What Is Nearshore Software Development? The Ultimate Guide

What is nearshore software development? Answering your biggest questions, discussing the benefits, and offering advice on guaranteeing success.

In today’s digital world, companies must innovate continuously if they want to stay competitive. At the same time, it’s growing ever harder – and more expensive -- to recruit and retain technical staff with the specialized expertise required to develop leading-edge products. Nearshore software development outsourcing helps organizations overcome these challenges by providing qualified tech talent at a reduced cost. But what is nearshore software development? This guide answers all of your biggest questions, discusses the benefits of nearshoring, and offers advice on guaranteeing success by hiring the right nearshore software development partner.

What Is Nearshore Software Development?

First: What is nearshore software development? Nearshoring is a category of outsourcing. Outsourcing involves hiring an outside team to complete work on a project, whether manufacturing a physical product or developing a software application. With nearshore software development, an organization outsources some or all development workflows to a team that’s geographically close while still being in another country. In the United States and Canada, nearshoring usually occurs in Latin America, often in Mexico. 

Want to learn more? Read Nearshore Software Development in Mexico: A Complete Guide

What Are the Differences Between Nearshore vs. Onshore vs. Offshore?

The primary difference between nearshore vs. onshore vs. offshore outsourcing is geographic location. With nearshoring, the outsourced team is in a neighboring country (e.g., Mexico). Onshore outsourcing involves using an outside team within the same country, and offshore outsourcing uses a more distant overseas team.

Each outsourcing category has pros and cons. Onshore teams speak the same language and follow the same workplace norms as your internal staff, which often makes it easier to work with them. However, U.S.-based tech experts are in high demand and charge accordingly, making onshoring the most expensive model. Offshore teams are typically based in countries with a comparatively lower cost of living, making them an economical choice. On the other hand, there are significant language, cultural, and time-zone challenges that can make collaboration difficult.

Nearshore teams combine the advantages of the other two categories while mitigating some of the downsides. Nearshore teams are typically English-fluent, have similar workplace cultures, and are located within a couple of time zones of your in-house team, ensuring a smooth collaboration. While the region’s tech schools and education levels are among the best in the world, the cost of living in Latin America is also low enough to provide some cost savings over onshore outsourcing.

Want to learn more? Read Outsourced Software Development: Nearshore vs. Onshore vs. Offshore

What Are the Benefits of Nearshore Software Development?

We touched on some of the broader outsourcing advantages above, but let’s take a more detailed look at the benefits of nearshore software development.

  • Language Fluency: Nearshore software development teams in Latin America tend to have greater English fluency than offshore teams. Additionally, U.S. American staff are more likely to speak Spanish as a first or second language. Having a common language can significantly reduce the misunderstandings and frustration that can arise when outsourcing development projects.

  • Shared Cultural Values: Mexico’s workplace culture is very similar to that of U.S.-based companies, and their software developers, in particular, value feedback, communication, and collaboration. A shared culture makes it far easier to integrate outsourced developers into your team, even in a fast-paced and highly collaborative DevOps environment.

  • Time Zone Overlap: Overseas teams might be half a day or more ahead, which makes it hard to get fast answers to urgent questions or foster collaboration with in-house staff. Nearshore software developers are never more than three time zones away, enabling real-time communication and closer collaboration.

  • Large Talent Pool: Latin America is one of the fastest-growing regions for software developers and engineers, and Mexico’s government in particular has encouraged tech education throughout the country. Nearshoring provides access to a large pool of qualified software talent, which is crucial at a time when many companies are facing a tech talent shortage.

  • Cost Savings: Recent inflation has resulted in a steep increase in the cost of living in the U.S., especially in major cities, making recruiting and retaining an in-house tech team expensive. Latin America is a less expensive region to work and do business in, so hiring a nearshore software development team can cost two to three times less than hiring in-house staff.

How Does Nearshore Software Development Pricing Work?

The cost of nearshoring varies depending on the outsourcing model, the developers’ experience level, and the nearshore team’s location.

First, there are three outsourcing models to choose from depending on what services you need, and each gets progressively more expensive.

  • Staff Augmentation – Hiring one or more nearshore developers to fill specific experience gaps in your in-house tech team.

  • Managed Team – Hiring a team of developers to work on a specific feature or release in collaboration with in-house project managers.

  • Project-Based – Hiring a nearshore company to handle every aspect of a software project, including design, development, and project management.

Nearshore software development pricing also heavily depends on how experienced your outsourced team needs to be, with senior developers costing more than junior developers. The team’s location also affects pricing to some extent, with mid-level developers in Mexico costing less on average than developers in Brazil, for example. 

Want to learn more and see a chart comparing pricing options? Read our 2024 Nearshore Software Development Pricing Guide

How to Choose a Nearshore Software Development Partner

Nearshore software development providers can vary drastically when it comes to the services they offer, their team’s expertise, and the quality of their results. Just as you must evaluate multiple candidates to hire the right in-house engineer, you should analyze several nearshore providers to find the best fit. Some important questions to ask include:

  • Does the provider offer the outsourcing model you require?

  • Do they have people with the technical expertise needed for your project?

  • Have they handled similar projects in the past, and can you see examples?

  • Do they have an established track record of on-time delivery?

  • How many previous customers would recommend their services?

The right nearshore development partner will also offer in-depth consultations to ensure you and your outsourced team are on the same page and will communicate as often as needed to keep you engaged at every step of the project.

Want to learn more? Read the Best Nearshore Software Development Companies (2024 Guide)

Why Choose Divelement for Your Nearshore Software Development Needs

When you hire a nearshore software development team, you really pay for outcomes. Divelement is a nearshore software development and engineering firm that partners with you to deliver successful releases and improved ROIs with every project. We take a three-pronged approach to guaranteeing you get the outcomes you deserve.

  • Creating high-quality digital products using a customized, strategic action plan that streamlines releases to maximize ROI

  • Addressing the problems you have – and identifying ones you weren’t even aware of – with custom-tailored technology solutions

  • Communicating with your team to provide the same real-time collaboration as in-house resources at a fraction of the cost

We offer the top tech talent in Mexico at competitive nearshore prices. With locations in Austin, Texas, and Monterrey, Mexico, we can bridge the knowledge gaps on your team while seamlessly integrating with your workplace culture, communication style, and collaboration tools. We also provide full software project outsourcing services, handling every stage of product development from planning to design and execution to support.

What is nearshore software development? Reach out to Divelement today and schedule a no-pressure call to discuss how our nearshore team can guarantee successful outcomes for your next software project.