2 Alternatives to Nearshore Software Development Outsourcing

Nearshore software development is an increasingly popular way of outsourcing to other countries. However, there are some disadvantages and advantages associated with the method that you should consider—and some companies might benefit more by using one of the alternatives to nearshore software development outsourcing. 

Don’t worry; we’re here to help. In this article, we’ll discuss nearshore software development and how it compares to other types of outsourced IT solutions.

What Is Nearshore Software Development?

Nearshore software development is a type of outsourcing in which companies outsource to a vendor located “near” their country. So, for a company based in the United States, this would mean handing over tasks to a third-party based in Mexico or Canada. 


Nearshore Has Some Disadvantages and Advantages

Though all outsourcing models might sound the same, there are key differences that your team should know about. 

While many companies have enjoyed success through nearshore software development, others might be restricted by its disadvantages. Let’s review the main ones to keep in mind. 

Advantage: There is usually no language barrier or different cultural expectations 

Though not always, most nearshore outsourced workers will be fluent in or have a working knowledge of your native language. As you can expect, this makes collaboration much smoother, as you won’t need to worry about translating documents or setbacks associated with mistranslations. Furthermore, there are (usually) no cultural hang-ups to get over to communicate effectively. 

Advantage: You are closer to nearshore talent and may share the same time zone 

A nearshore company is typically closer to you and usually in the same time zone. You can work closely with them and even give them instructions on short notice. This advantage could be crucial for companies that deal with many projects requiring quick turnaround. 

Disadvantage: Nearshore is a more expensive solution than offshore outsourcing

The main disadvantage of nearshore software development outsourcing is that it can be more expensive than offshore outsourcing. 

When you outsource your project to a country closer to your business, you’ll enjoy a faster turnaround time and greater flexibility due to the shorter distance. However, you can expect this convenience to come at an added cost. 

Disadvantage: There is a limited talent pool for nearshore software development 

Another disadvantage of nearshore software development outsourcing is that there is a limited talent pool for you to choose from. 

This could be an issue if you’re looking to hire many software engineers or find candidates with specific skills (such as experience with a particular programming language). Furthermore, you might need to spend more time vetting candidates than you would if hiring offshore developers or onshore-based devs. 


2 Alternatives to Nearshore Software Development Outsourcing

Fortunately, nearshore outsourcing is one of many companies’ options when searching for the right software development partner. 

There are two alternatives to nearshore software development outsourcing to be aware of before you start your search. 

Alternative #1: Onshoring 

A simple model, onshoring, is when a company outsources to a vendor in the same country. This has been around for a while, but it’s becoming more popular as businesses look to cut costs and invest in remote employees. 

As you can expect, onshoring means you eliminate cultural and language barriers, which often leads to better communication with your workers. Not only that, but there’s the potential for on-site collaboration: If your outsourced software engineering talent is in the same city (or willing to relocate), you could invite them to work alongside the rest of your in-house team

Still, onshoring isn’t without its disadvantages, with the most significant one related to cost. 

Hiring people from the same country means you’ll pay them no less than other companies for a similar job. So, if you are in the U.S. and are going to hire Americans, do not expect your hourly rates to be much cheaper than those of other American employers.

Alternative #2: Offshoring 

One of the most well-known alternatives to nearshore software development outsourcing, offshoring, is a form of outsourcing in which work is sent to a foreign country that is not near your company’s origin. The most common locations to send offshore outsourced work to are India and China, which could be on the other side of the planet from your team. 


Despite the distance, offshoring’s advantages are incredibly attractive, especially when cutting costs. For instance, the average hourly rate for an American software developer is as high as $75 per hour. In India or China, you can hire an experienced professional for just $15-$20 per hour. And since the labor is in another country, you do not have to worry about travel or accommodation expenses. 


Unfortunately, this also means you’ll be working with someone who doesn’t speak your native language 90 percent of the time, which could lead to frequent miscommunications if your outsourced workers aren’t fluent. Differences in time zones will also require asynchronous collaboration, which can be frustrating if you need someone to be available immediately to answer questions.


Which outsourcing model is best? 

Ultimately, the best outsourcing model for your business will depend on the type of work you have to do, the resources you have available, and your budget. To understand where you’re at, sit with your team and consider how important the following factors are to your company: 


Apply these answers to the models we’ve just reviewed to make an informed decision! 


Software Development Outsourcing with Lab651

Outsourcing can be a great way to save time and money, especially when it comes to tasks that your company doesn’t have the resources to complete. However, it’s important to pay attention to the details; if you’re considering this option for your business, make sure you’re comfortable with the model you choose before committing.

If you are considering outsourcing your software development, Lab651 has the experienced industry professionals you need to see any project come to life. Click here to connect with our team today!