Business

February 10, 2021

Nearshore vs Offshore Development

Boost your tech company performance. Which is better Nearshore or Offshore Development? Here we discuss about the advantages and disadvantages of each model.

An Efficient way of delegating tasks with greater opportunities for performance and progress has been outsourcing; Through this work modality, a company is hired to carry out some specific functions. Although outsourcing, in its beginnings, tried to entrust complementary tasks such as surveillance or cleaning to third parties, today, its use has been extended to all kinds of functions, even strategic ones.

Technology companies have broken the myth that outsourcing is not for core tasks; The need to hire third parties is so common that the discussion is now focused on which type of outsourcing is more convenient: Nearshore or Offshore. Although there is onshore outsourcing (hiring a company in the same country), for IT companies it does not seem very attractive when comparing the advantages of the other two models.

Other names used to refer to outsourcing are: outsourcing, outsourcing and offshoring.

When to take the first step to decide? Nearshore vs Offshore outsourcing

If you are in a managerial position as CTO, CEO or CIO, you know that the first step in thinking about outsourcing, should be done at the beginning of a software project, this helps the potentially hired company to quickly identify with the product.

In other cases, a business owner may be urged to hire a third party if the results of his own team are poor, slow, or delayed; if the costs of your business or project are increasing too much.

A particular case is the CTO, CEO or CIO, who wants to bring an idea to reality but does not have a strong economic base to start with the development of software such as a mobile web project, an app or an artificial intelligence project. Time presses them to go to the market soon before someone else does. For them the option of outsourcing is a blessing and they only have to evaluate the advantages between nearshore vs offshore development. Actually, Nearshore Software Development is the alternative for complex tech companies.

Nearshore Outsourcing or Nearshore Development

Nearshore development is the most popular form of work in the software industry, not only in the United States, but also in developed countries. Nearshore outsourcing consists of hiring a company in the neighboring or near country; This implies that there is not much time difference between the customer and the service provider. There are advantages of nearshore development vs. In-House FTE Developers although in this article we will not explain much.

Low software development costs are the first of all nearshore advantages; These fees are much lower than hiring an American company. Another reason, to hire a nearshore company, is the impossibility of finding a developer, local or national, available, the few that exist are already occupied and their costs are higher.

This model offers the best advantages with Mexico, due to the great border interaction: Texas, New Mexico, Arizona and California are perfect neighbors with Mexico in Baja California, Sonora, Chihuahua, Coahuila, Nuevo León and Tamaulipas.

One of the fears that holds many US companies back is how to ensure their trade secret, their intellectual property and preserve ethical discretion on the part of the supplier. In this sense, Mexico offers perhaps the best protection to US businessmen, since there is legal regulation and international agreements to which Mexico is a signatory, for which reason these contracts are widely protected in Mexican legal regulations.

In this way, although the client-supplier relationships are separated between the USA and Mexico, face-to-face meetings are perfectly feasible; In particular, for ArkusNexus, attending a meeting would take no more than two hours between Los Angeles and Tijuana.

Nearshore vs Offshore Development


Advantages of nearshore outsourcing

Although some advantages such as low cost of nearshore services, physical proximity for possible meetings and the legal protection of hiring have already been mentioned, other advantages of nearshore should be highlighted.

Synchronized work

Outsourcing a nearshore company implies that both countries are in the same or very close time slot; Both teams will be able to work simultaneously, during the same usual hours, have virtual meetings, questions can be consulted or any unforeseen event can be resolved without delay. The lack of synchrony exists when the time difference between customer and provider is six or even 12 hours.

Fluid communication

Various studies of the nearshore job market have concluded that interpersonal communication between client and developers is the basis for the success of software projects. Speaking the same language, fluently, by any of the active routes: telephone or video-conference, is crucial for understanding the tasks and problems to be solved. Written communication - e-mails and chats - is more used for formalities; oral and face-to-face, favors collaborative work.

In the case of US-Mexico contracts, the English language will never be a barrier for software developers; These professionals must master the language from university, given the characteristics of their jobs. Some even have the opportunity to improve in North American institutions.

Culture: Invisible Barrier

Nearshore services favor a perfect understanding of client-provider work styles and the needs of writing texts and content articles, aimed at the North American market; When the culture of both is similar or easily understood due to the proximity of the border, confusion or misunderstandings are avoided and the idiomatic twists necessary in certain developments are understood.

Wide experience

Usually. the nearshore services company has had a variety of projects taken care of to back it up; This gives you a very complete overview when advising a new client. It is also common that the members have very different skills, thus a multidisciplinary team is formed with an extensive domain of software development skills.

Nearshore vs Offshore Development

Quality assured

Given the level of professionalism of the nearshore team, their work can enjoy high levels of quality, performed in a minimum time and with timely or early deliveries due to the performance of their tasks.

Nearshore vs Offshore Development


The management of the various available technologies leads to having experts with very different skills to be able to deepen the applications of each technology.

Offshore outsourcing or Offshore development

In this category of outsourcing, the company hires the services of another located in another continent or very different time slot. The main reason is that you can get the lowest possible cost.

Although some write to compare onshore vs offshore vs nearshore, the reality is that most managers or business owners consider outsourcing to contrast nearshore vs offshore development.

In the opinion of many experts, the offshore model apart from the considerable reduction in the cost of software professionals, offers few or very specific advantages. But there are more disadvantages and risks.

Advantages of offshore outsourcing

  • Convenience for low-level tasks that do not compromise the security of the client company.
  • Help with non-urgent or long-term tasks to carry out such as an internet investigation or obtaining contact information for new potential clients.
  • Tasks that do not require constant or one-time monitoring as Data entry
  • In general, tasks that can be worked asynchronously and where communication, language, is reduced to a minimum.

Disadvantages of offshore outsourcing

As mentioned before, there are many disadvantages to this model discussed by entrepreneurs who have already had bad results.

  • The customer-provider time difference is something that always works against the two. Meetings are difficult and generally the offshore professional must sacrifice their hours to contact the client.
  • Threats to the quality of the result for working during night hours; exhaustion leads to mistakes that later come to light.
  • Although English is a universal language, it is not always dominated by offshore professionals, hindering the understanding of oral instructions and communications. The use of translators is not totally reliable.
  • The texts and contents written by the offshore professional must be carefully reviewed. Colloquial expressions sometimes say a lot in a few words, but they are not known in other countries.
  • Cultural barriers are the greatest discomfort frame for the business relationship.
  • Intellectual property may be compromised and not legally protected in other countries. The supplier could even disappear without a trace.

It is common to hear from business owners or managers that the money supposedly saved in offshore hiring does not compensate for the headaches, worries and nights that were experienced during the time that the relationship lasted, even when in the end the objective was achieved and the desired quality.

Deciding between nearshore and offshore development

As you have already seen the advantages and disadvantages of each type of outsourcing, it is up to managers, entrepreneurs and innovators to make the right decision to avoid future regrets. You can learn about the activities and challenges generated by shifting to a remote software development format.

With this article, we hope we have contributed to making this important decision; However, you always have the possibility to consult in the case of companies such as ArkusNexus since we have offices in the United States and Mexico and the management staff is fully bilingual. If you still have any questions, please contact us through any of the available channels.

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.
kgoatley@arkusnexus.com
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