The global trend of nearshoring outsourcing is increasing consistently due to the great advantages it offers to all types and sizes of enterprises, especially the startups. Nearshore software development is powered by smoother communication, similarities in cultures, and overlapping work hours, which allow potential clients to establish a better team cohesion, compatibility, and ease of working.
The global revenue of IT staffing services was recorded at a whopping $92.5 billion in 2019, according to Statista Global Market Size of Outsourced Services Report. The share of nearshoring ones is continuously increasing due to the enormous interest taken by the startups. Many industry experts and software development gurus believe in the brighter future of nearshore outsourcing in the coming years. I am going to outline in this article 8 the most important benefits the startups can have by working with mentioned outsourcing partners from the nearest countries and let’s swallow in this topic together.
Nearshoring is about IT Industries Broaden Horizons
Nearshoring is a type of outsourcing in which the remote software development services are engaged to any teams located not far away from the country the potential client is located. IT outsourcing services can be divided into three categories – onshore, offshore, and nearshore development. It is worth to mention that there is one more category – reshoring, which is frequently met in the USA region. However, I am not going to talk much about it in the following paragraph. You can read more about its impact on the North America economy here.
The term nearshoring is getting huge traction in the software development industry worldwide. New hubs of nearshore IT staffing vendors are emerging in the Eastern European and Caribbean countries alongside major offshoring R&D centers like India, Philippines, and Malaysia.
Countries like Ukraine, Bulgaria and other neighboring ones are emerging as new hubs for remote software development team acquisition.
Usually, such firms are aiming to decrease the financial and tax load on startups. In other cases, they are able to be a great addition to the existing software development team and the better budget-saving object. Moreover, the tech world is developing at a tremendous speed, and I am sure nearshoring developers have many tips and ideas your native development team even does not suspect about. I have a strong belief in globalization’s positive effect on the global economy and international IT development due to nearshoring and offshoring staffing services, our common desire to share experience and skills worldwide.
Achievements Unlocked by Nearshoring Partner Engagement
The global market of IT outsourcing, especially the software development sector, is noticing a shift from the offshoring to nearshoring development. Startups are playing a pivotal role in this shift in the outsourcing industry. Nearshore Development Team suppliers offer the following major benefits to the potential partners.
#1. Effective and Trusted Communication
Communication always plays a very critical role in the outsourcing business, especially in software development niches. The success of any development project relies on effective communication at different stages from customer requirements to product performance and beyond. Communication in nearshoring is the first step to durable, sincere and trust relationships with your client.
#2. Development Cost Reduction
Normally, startup companies face constraints of short budgets, so they need cost efficiency, high quality, and greater productivity in software development. Nearshoring is a very tremendous phenomenon in the IT business world that is a great way to reduce costs of hiring a nearshore developer or a team of developers. The traveling costs also reduce significantly in case of any requirement for physical traveling.
#3. Proximity Dividends
Nearshoring vendors offer many benefits of geographical proximity such as time-synchronization, effective collaboration, longer working hours to communicate and collaborate. The cost of physical traveling and the time for traveling also reduce significantly in nearshoring development. All those factors offer great benefits to all sizes of enterprises, especially startups.
#4. Access to Larger Talent Pool
Like other types of outsourcing, you get access to larger pools of talents in the nearshoring staffing services. This helps you choose the most suitable talent for your project so that you get the desired business bottom lines.
#5. Quality & Control
In nearshoring development, you get better control over the development team due to geographical proximity, shared culture, effective communication, and overlapped work hours. So, you get not only better control over the teams but also get better quality of services.
8 Key Points to Take Care of if Nearshoring is Your “Perfect Match”
I may mention that your startup will benefit the most from this type of outsourcing software development services in the case if you will pay the most attention at a nearshoring development vendor. I have spent a lot of time observing diverse cases of success and failures in the process of this issue solving, and collected some important to remember tips and suggestions to help you define if nearshoring is a perfect match for your business needs.
✔ Measure thrice and cut once
My congratulations – a good start is half done! You need to define your business requirements and objectives very clearly and specifically. If you miss any important aspect or just digress a little bit from the desired direction, you may need to pay dearly. It would be even better if you will write them down before you send a request to any vendor.
✔ Decide Location Carefully
You need to study nearshore locations around you and decide the best out of them based on proximity, talent pool, outsource developer salary, traveling options, local infrastructure, political situation, culture, work ethics, and much more. Try to investigate the mentality of the country you would like to choose – it will be great for the further building relationships process.
✔ Research & Analyze Nearshoring Vendors Properly
Search for all existing professional IT staffing companies in the nearshore location from where you decided to engage talents to your development project. Analyze all the aspects of nearshoring companies such as talent pool, portfolios, experience, financial status, infrastructure, communication systems, and others. There are many approaches to make a choice. I prefer to use BCG Matrix.
✔ Make Comprehensive Contract
The conflicts are one of the most common things in all types of teams whether onshore, nearshore or offshore. So, you need to make a comprehensive contract so that every aspect of work, processes, and procedures are defined clearly. All aspects of a project such as a delay in delivery, incurred cost, liquidated damages, hidden charges, control over the teams, management control, and other similar types of aspects should be properly discussed and defined in the contract.
✔ Quality of Service Agreement
Before you hire any professional nearshoring service company, clearly define a Service Level Agreement SLA and quality benchmarks of your project. You should clearly define performance tests, quality checklist, software presentation criteria, features and capabilities, and other aspects so that you get not only the product that you are looking for but also the quality that your startup deserves.
✔ Sign a Non-Disclosure Agreement NDA
Normally, startup businesses are based on innovative ideas and out of the box approaches to viewing the existing business ecosystem. So, you should be very careful about your business idea to be kept secret until you launch your idea. This provides you a better competitive edge in the business. Never forget to sign an NDA to get most of the nearshoring development.
✔ Soft and Tech Skills Check-up
Both technical and soft skills like communication skills, requirement analysis, business acumen, solution-oriented approach, attitude, programming skills, and other factors regarding a nearshore team play a critical role in the success of your software project. So, assess both technical as well as soft skills of your team along with the supported tools to benefit the most from nearshoring. I recommend you to have a card with competencies you require from the potential members.
✔ Keep Engaged with Your Nearshore Team
Managing a remote team is very tricky and complex. You need to take care of regular communication with your team to keep them motivated, engaged, directed, and committed to the project objectives and timelines. Always be careful of any kind of rift or conflict in the team. Nip the conflicts in the bud and amicably settle the matters.
✔ Cost Is Key
The most fundamental driver of the outsourcing industry is cost. And, cost matters a lot for startup companies. So, negotiate the cost of the project carefully. No hidden charges should be there.
Offshoring is declining continuously and nearshoring is taking over the offshoring services worldwide. Nearshore software development reduces cost, time, and risk factors for the startups and allows leveraging the other benefits of proximity, culture, and language. Useful tips mentioned in this article will help startups benefit from nearshore development significantly.
I am Kateryna Boiko, and I am working as a Marketing Director at Mobilunity, the provider of Dedicated Development Teams with 9 years of hands-on experience in digital marketing located in Kyiv, Ukraine. I have passed a long way from Product Manager to Marketing Director managing to work with diverse industries and markets and now is keen on sharing unique cases with the world and coaching on topics relevant to Business Management & Development, Digital Marketing and Product Development.