By Anastasia Stefanuk
Thanks to a few decades of constant globalization, wireless communication, and fast ways of transportation, we believe to have witnessed “The Death of Distance.” The number of teams that work remotely throughout different time zones, thousands of miles away from each other with nothing but project management tools is higher than ever.
In the light of the circumstances, yet another trend stood firmly – outsourcing. According to the report issued by the State of Software Development in 2017, 56% of startups have used outsourcing at least once instead of in-house IT staffing. Those who haven’t tried the approach yet plan to do it in the next 12 months. Thanks to management and team communication tools, outsourcing is now easier to control than ever.
However, as you may have noticed from the title, today we’re going to take a glance at a particular type of outsourcing – nearshore software development.
Onshore, offshore vs nearshore – where’s the difference?
If you’re new to outsourcing and its specifics, we’ll take a while to get it straight.
Onshore outsourcing is getting a third-party vendor from your home country to work on your project. An American company outsourcing software development to another US-based agency is a perfect example of that.
Offshore outsourcing stands for attracting an overseas company to work on your development. For instance, India has become a top offshore destination for many US and European companies.
Nearshore outsourcing also means collaborating on a project with a foreign distributed team if there’s the tech talent shortage in your home country. The difference is, however, that a third-party contractor is fairly close to the place where your business is located. Chances are, you’ll be sharing a common tongue, a time zone, as well as cultural similarities.
Why Nearshore Outsourcing Is The Way to Go
Out of all the approaches to outsourcing, nearshore is the most balanced one. It’s cheaper than onshore (since you can hire a team in a country with a cheaper cost of the workforce) yet it’s relatively easy to get in touch with your team and even to set up a face-to-face meeting.
Let’s go over the main advantages of nearshore outsourcing for your software development.
Reason #1. Cheaper development cost
If you feel like hiring a developer in your home country will cost you an arm and a leg, there’s no need to look for someone overseas. It could be very well so that an affordable team is waiting for you right across the border.
Nearshore outsourcing is also a way to offer tech jobs in countries with high taxes. If you don’t want to give away a dime in taxes, one of the neighboring countries can help out. For instance, European tech companies outsource web development to Indian, Polish, Ukrainian, Belarusian, Czech, or Russian developers.
There, the nearshore team is exponentially cheaper while the skill of developers remains steadily decent. Also, unlike Italy, Germany, Spain, or Great Britain, taxes in Eastern Europe are way lower which lives western businesses with a decent return.
Reason #2. Little time difference
Everyone who worked in an international team before knows what a pain in the neck time zones can be. It’s hard to coordinate communication, create a system of deadlines, and optimize the workflow.
Choosing a remote team collaboration, you know that time difference won’t stand in the way of your work. Almost all countries in Europe share the same time zone. If there is a difference, it’s no more than 1-2 hours which doesn’t really make a difference. Working at the same time is a huge boost in team productivity since the risk of misunderstandings is little to none.
Reason #3. A possibility to meet a third-party contractor face-to-face
To make sure the project development goes as planned, we would all love to come to the third-party company’s office and see the progress. However, if you’re outsourcing overseas (say, in India), it would take a ten to thirty-hour flight depending on where you’re located. That’s a long way to go, and the airplane tickets on their own will cost a dime.
Obviously, a lot of offshore teams are managed by emails and phone calls but the team efficiency of this approach is way lower than the one of face-to-face meetings.
However, if you’re to hire dedicated developers in a neighboring country, it’ll take but a couple of hours to get to a face-to-face meeting. In fact, statistically, nearshore is the leading outsourcing approach by the number of face-to-face meetings. This data was provided by Abbott&Jones.
Unlike an email or a phone call that gives you nothing but an estimate for the project’s progress, with a face-to-face meeting, it’s easier to learn how to manage a remote team.
What Can Go Wrong?
Regardless of how comfortable nearshore outsourcing is, there are always a couple of things that can go wrong. Here’s what you should watch out for:
Red flag #1. No skilled staff
In countries that lack resources for a proper tech education, it’s as difficult to educate skilled tech graduates to work on your project. Quite obviously, thanks to the Internet and remote team management tools, you can get the most out of global tech talent pool.
However, when choosing how to hire a developer, there are many things to take into account so you have to be especially thorough. Make sure your candidates have enough professional background to fully tackle a project, their management system is efficient and fits your criteria.
Instead of chasing the price tag, focus on skill sets instead. After all, you should be able to fully trust the contractor if you’re to outsource a software development project to him.
Red flag #2. Protection of confidential information
When a third-party company works on your projects, data leaks are a vivid threat. With Deloitte, Equifax, and Yahoo all being victims to those, small businesses had their wake-up call as well.
Most data leaks happen out of misunderstandings between the company and a third-party contractor. To avoid all the problems that come along with information leaks, make sure you signed a data processing agreement (DPA) with an agency that’s handling your project.
Another way to go is asking a vendor to produce and document a Security Management System. There, all the steps regarding client information system will be recorded.
- If you don’t want to make a staff augmentation in your in-house team, outsourcing the project to a vendor is a good idea. Nearshore outsourcing is a way to go for most small businesses since it cuts software development costs all the while ensuring a fairly comfortable communication system.
- Nearshore outsourcing allows your company to track the progress of a project constantly including scheduling a face-to-face meeting. Cultural similarities and little-to-no time difference both come in handy in the remote team communication.
- However, it’s important to watch out for a few red flags when it comes to nearshore outsourcing. Ensuring that a project is handled securely by a skilled staff is important to establish trust between both parties.
Anastasia Stefanuk is a passionate writer and a marketing manager at Mobilunity. The company provides professional staffing services, so she is always aware of technology news and wants to share her experience to help tech startups and companies to be up-to-date.
Nearshore stock photo by Lightspring/Shutterstock