Software Development Service Models

What is Nearshore Software Development & Why is it Good for your Business

Whether it is for cost-cutting, staff augmentation, or the need to focus on the core business, outsourcing software development tasks to other firms can be a huge advantage.

Choosing the right outsourcing company or independent contractor factors greatly in increasing productivity without sacrificing quality in a firm’s software projects.

But there’s an often-overlooked factor when outsourcing software development projects – service models.

The type of outsourcing model can significantly affect a company’s experience with a software development firm.

Let’s take a deep dive into the subject.

Quick Overview of Service Models

Offshoring software development services has been the dominant method of outsourcing projects because of the potentially large savings. Countries from other continents have relatively lower labor costs so talented workers can work for less. However, communication issues might arise because of the geographical distance between in-house and outsourced teams.

Cultural differences in an Offshore set-up, can easily result in muddied communication lines. Furthermore, the significant difference in time zones prevents real-time information exchange between the two teams. And in circumstances that require it, traveling to and from the country of the outsourcing firm, can get prohibitively expensive and time-consuming, especially for small companies.

Offshore software developers also typically focuses on delivering a finished product and rarely stays on-board for the full Software Delivery Lifecycle (SDLC).

On the other hand, Onshoring is popular with companies that prioritize a cohesive collaboration between in-house and outsourced software development teams. The geographic and cultural difference, present in Offshore outsourcing models, just doesn’t exist on an onshoring set-up. The problem, the Onshore model, negates the cost-saving function of outsourcing, because the labor cost of Onshore software development outsourcing firms, is usually relatively close or even higher than what companies are paying for their in-house teams.

Nearshore outsourcing exists right in the middle of these two methods. In this type of service model, companies engage a software development firm in a geographic location that’s not too far geographically. This allows organizations to enjoy the benefits of both Offshore and Onshore outsourcing methods, while minimizing the disadvantages as well. One of the best benefit is that nearshore software developers often support the finished code for the entire SDLC.

Branding experts often cite the unattainable triangle that claims quality, speed, and price can never be achieved simultaneously. However, the Nearshore Software Development model, seems to have achieved this delicate balance, making it the best service model for businesses looking to outsource software development projects.

Nearshore Model Advantages

1. Synchronized Work Hours

One of the main benefits of the Nearshore Software Development model is that organizations and outsourcing firms can work simultaneously. This is because the time zone difference is usually little to none. South American IT firms, for example, generally have the same work hours as companies in the United States. Often with Offshore Software Development companies, crucial services such as debugging can only be addressed once work hours resume in the developer’s geographic location, which can be from 6 up to 12 hours. By that time, the damage to brand reputation could already be beyond repair. The geographical proximity would allow for real-time information exchange that prevents misunderstandings and costly communication-related missteps. This way, time-sensitive jobs can be remedied much quicker and easier than offshoring can .

2. Communication

The simultaneous work hours not only boost the efficiency of work-related communication but also ensure the quality of interactions between in-house and nearshore teams. Going for nearshore software developers also ensures that language and cultural barriers are not hindrances to collaboration. Sometimes, the proximity between regions could mean shared history, heritage, and culture, which can further enhance rapport between in-house staff and remote outsourced contractors. These can further reduce the friction and help the SDLC hit the ground running.

3. Cost-Effectiveness

Nearshore Software Development models have an edge in terms of pricing to Onshoring as the living wage is a lot cheaper in neighboring regions.

4. Travel Expenses

This service model also keeps the travel costs down in case the job requires face-to-face interaction. By minimizing lengthy flights, nearshore software development companies can also help in reducing unproductive time spent in transit.

5. Labor Cost and Quality

While there may be other outsourcing companies with lower labor costs if you choose to go offshore, the wages in nearshore firms have pricing options that can compete with high-end offshore companies. However, what makes nearshore software developers truly stand out is that their talent is nearly on par with onshore workers.

6. Tax Savings

Latin American governments are even trying to strengthen their countries’ outsourcing industry to cater to the needs of their wealthier neighbors such as the United States by giving favorable tax breaks to both the outsourcing companies and the organizations who wish to engage their services.

7. Extended Post-Delivery Service

All these benefits boil down to one crucial advantage – top-notch post-delivery service. Being in such proximity with each other puts pressure on the nearshore software development outsourcing company not only to deliver a quality product but also to make sure the software can be serviced quickly in case of emergencies such as bugs and critical errors.

The synchronized work schedules and unhindered communication,can help companies achieve SDLC efficiency from planning to maintenance. In a way, nearshoring software development projects, can help create a work environment where in-house IT teams can work in perfect sync with remote workers, especially as internet access continues to improve in developing nations.

With a Nearshore Software Development service model in place, a near-perfect operational efficiency can be achieved, while remote workers feel more like extensions of the in-house IT staff than outsider contractors.