nuzzi is the VP of Marketing at Sonatafy Technology, with over 12 years of marketing expertise in a variety of industry verticals, with focus on technology and software.

Nearshoring is a topic on the tips of many tongues today due to its many benefits. if you are a company which operates especially in the field of IT and technology then you should probably hope on the Nearshoring train. Nearshoring enhances and strengthens the workforce of the receiving company. Nearshoring means that there are more hands added to the team and more talent. It takes the load of having to do extra work off of your employees and on to fresh employees who are up for the challenge. This enhances productivity and the quality of work produced within a company and sets it up for success.

 Some of the top advantages of nearshoring software teams are:

 -Same/similar time zone

A big difference in time zones causes delays and makes it more difficult for face-to-face interactions to occur. Nearshore software development companies work in more compatible time zones with their clients which allows clients the flexibility to respond quickly to new requirements and more. Nearshoring makes it more convenient for clients to meet up with the team because of a shorter and more convenient travel distance.

 -Quality Infrastructure

Nearshoring teams typically have better quality infrastructure compared to other parts of the world. Delays can be caused by slow loading times and outages so reliable communication infrastructure and stable internet connectiomeanns have fewer delays and more progress.

 -Fewer language barriers

A disconnection in communication leads to less efficiency and progress. Most Mexico-based Nearshoring teams are so close in culture to the US which makes a more progressive working environment and a good work relationship. The above factors make Nearshoring the most suitable option for agile development projects that require a high level of engagement either face-to-face or just closely.

 -No Hidden Costs

By hiring a Nearshore team you avoid the many hidden costs that may spring upon you with outsourcing, this is due to the closeness in time zones which makes the chances of developers overcharging you fewer.

 Why Nearshore?

 Nearshore outsourcing is all about hiring a development team to carry out services in nearby countries and offshoring is all about employing or contracting services to countries further away. While offshoring is said to be cheaper than nearshoring, nearshoring has many benefits, the main being that it is more progressive and has fewer delays, language barriers, and cultural barriers. Offshoring often presents more language and cultural barriers and a lot of delays due to this.

 What are Offshore Vendors?

 An offshore Vendor is someone who offers their IT services to companies in nations further away from theirs.

 What is the Difference between Offshoring and Nearshoring?

-Offshoring occurs between an offshore vendor and a company that areis nations that are geographically far away from each other. Plenty of talented offshore vendors can be located in countries such as India, the Philippines, and China. There’s a high amount of talent there as well as low expenses.

-Nearshoring occurs between countries nearby, preferably neighboring countries. The closeness in proximity decreases the travel time for face-to-face meetings which means that they can occur more frequently and at a lower cost. The closeness in proximity also means that there’s more cultural compatibility which reduces any chances of misunderstandings.

What is Nearshoring?

Nearshoring is the outsourcing of services from a third party in a different nation near the client company. It can also be described as shifting a company’s operations to a neighboring country. A nearshore team takes on whatever tasks the client company requires them to do. The employees of a company that nearshores a part of itself will continue to carry out the entire operation while a company that outsources to a third-party vendor will have a different set of employees.

What Companies Use Nearshoring?

Most Nearshored IT services are from Western companies to Central and/or Latin America. Some companies that use nearshoring are:

-Pharmaceutical companies- nearshore their manufacturing processes to nations near them who are within their time zones. Many US companies are nearshoring their manufacturing processes due to increased production and expenses in their native country. An example of a pharmaceutical that had nearshored its services is Medtronic which had nearshored its plants to Mexico back in the 1970s.

-Automobile companies-this involves giving your automobile manufacturing as well as other processes involved in the making of cars to countries near yours. Some major automobile companies such as Volkswagen, Nissan, and GM nearshored their manufacturing to Mexico back in the day. According to the ITA, the US imports 75% of exported vehicles from Mexico.

What is Nearshore Software Development?

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

What is a Nearshore Zone?

A Nearshore Zone is the area or distance between the outsourcing company’s country and the client company’s country.

What are the Benefits of Onshoring?

The top advantage of nearshoring software teams does outweigh those of onshoring software teams. Some benefits of onshoring include:

-Reduced time to market-onshoring allows for requirements to be gathered, coded, tested, presented, and revised in a cyclical pattern. It gives clients the chance to give their attention to more serious concerns and respond as the development occurs which results in less work that has to be redone.

-It is cost effective-onshoring costs less compared to offshoring. This means that businesses can save money on production.

-High quality-Onshoring produces high-quality work. Onshoring involves a company utilizing local talent to carry out tasks which means that there’s a higher concentration of talent. Having the talent be local also means more consistent, high quality, and high-touch deliverables.

-Preparedness for unplanned issues-Having your workers onsite means that they’re always prepared for unexpected occurrences. It also leaves you feeling certain that if your project requires some face-to-face/ in-person interaction, you’ll receive it in a quick time.

-Reduced risk-the onshore model presents less risk overall because the employees are present on sight. The geographical distance and unfamiliarity make offshoring riskier than onshoring.

What is an Example of Nearshoring?

A good example of nearshoring is, a company based in the US outsources to a third party in Mexico. For example, Apple wants to hire a outsourcing team so it does so with an outsourcing team from Mexico a country in close geographical proximity to it.

