Finding the right talent at an affordable cost is a challenging task for development companies. Recruitment costs are getting higher, which increases the need to save costs and instead invest in hiring specific skills that the in-house teams lack.
Let’s have a look at some of the following interesting figures that make nearshore agile software development a competitive marketplace:
- Global software development outsourcing is projected to reach USD 40.16 billion by 2025.
- 80% of North American companies are actively considering nearshore in 2023.
Global access to talented software developers provides better expertise and accelerates project deliveries. With nearshore software development, companies can get a lucrative option that is:
- Geographically closer
- Culturally similar
- Synchronized with time zones
- Flexible without borders
In this blog, we’ll uncover more on how nearshore development can boost your team productivity and help you simplify your struggle to find the right nearshore partner.
What is Nearshore Agile Software Development?
Nearshore agile software development is a cost-effective solution that expands the app development capabilities of your in-house teams. It enables the current teams to work with other development teams that are near your company’s location. Sharing similar cultures, work environments, and time zones leads to a productive partnership.
Let’s understand this through an example.
Suppose an IT development company in Texas is looking to expand its development teams. They want to invest in a cost-effective, talented team with minimum language barriers.
Compared to nearby locations like California and Arizona, Mexico’s culture aligns most with Texas. So, the ideal option should be to hire nearshore app developers from Mexico to ensure real-time interactions with the closest proximity.
Benefits of Nearshore Agile Software Development
Nearshore software development benefits both the in-house developers and the external team hired to bring in new skills. The neighboring vendors are affordable because local development companies don’t have to pay to recruit new employees with new skills. Here’s how:
Cost Efficiency
The development costs of nearshoring destinations are lower than the location of the home. Suppose you’re seeking software development services in the Latin American region.
Argentina is one of the top destinations for nearshore app development, with a well-educated workforce and strong IT infrastructure. Buenos Aires and Rosario are your ideal bets for outsourcing software development services.
Cultural and Language Compatibility
This can only be achieved when the home country has outsourced development services from a location that shares a similar language and culture. Suppose your development company is in the South American region, and the primary language is Spanish. Thus, hiring app developers from nearshore locations like Costa Rica, Colombia, and Peru makes sense as they have similar language.
Time Zone Alignment
The alignment of time zones between the home development company and the nearshore company is heavily dependent on how near the location is. For example, Costa Rica’s central time zone syncs with most of the US locations with just a 3-hour difference.
Similarly, Western European countries like Poland, Ukraine, and Romania are top locations for nearshore software development services.
Access to Skilled Talent Pool
Nearshore developers work exclusively with in-house teams, enabling a smooth communication flow throughout the project management cycle. Moreover, the options for choosing the right team are unlimited. For example, many US locations are switching to Argentina for nearshore development because of distributed environments and wider UX/UI capabilities.
Faster Time-to-Market
With an additional team, development time is reduced, and development processes experience a speedy shift. Agile software development practices like DevOps outsourcing help deliver a product in small iterations and faster market releases.
For example, Canada remains a top nearshore destination due to the government’s tax incentives and funding in the tech industry, which quicken product market release.
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Process of Outsourcing Nearshore Development
The demand for expert talent is a priority for many companies, yet there is a high scarcity of niche-specific talent. However, when it comes to hiring an experienced team, talent matters more than the location. Here’s how you can make that process easier:
Identifying Business Needs and Goals
If the home company is located in Latin America, it’s best to list nearshore locations with swift tech progression and a thriving development market. For example, China and Brazil are globally recognized nearshore destinations in North America, with expert talent ranging from basic to intricate applications.
Selecting the Right Nearshore Partner
Apart from evaluating domain expertise and technical skills, client retention and risk management are some of the top criteria for selecting the right nearshore development company. Additionally, it’s crucial to evaluate your in-house talent based on their development expertise, available budget, and ability to afford the upfront cost of hiring a development team.
Defining the Scope and Objectives
The scope of development objectives should be to reduce the total cost of engagement. If you are in North America, consider if the time zones of the nearshore partner align with yours.
For example, engaging with Eastern European countries like Belarus might give you access to talented engineers from Belarusian universities. Still, the distance is almost 14 hours, leaving no room for face-to-face meetings.
Contract Negotiation and Legal Considerations
Negotiating contracts includes provisions for protecting sensitive information and trade secrets with Non-disclosure Agreements (NDAs). Additionally, Service Level Agreements (SLAs) help manage expectations of deliverables, payments, compliance, and exports. For example, California requires CCPA regulations under the GDPR laws.
