What is nearshore software development?
This is a question that many companies are asking as they look for new and innovative ways to develop software and digitally transform their businesses.
Nearshore software development at its core differentiates the type of software development outsourcing.
With nearshore, development companies engage developers and agencies located in a nearby country or share similar timezone.
There are many advantages to choosing this type of developer, we will outline several of them in this blog post and also provide you with a rough guide on the differences between models.
What are the different types of outsourcing models?
When it comes to outsourcing, there are a few different models that companies can use. With each choice, the customer can determine the model they prefer: offshore development, nearshore development or simply outsourcing which can be to a local provider.
When we engage with our customers many of them are familiar with the four main types of outsourcing models available to them.
- Staff Augmentation. The first is the staff augmentation model, in which the outsourcing company provides additional staff to supplement the client's existing workforce. This model is often used when a company needs extra manpower for a short-term project.
- Project-Based. The second model is the project-based model, in which the outsourcing company takes on a specific project from start to finish. This can be a good option when a company does not have the internal resources to complete a project in-house. The project-based model allows the customer to hire leverage the dedicated team model and build software alongside their in-house development team.
- Business Process Outsourcing. The third model is the business process outsourcing (BPO) model, in which the outsourcing company takes over all or part of the client's business process. This can be helpful for companies that want to streamline their operations.
- Managed Service. In the managed service provider (MSP) model, the outsourcing company provides comprehensive IT support and services to the client. This can be beneficial for companies that do not have their own in-house IT staff.
Each of these models has its strengths and drawbacks. To keep things brief, we'll focus on the most popular of these for this article: staff augmentation and project-based solutions. Outsourcing might be a fantastic method to save time and money, but it's crucial to match the model with the task.
Digital Transformation and Outsourcing
Since Marc Andreesen penned the famous words, "software is eating the world," more companies have come to understand the importance of web development, mobile development, machine learning, and data engineering.
Digital transformation is the process of using application development to create modern business processes, products, or services. One way that organizations can accelerate their digital transformation journey is by outsourcing some or all of their work to software development services companies.
Many older companies gain unique benefits through this approach since it frees them to focus on their core competencies. By partnering with specialized providers, organizations can free up internal resources to focus on more strategic initiatives and improve their overall performance.
How is the Nearshore Model for Outsourcing Software Different
The main difference between offshore and nearshore software outsourcing is the location of the nearshore software development team. Offshore outsourcing involves hiring a team from a country that is far away from the company, while nearshore outsourcing involves hiring a team from a country that is near the company.
Nearshore software development is a type of outsourcing where companies outsource their development projects to countries that are near them. This is different from other kinds of outsourcing because it allows for better communication between the company and the developers, as well as shorter travel times if face-to-face meetings are needed.
More Time to Collaborate
A nearshore service provider can be a great option for companies who want to outsource their development but still want to maintain good communication and collaboration with the developers. Good engineering requires good communication, planning and coordination.
Take Advantage of Agile Methodologies
The idea behind agile and scrum is to create the methodologies that enable development teams to design and build software and then do software testing efficiently. Having a nearby nearshore development services partner can be a critical piece in the outsourcing puzzle.
Offshore outsourcing to Eastern Europe or India can be a great option for companies who want to save on costs but may not need to maintain synchronous communication with their developers, particularly if they are using a waterfall approach to development.
There are many different types of nearshore software outsourcing
Nearshore software development companies can be either nearshore outsourcing companies -- think staff augmentation businesses -- or nearshore product development companies.
While these companies may look very similar, we view companies offering customized nearshore software development services as being radically different than the nearshore outsourcing companies that act as remote staffing agencies.
The staff augmentation companies experience higher rates of turnover. Their retention issues can have a material impact on the success of the software projects they resource with their hired-gun software engineers.
On Wall Street, there is an old saying, "no market, no trader." That axiom is true for staffing companies too, essentially: no software development project, no software developer.
Since all the developers have a sneaky suspicion that they may be out of job once their project is done, these staffing companies have a hard time building a strong internal company culture.
To offset the turnover issues, these businesses often have huge recruiting arms that churn through a lot of developers but in doing so alienate many more. Ultimately we think customers pay a premium for the services of these IT Staffing Augmentation companies.
Staffing Company farce of Top Tech Talent
Alongside these IT staffing companies are the marketplaces. We think of these honestly as meat markets that advertise that they can hire the top 1-3% of developers in the local market or attract Google and Facebook level developers -- whatever that means.
These are wild claims and are rarely true.
If you were the very best at what you do would you go work for an employer that did not care to retain you once your current role was done, or had no interest in developing your career?
Today, the staffing company nearshore software development model essentially looks the same as the marketplaces. They compete for the same type of business and again make the same outlandish top tech talent recruiting claims.
Yes, we are biased but we would avoid their services. From a recruiting perspective, at Azumo we would guide toward the old-school Cisco recruiting model. In hiring they aimed for a 10-to-1 ratio of potential candidates to new hires and so do we.