Is Offshoring or Onshoring Better?

Considering that in onshoring the employees are onsite and ready to get to work at any point in time at a significantly low cost than that of offshoring, Onshoring is considerably better than offshoring. Offshoring increases the risk of miscommunication, language and culture barriers, higher costs, and less quality work.

What are Nearshore Projects?

Nearshore projects are software development or other tasks that are delegated to companies that are in close geographical proximity to the client company.

What is Onshore and Offshore in Software Development?

Onshore software development is when companies delegate certain tasks to companies in close geographical proximity to theirs while offshore involves companies delegating their tasks to companies in further geographical proximity to theirs.

What Does Onshoring Mean?

This is when tasks are delegated by a company to a third party residing in the same nation. Onshoring has many great benefits such as lower costs, more productivity, and more.

What is Nearshore Software Outsourcing?

Nearshore software outsourcing is defined as the process of giving some tasks, software development in particular, to companies in close geographical proximity to theirs. This gives companies better control over operational expenses. This means more proximity in culture, convenient location, and a barrier in language.

What are the Disadvantages of Onshore Software Development?

Now that we’ve discussed the top advantages of nearshoring software teams, here are some disadvantages of onshore software development which include:

-limited skills sets with some software companies

-Infrastructure cost of managing another team

-costs of local training.         

The quick development of varied digital solutions has made several companies search for a way to keep up with the innovative technology for them to keep themselves one step ahead of their competitors. Not doing this increases their chance of losing and business clients and eventually having their business fail.                                                                                                                                         

What is the Difference between Onshore and Offshore in the IT Industry?

Onshore in IT is when the process of a company outsourcing its services and another company receiving those services occur within one nation meaning that the client company looking to delegate its IT service to a third party would pick a third party from within the nation. Offshore in IT is when the same process of a company outsourcing its services and another receiving those services occur between companies residing on two separate nations that are further away in geographical proximity to each other.

 What is the difference Between Onshore and Offshore outsourcing?

The major difference between onshore outsourcing and offshore outsourcing is that onshore outsourcing delegates its tasks to third-party employees from the same nation as the client company. Offshore outsourcing delegates its tasks to third-party employees from nations in distant proximity to that of the client company.

What Key Factors are most Firms Seeking when they Offshore Services?

Before choosing a vendor to delegate your tasks to, you should be careful enough to be certain that your relationship will be for the business’s best as the wrong choice could seriously destroy/damage your business and its reputation. Some key factors need to be examined to ensure the safety of your business. By considering the following factors, the client company can ensure a stronger relationship between it and the vendor company which in turn ensures good work production and quality work production. Here are some key factors that businesses should look at when they offshore services.

-Infrastructure-The service provider’s infrastructure is one of the deciding factors before a company accepts to outsource its work to them. A good working environment means that the offshore staff is safe and can be fully productive.

-Alignment in Culture-outsourcing to offshore locations that have similarities in culture, language, and time zones means more effective work with very few breaks in communication

-Talent pool-The business owners should take their time to look into the local environment of the outsourcing area. It should look into whether the outsourcing company can produce professionals with the technical and communication skills they need.

-Industry standards-Checking whether the outsourcing company has a high BPO is important. It is also of great importance that the outsourcing company check whether the service provider is up to its standards.

-Pricing-price is a key deciding factor in the final decision and a good price could mean the difference between accepting the service provider company or not.

-Service level agreement-Having everything written out leaves less room for confusion for everyone involved. There should be absolutely no ambiguity or confusion about the minimum level of quality required by the client company.

-Stability-before offering a contract to the outsourcing company make certain that you carry out a background check to ensure the reliability of the company and that they are well reputable to carry out your tasks well and up to standard. This also helps to establish trust between the outsourcing company and your company.

Some large companies such as Apple and Amazon have already taken advantage of Nearshore outsourcing. Nearshore outsourcing allows the company’s actual employees the time to focus on effective project management and client communication. However, deciding whether to remain in-house or outsource takes some careful and strategic thinking and planning. The business’s priorities must be considered before making this decision as well. The Benefits of nearshoring make a major difference in the company and boost business as well as the company’s image. Nearshoring ensures strategic agility and the ability of the company’s actual employees to focus on core competencies.

Sonatafy provides businesses with high-end, talented Nearshore resources with several skills in various disciplines. Sonatafy has very simple requirements for starting a career in nearshore software development. Their simple requirements are to be professional, be driven, be open to continuously improve your skills and domain knowledge, edge, and lastly be ready to have fun. By joining Sonatafy you will speak, share and grow with Sonatafy.

Now that you’ve been educated on the top advantages of nearshoring software teams amongst others, take careful consideration before making your wise decisions but don’t waste too much time or you’ll be left behind.

Nearshore outsourcing is a lot less complicated compared to offshore outsourcing and onshore outsourcing  According to Forbes, many countries have been using outsourcing since the 1980s n an attempt to reduce costs. It also states that nearshoring shall continue to bring the most prepared international technology as well as software engineers into the teams of the American companies which have a global vision. Nearshoring indeed has a bright future. Many companies will continue to utilize it for the betterment of their businesses.

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