February 24, 2021

Nearshore Software Development: A comprehensive guide to deciding on this outsourcing model

We offer a very comprehensive guide to outsourcing models; We describe nearshoring, why outsource to it, benefits, and how to choose a nearshore software company.

In each business market there are behavioral guidelines that become standardized due to their proven effectiveness during the years of  practice. This is how technology companies have been making use of outsourcing services; it is about nearshore, onshore or offshore.

A well-known example is when a company uses another company to assign its functions in a certain area of ​​the business; This figure has been very common for the cleaning industry.

However, in technology companies where the main product is software to provide services on the web or mobile applications, it is already a natural strategy to hire the development of software, repairs, maintenance or new products to external companies.

With the coronavirus crisis in 2020, technology companies saw their services demanded much higher than usual, causing breakdowns to websites and applications or apps, which were not prepared for an unexpected growth of users.

On the other hand, the large global companies were ready to face the challenges derived from the pandemic because they have been using outsourcing of the type of nearshore software outsourcing in combination with onshore software development for several years.

Types of outsourcing for information technology (IT) companies

The three models of outsourcing are:

  • Onshore Software Development
  • Nearshore Software Development
  • Offshore Software Development

In general, any of these outsourcing models brings advantages such as getting rid of fixed staff and office costs, accessing highly trained professionals with experience in the sector, and speeding up product and project delivery times.

Of course, handing over your business know-how to another company can endanger your own company, it is one of the most frequent fears; That is why before proceeding with a contract, some essential steps are recommended that we will provide at the end of this article.

Onshore Software Development

Although this option is being minimized by technology companies, we must mention that it is about finding a nearby local resource, within the same country, to delegate some functions. However, this option has been reduced to a minimum depending on the complexity of the work to be hired. External personnel are used since the expert personnel in the software area is very varied; then, it would be very costly to keep such high-ranking employees within the company. Also, it can happen that these qualified professionals get bored by not being able to apply the full potential of knowledge in a software product that does not require it; then, these people run the risk of becoming obsolete in their knowledge by not practicing it.

The above explains why it is difficult for a company to maintain high professionals in its ranks without being strictly necessary. Depending on the required specialization, it is possible that there is a shortage of this professional or no immediate availability to attend the urgency required.

On the other hand, requesting a local company in the United States to commission a software project can seem like looking for a needle in a haystack, since good companies are always at the top of their jobs; but their main problem is the high costs for their services. While some US firms could afford an Onshore company, the vast majority - including giants with enough money - prefer nearshore companies and even those offshore in distant countries.

nearshore software development

Offshore Software Development

This outsourcing option is the other extreme of onshore outsourcing. in this case, the software development provider is located in a country far from the United States. At first glance, this distance does not seem to be a problem, because there are communications via the Internet that can be free or very cheap. However, other characteristics of this form of offshoring offer difficulties and problems for executives located in the United States.

The main reason for hiring an offshore company is almost always based on the price or hourly rate, because depending on the country where the supplier is located, the economic situation may be more favorable to obtain the lowest price. Also, the country of destination of the task must show adequate competence to train professional resources in software development, since the ideal is to have greater professional competence and availability than that existing in the contracting company.

The common problems in contracting Offshore Software Development come from the time difference, which forces both parties to make sacrifices to communicate or work in a synchronized way to monitor the results, instructions of the tasks or tests of the software. Although the English language is used by programmers all over the world, spoken communication is not as fluent as we would like, because these remote workers understand written English better than spoken.

For more details on offshore outsourcing you can consult one of our articles on the ArkusNexus blog: Nearshore vs Offshore Development.

What is Nearshore Software Development?

The Nearshore Software Outsourcing has become the most convenient strategic option for North American companies. In this work model, a North American IT, commerce or services company hires a firm located in a neighboring country such as Mexico or something further down such as Colombia, Argentina, where the time difference is not great. Ideally, between the two countries it should be small: it could range from one to three hours; This is useful to make the most of the overlapping of working hours, so that joint customer-supplier remote work is facilitated.