Establishing Communication Protocols
Hiring app developers from Eastern European countries can be a worthwhile investment for nearshore development. If you want lower labor costs, then offshore development from Western Europe and the USA can deliver quality services at lower workforce costs. Similarly, Ukraine and Russia will provide developers with proficiency in more than one foreign language.
Onboarding and Knowledge Transfer
The last step is onboarding a team well-versed in their niche-specific skills. For example, the most prominent near-coastal locations providing some of the finest talent in software development are Vancouver, Montreal, Tijuana, and Toronto. Similarly, Costa Rica and Argentina provide low labour costs and an emerging highly educated workforce.
Cost of Nearshore Agile Software Development
Nearshore software development rates can be highly influenced by countries’ current exchange rates. Some countries have a higher cost of living, making them good locations for nearshore development services.
Similarly, other countries have better working conditions and a talented workforce. Hence, the rates can fluctuate from a minimum of USD 1,000 to a maximum of USD 1,00,000.
For example, if you’re in North America and looking for top locations to outsource development services, Latin America is the ideal choice. Here’s a tentative nearshore software development cost breakdown of the ideal areas in Latin America for US companies looking to outsource development:
| Location | Approx. Nearshore Development Rates | Reasons to choose |
|---|---|---|
| Argentina | USD 125 | Ranks 14th in global education Software engineering revenues up by USD 2.7 billion by 2026 |
| Columbia | USD 1.140 | English is the official language in Andres, Providencia and Santa Catalina Bogota and Cali emerging tech hubs |
| Costa Rica | USD 2,425 | Ranks 5th in Latin America for global skills Cultural affinity and favorable time zones |
| Brazil | USD 1,805 | The software development market is valued at USD 11.3 billion Expertise in Java and .Net Spanish is the dominant language |
| Mexico | USD 1,878 | Vast developer talent pool of over 2,25,000 The software industry reached USD 3.9 billion in 2023 |
| Chile | USD 50 to USD 65 per hour | The Chilean variant of Silicon Valley, “Silicon Valley” Home to 61,000 developers generating USD 1.4 billion in revenue |
| Peru | USD 45 to USD 65 per hour | Best in Latin America with a YoY growth of 3.5% Top-ranked universities and highest-skilled ReactJS developers |
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Challenges in Nearshore Development
Choosing a nearshore product development region can invite its share of challenges. These can range from wrong evaluation of skills and rates to incompatible time zones. Additionally, cultural differences, such as English proficiency in countries from Eastern Europe and Latin America, can also pose some obstacles. Let’s understand them in detail:
Cultural and Communication Barriers
Cultural differences can cause communication barriers even if the neighboring countries have the same languages in terms of misunderstanding the strategies. For example, the United States can still face communication barriers with Canada because of differences in laws and regulations.
Time Zone Challenges
Geographical proximity is the biggest advantage of nearshore development, enabling work in similar time zones. However, balancing work schedules and overlapping hours can pose a concern. In such cases, adopting agile software development methodologies is best to solve misunderstandings and project delays.
Managing Expectations and Deliverables
Often, the client and the outsourcing partner have inconsistent processes due to different approaches and project management methodologies. Additionally, timelines, complexity, and cost expectations can become hurdles to incorrect resource assessments.
Quality Control and Assurance
Relevant domain knowledge and expertise are essential for quality assurance and control. Misinterpreting documentation might not address the client’s needs, leading to performance issues. Hence, testing practices and CI/CD integration can prevent such delays early in the development cycle.
How Moon Technolabs Help You With Nearshore Agile Software Development Challenges
Capturing your target audience is a time-intensive process. It requires understanding their core problems and building software that can solve them with the right functionality. In-house development teams can often reach a saturation point or have conflicting priorities, leading to the need for a different perspective.
Hiring a nearshore development team from Moon Technolabs can bring a fresh outlook and expertise to work with the in-house teams. It also enables delegating development tasks to niche experts while the business can run core operations. Get in touch with us today to onboard the right team members and complete your projects in record time.
Conclusion
Nearshore software development has emerged as a popular alternative to in-house development options due to its ability to maintain productivity, save time, and reduce costs for enterprises.
This approach enables organizations to delegate project segments while effectively optimizing operational efficiency. It streamlines remote team management with tailored solutions for product development without traditional recruitment delays.
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