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How Offshore And Nearshore Software Development Models Differ

Companies are already familiar with practices such as outsourcing and staff augmentation, and even though these practices weren’t as common a few years back, they have now risen in popularity as these options help cut costs, increase efficiency, and tackle core tasks that third parties are able to proficiently manage.

Over the last two decades, globalization has been propelled by a constantly changing digital landscape characterized by instantaneous connectivity. 

People are no longer confined and defined by geographical limits and national boundaries and, as we’ve seen over the last few years, remote work (especially in the tech space) has experienced a huge boom. 

The rise of outsourcing in tech

Companies are already familiar with practices such as outsourcing and staff augmentation, and even though these practices weren’t as common a few years back, they have now risen in popularity as these options help cut costs, increase efficiency, and tackle core tasks that third parties are able to proficiently manage.

Outsourcing is no stranger to software development and, according to Deloitte's 2021 report, the most commonly outsourced services are IT services, amounting to a staggering 54% stake. Credits for the massive part of outsourcing in the IT sector undoubtedly go to software development. 

Each year thousands of small and medium-sized businesses look to outsourcing options for software development but are plagued by the hassle of restricted budgets, time constraints and, not knowing what and who their best outsourcing options really are. 

Businesses looking for an outsourcing solution for software development can start off on the right foot, but they first need to have a clear understanding of the options that are out there, how they differ, and which one will best suit their business needs. 

So, we present you with two types of outsourcing options for your next software development project - nearshore and offshore development models - how they differ and why nearshore is today’s best solution for your project to become truly successful. 

Offshore software development

Offshore is when companies hire the services of another located in another continent or very different time zone. The main reason and advantage is to get the lowest possible cost. An example of this could be a company in the US hiring software development services from a company in India. 

Unfortunately, although offshore may look like an attractive option for cost-recution and budgeting, the disadvantages of going this route outnumber the advantages. 

One of the most important factors companies need to consider before starting an offshore project is the stark difference in time zones and teams having to efficiently work within them. The customer-provider time difference is something that usually ends up working against the two. Meetings are difficult and generally the offshore professional must sacrifice their hours to contact the client.

Another disadvantage of offshore is a probable language barrier (as well as plenty of cultural one’s) between the two companies and their professionals. Although English is a universal language, offshore professionals don’t always have a strong command of it, hindering the understanding of oral instructions and communications. Plus, the use of translators isn’t totally reliable and hiring translation services only adds to extra work and time-consuming activities.

The constant stress, frustration, and struggles brought about by the offshore software development model have led many businesses to agree that it simply does not compensate for the low cost and the money supposedly saved throughout the project. 

Nearshore software development

The main difference between offshore and nearshore is evident in nearshore’s name. Nearshore software development is the most popular form of work in the software industry, not only in the United States but also in other developed countries. 

The nearshore development model involves hiring a company in a neighboring or nearby country to provide services. An example of this would be a company in the US hiring services from a company in Mexico (Both countries share a common border and have many more linguistic and cultural similarities than offshore would be able to provide.)

The benefits and advantages of going the nearshore route are much more numerous than those of offshore. Some of these include:

  • Lower software development costs
  • Similar time zones for better working efficiency
  • Geographical proximity for ease of travel
  • Easier communication between teams as (English is widely used amongst developers in Latin American countries)

How they differ

The most important factors companies need to consider when going either offshore or nearshore are time zones, geographical proximity, culture differences, and the language barrier. Companies may be driven to cut costs at all measures, but post-project launch the above may end up becoming much more costly than one expects. 

Today, most companies have resorted to nearshore software development as the best means of outsourcing as being able to work simultaneously, during the same usual business hours regardless of location leads to increased productivity. Here, meetings can be held within the same day, deadlines can be met and unexpected events can be managed together without delay. Adding to this, consider communication and the use of a common language such as English as important influencers of work well done.

Choosing the best option

It’s up to business owners and management teams to decide what their best option is and to make the right decision before starting a software development project. Taking the above advantages and disadvantages into consideration will help evaluate the best path forward. 

Remember, cutting costs is only one part of the solution and should never take place at the expense of reduced project efficiency, lower quality, and sub-par overall results.

Your next software development project

At Icalia we strive every day to become your best option. From the beginning of your project, we’ll carefully analyze each one of your business needs and offer solutions that not only solve your current challenges, but also get your organization one step ahead. 

Founded in 2012 as an Agile Development Shop, Icalia Labs has evolved into a world-class nearshore software product firm enabling small and medium-sized businesses to translate their digital strategies into tangible value delivery and a managed-risk software development plan. With a customer-centric design and an engineering culture introduced to every product we construct, we guide our clients through an agile framework to acquire new digital capabilities and fortify their innovation-to-market mindset.

As a nearshore software development company with 8+ years of proven experience, Icalia Labs brings together deep industry expertise and the latest in tech to help you deliver solutions that thrive in today's marketplace.

Contact us and tell us how we can help you reach your full potential.

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