Again the price of the nearshore development is an influential variable for the decision of the contract; However, another indisputable advantage of nearshore outsourcing development is the certain possibility of face-to-face meetings for key meetings, both at the beginning of the project and at the end. Which of the two travels: the customer or the supplier? It is not a problem, because being neighboring countries, flights are short, even with return the same day; It is enough to agree on the number of personal encounters throughout the contract.

Due to the interrelation that is created during the fulfillment of these contracts and thanks to the delivery and identification of the nearshore software development firm, it is common to refer to the company as a Nearshore Partner, due to its high degree of involvement with the product that helps to launch or improve.

nearshore software development

Reasons for hiring a Nearshore Software Development Company

We will describe here some reasons that other companies have expressed as motivations for choosing the nearshore software development model

Requirement of a higher professional level for your project or product

Although an American company has its good work team, consolidated for several years as full-time workers, under the same roof, the constant evolution of the software world leads to product improvements with new technologies, programming languages ​​or application redesign. So, old-time workers are no longer as efficient as it takes time to get into handling new stacks of technology.

Another similar situation is when more expert personnel are required due to a peak in demand, to design an additional function or a new project; these new additions would have a long-term training and cost effect.

Going to a nearshore software development company is an ideal solution from many points of view: the contract is temporary, involves a single cost, does not require adaptation of more offices or new equipment or long training. Nearshore software developers do not need to train in new technologies and have extensive experience and results in their portfolios to immediately benefit the new client.

Redesign or relaunch of software products

When a web application or mobile app, after a reliable service time, begins to show weaknesses due to slow response, a lot of user growth, frequent failures that warrant review of the code or incorporation of modules, or difficulties to run the app in new devices, it may be necessary to adapt their structure for an improvement in the used software architecture or adaptation to new technologies.

If the final decision points to a redesign of the application or a possible relaunch to also refresh the image, the user interface (UI) and the user experience (UX), the nearshore application development offers the option of a better upgrade with the safest stacks of technology where everything results in exceptional quality work.

Rapid project development

Another reason for CTO, CEO or CIO executives to seek nearshore software engineering firms is to accelerate company growth through technology; but, in a fast, safe way and with a quality level at least equal to your standards or preferably much higher.

In nearshore outsourcing web development work, it is common to adhere to a schedule of delivery commitments that allow the client to ensure that they have final results in the timeframes that they consider necessary for their success.

Reduce product development and maintenance costs

Although this is the most common reason, for the nearshore software development outsourcing of many North American companies, we have wanted to leave it until last, to highlight other explanations that we have known throughout almost 20 years of working as a nearshore software development company .

In particular, ArkusNexus has not only shown better costs for its customers throughout the North American geography, its working model agile software development nearshore has convinced the most skeptical owners of technology companies.

What are the Nearshore Advantages

Talking about the Nearshore Advantages is the easiest thing about this method of outsourcing, because there are many aspects that favor North American companies to decide to hire a company from the neighboring country, in this case: Mexico.

Before, we will summarize some advantages mentioned in another post on our blog

  • Reduced costs: Compared to Onshore or local outsourcing, the big difference in development costs is always in favor of Nearshore software development.
  • Synchronized work: Both companies can work several hours under the same schedule because the difference in U.S.A. - Mexico is minimal.
  • Fluid communication: Companies located in the border area, such as ArkusNexus, have naturally bilingual personnel.
  • Culture understanding: Due to the high cultural interaction between the US and neighboring Mexican cities, understanding between both teams is immediate and simple.
  • Wide experience: The nearshore software developers have varied experience because they have attended projects of all kinds and dominate the different stacks of technology.

However, there are other advantages of nearshore software development outsourcing that are very convenient to decide to outsource soon and enjoy these benefits for your business and your product:

Does not require personnel training

The cost and time it would take to train  newly hired personnel does not exist with a Nearshore company.

Once the client's needs and the problems to be solved have been explained, a good nearshore company functions as an extension of the client's team. ArkusNexus optimizes this relationship based on Customer Culture, Competition and Happy Engineering. With clear objectives and defined deadlines, the work is carried out with minimal supervision from the client.