Staffing is not all bad.
Many companies prefer to have on-site staffing as way to try-out resources before hiring them full-time. Some companies prefer to have the operational flexibility staffing provides while maintaining more control. And still others who really do need the specialist that has a very particular set of skills to get a single job done.
Custom Software Development Services Companies
A project-based consulting services business is a custom software development company.
These companies' provide their nearshore services on a time and materials basis or even on a fixed-priced basis depending on the work.
These nearshore outsourcing companies provide software development services to companies who have one to multiple projects they need to outsource to a consulting company.
These companies that provide customized solutions are not staffing agencies.
Nearshore product development companies develop software products for companies. While these companies' messaging can sometimes be confused with the staffing operators, their models are very different.
Highly Developed Operating Models
These vendors will typically have highly developed business processes that are geared toward ensuring your project is successful. They will have a deep pool of in-house talent located in several development centers.
These nearshore software developers will think like business partners. They will provide advice on technical aspects of your software product development and explain how various decisions may impact the total cost of development and ownership.
In short, they can act as more than just a nearshore outsourcing company. They can serve as a nearshore partner. Nearshore software companies like Azumo who operate within this model have an easier time recruiting outstanding talent.
Attract and Retain Better Talent
Well, our nearshore software development company model is attractive to software engineers because we offer a well-defined career path and opportunities to learn new skills.
Our employees also know that they can move between different areas of development, and will be given internal projects to help them hone their skills. This makes us a much more appealing option than staffing companies masquerading as nearshore outsourcing companies.
Hire a Nearshore Software Development Company Partner
Because our employees stay with us, we can develop a culture. The software engineers on the nearshore team that works for us see the projects through from beginning to end and take pleasure in their accomplishments.
Our engineers can easily collaborate with the in-house development teams at our clients since they are members of the dedicated team offering development services. They understand the stack and business the same way the in-house team understands both. That shared knowledge inures to the benefit of our customers.
Advantages of nearshore software development
Both types of nearshore software outsourcing can be a great option for companies who want to outsource their development projects. Nearshore product development companies can be a great option for companies who want to speed up their product development cycle by having access to a nearshore development team.
And of course, nearshore software outsourcing companies can be a great option for companies who want to save on costs while still maintaining good communication with the developers.
One advantage of nearshore software development services is proximity. This can be beneficial for companies in several ways. First, it can help to reduce travel costs associated with face-to-face meetings. Second, it can cut down on the time needed to coordinate between different time zones. Third, it can foster trust since everyone can see everyone else working.
Shared culture and values
Another advantage of nearshore software development services is that it can help to create a shared culture and set of values between the company and the nearshore development team. This can be beneficial in terms of creating a more cohesive work environment. In particular, both companies can create a similar working environment.
The time zone allows for mutual "good mornings" and "good evenings" which go a long way toward creating familiarity.
Another advantage of nearshore software development is improved communication. This is due to the fact that nearshore developers are typically located in the same or similar time zone as the company. This can help to improve the flow of information and reduce miscommunication.
In addition, project-based nearshore businesses like Azumo will have a solid development process that may be employed to enhance productivity. We can also help you improve your team's development method if that's what you need.
Nearshore software development can also be beneficial in terms of increased flexibility. This is because nearshore developers can be more easily reached and are typically more flexible in terms of their work hours.
The minimal time difference enables everyone to get together in a snap, especially with the emergence of collaboration tools like Microsoft Teams and Slack.
Nearshore software development can help to reduce the risks associated with outsourcing. This is because nearshore developers are typically located in political and economic stability countries.
While this is not always the case, it has been quite evident recently why location matters when selecting a business partner.
Increase Access to Nearshore Development Center Talent Pool
For certain nearshore software development opens up access to a deep talent pool. This is due to the fact that nearshore developers are often located in countries with a large pool of skilled workers. This can help to improve the quality of the final product.
Cost is another important consideration when choosing nearshore software development. In general, nearshore software development costs less than offshore development. This is due to the fact that nearshore developers are typically located in countries with lower labor costs.
Nearshore software development can provide your company with the same quality of work as offshore software development with greater productivity.
Spend more on In House Team.
Aside from the overall budget savings, many technology companies elect to do nearshore software development outsourcing so they can use the savings so they can upgrade their in house team or invest in more sales and marketing.
Azumo is a Nearshore Software Development Services Company
Nearshore outsourcing models have many advantages for businesses. The right model can provide your company with access to talented developers while saving you money, time, and more. Carefully consider the options and choose the model that best meets your needs.
At Azumo, we understand there are many nearshore outsourcing services available to you. We have a defined development process, a deep pool of well-trained developers, and a host of nearshore software development services and cloud services.
If you're looking for a nearshore software development partner that can provide you with the quality work you need, contact Azumo today. We'll be happy to discuss your needs and help you find the right solution for your business.