Product Expansion and Scalability

Thanks to having multidisciplinary engineers, the nearshore software development company can handle high workloads for product development, maintenance or fault repair.

The foregoing allows expanding the features and functionality of the customer's product applying a vision towards future scalability.

Face-to-face meetings without sacrifices

Nearshore companies located on the North American border line have the great advantage of being able to go to the client's offices, or vice versa, for key meetings to present the nearshore services project, show progress or deliver the final product.

Even in the case of ArkusNexus, there is a super-advantage to serve the North American market because it has five offices located between the United States and Mexico: San Diego and Irvine (US) plus Tijuana, Monterrey and Aguascalientes (mx)

The nearshore company surpasses the services of a freelancer

It is well known that some employees leave a company to become independent and offer their software development services as freelancers.

However, a freelancer does not compare with the support that an established nearshore company offers over the years and many satisfied clients; The risk of being left halfway through lack of expertise can be very costly and cause a disaster with the programming code of a software product.

Nearshore Software Development

Choosing Your Nearshore Software Development Company

Surely your company already has a protocol for contracting suppliers; And if it is a relatively large company, your purchasing department will be able to give you the first guidelines to choose the nearshore company that best suits your conditions and can be aligned with corporate objectives.

However, those guidelines may not be enough; We explain why: We have said that Nearshore outsourcing is equivalent to having a partner for your company, which implies a higher degree of commitment and better identification of the new personnel in charge of the tasks entrusted.

Some aspects to consider when selecting your Nearshore Software Development company are the following:

Review the formality of the nearshore company

It is not only convenient to hire a good team for your product, it is about selecting a company legally established in the neighboring country that complies with the established standards and will respond legally in case of claims. Be careful, a group of good freelancers is not a formal company.

Even better if the selected nearshore provider has offices in the U.S .; this gives it a very different framework in favor. A nearshore company firmly established on the border, it cares about facilitating a point of contact within the country and is also subject to North American laws

Contrast the information provided with opinions and profiles on the web

It is natural that you should ask a candidate about the projects in which they have participated, if they are similar to yours and the opinions of the clients served; however, don't settle for that; research the corporate profile on the web and also that of managers, such as LinkedIn; everything must match.

Team size flexibility

It is known that at any given time, a client requires maximum dedication to resolve any incident, repair or maintenance; If the nearshore company is understaffed and they are homogeneous in individual capabilities, chances are they will not be able to save it from a crisis. A scalable team is broad and multidisciplinary, it is not more expensive for you, it can accompany you in crisis and in the period of growth of your business.

Learn about the alignment, development and testing processes

If you are looking for a partner to boost your business, you need to know the plan he proposes to join quickly, safely and effectively; that is, optimize the initial alignment. Next, it pays to know the software development and testing methodologies; agile nearshore development is a method that offers great advantages for adaptability and quick responses.

Why favor ArkusNexus as your nearshore software development company

In this part we show some of our strengths to gain the trust of the North American market; our first advantage has been to have offices in the U.S .: San Diego and Irvine; in addition to three offices in Mexico, with a strategic location to connect. Fluent communication by a 100% bicultural staff, without English language barriers and at comfortable hours as if they were working in the office next door.

nearshore software development company

In almost 20 years of activity, it has been possible to consolidate a very complete, multidisciplinary, scalable team with a high capacity to add value to your project with minimal supervision.

The ArkusNexus Tech Stack offers extraordinary advantages and the best experts to apply them in all types of software projects.

To this is added a portfolio of highly recognized clients where you can see the success of each experience. We represent an excellent cost saving option for your business that will be transformed into a strategic investment opportunity.

If you are still thinking about it, we encourage you to take action to choose your Nearshore Software Development company; You can make us a traditional phone call for a first approach, or use other means of contact.

Case Study from Arkusnexus
Keith Goatley
Keith is currently Marketing Manager for ArkusNexus and believes in marketing that is customer centric, data driven, digital first, and purpose led.
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