Offshore & Nearshore Software Development: Practical Guide to Choose Your Best IT Vendor

Nearshore development is the outsourcing of technical activities or the implementation of software projects to nearby countries.

The phenomenon arose mostly due to lower pricing, as well as the search for expertise or extra talent.

The results of this cooperation are stunning: services like Slack, Opera, GitHub, WhatsApp, and even Skype were developed by outsourced programming teams.

This practical guide aims to help you with IT outsourcing decisions.

So, let’s read on!

Outsourcing Software Development in 2020: Key Insights & Processes

  • Offshore software development services are delivered from distant locales. For example, US projects are carried out in Eastern Europe or India.
  • Onshore software development is the process of delegating software development tasks to companies located within the same country.

The following infographic presents the top offshore and nearshores development regions, key insights, and statistics regarding outsourcing IT activities.

Infographic: Key Insights for Offshore & Nearshore IT Development

Nearshore Development: 5 Key Factors to Consider

1. Nearshore Outsourcing Locations

In the United States, the median software developer receives an annual salary of $81,195. Generally, the salaries range from $40,000 to $153,000.

Canada: average salaries for software developers vary between $50,000 and $150,000, since wages in Canada don’t differ much from those in the US.

Locales like South and Central America offer various services with more acceptable rates.

  1. Argentine: the yearly compensation for a junior developer is $6,597. The salary of a middle developer is $12 808. An average salary is $12,780.
  2. Mexico: the yearly salary for a junior developer is $16,800. A middle developer receives $20,380 in annual compensation. Average: $20,400.
  3. Brazil: the yearly salary for a middle developer is $17,546. A junior developer receives $10,938 annually. On average, a developer gets $15,142.

Options for clients from Europe

The best countries to outsource software development in this region are Ukraine, Poland, and Belarus.

  1. Poland: a junior software developer receives a yearly compensation of $13,661. A middle-level developer receives $24,287.
  2. Belarus: the average yearly salary is $16,203. The hourly rate for mid-level developers is $40. Junior developers: $25.
  3. Ukraine: a junior developer in Ukraine works at an hourly rate of $20. An average yearly compensation for this experience niche is $12,400. A mid-level developer would typically charge $25–35 and have a yearly salary of $16,400.

Is there a difference between nearshore and offshore outsourcing?

  • Budget savings
  • Timely feedback
  • High level of expertise
  • Rare technology specialists
  • Meeting in-person

Eastern Europe, Ukraine in particular, offers great nearshore opportunities for European clients and makes a great offshore development center if you are located in the USA or Canada.

2. Rates for Development Services

  • Team size
  • Location
  • Expertise
  • Experience
  • Agreement details

The table below shows the average hourly rates in key IT outsourcing destinations in relation to the position.

3. Key Expertise and Experience of a Vendor

  • Check the company’s background
  • Check portfolio and number of completed projects
  • Get in touch with former clients in your location
  • Evaluate the team and number of available resources
  • Pay attention to the company’s ranking

Today, there are about 18.5 million professional software developers in the world. When it comes to the Eastern European market, the concentration of specialists is also high. For example, Ukraine is famous for having a multitude of IT experts. According to the top IT-statistics resource in Ukraine, Dou.ua, this meant 150K+ software developers in 2019.

4. Communication & Cooperation Procedures for Software Outsourcing

  • Your vendor is literate in applying effective development methodologies like Agile and Scrum.
  • The company or the team you hire has an established procedure in the elicitation of product requirements (e.g. discovery stage, can be called business analysis).
  • The vendor has an established, flawless communication procedure, including frequent meetups, reports, and timely feedback, as well as fast responses to change requests.
  • The team has a level of English that is at least intermediate and upper intermediate levels.
  • The collaboration with your IT-vendor is free from fraudulent risks, and you have proof of that in the form of legal documents, like NDA agreements.
  • The team complies with the GDPR guides (for Europe) and with US data privacy legislation, including the California Consumer Privacy Act.
  • Security activities inside the company are reflected in a knowledge of the latest field updates, regular vulnerability scans, strict security procedures inside the work done by teams, and use of the latest software.

5. Cultural Aspects that Influence Software Development

Hofstede’s Cultural Dimensions index may be a beneficial tool in this process.

Hofstede’s Cultural Dimensions

In conclusion, there is a tendency for North American and European companies to increasingly outsource to Eastern Europe, since cultural similarities make it easier to build a long-lasting partnership.

Pro Tips to Manage Remote Development Teams Efficiently

Step-By-Step Process to Outsource Software Development

1. Share Your Strategy & Get Involved

2. Arrange Work Procedures

You may use tools like:

  • Project management software: tools like Jira, Trello, Asana, PivotalTracker, Workzone, etc.
  • Microsoft Office 365: includes a list of software like Skype for Business, Teams, email, calendar, the best on- and offline Office Suites.
  • Google Suite: outsourcing IT with Google Suite is easy thanks to storage, sharing, meeting, planning, mailing, and other necessary functionality.
  • Video conferencing: tools like Zoho Meeting, ClickMeeting, GoToMeeting, Cisco Webex Meetings, BlueJeans Meetings, Join.me, Zoom Meeting.

Based on the duration of the project and the agreement terms with your IT provider, you may pay a fixed-price or on an hourly basis (time & material).

Cooperation Models in IT Outsourcing

3. Build Trust & Reward Your Developers

4. Provide Regular Feedback

5. Meet In-person

The following practices are welcomed:

  • invite programmers to your country (to the US for instance) to see your business operations real-life
  • visit their office to have an estimation of their needs and existing resources
  • arrange informal meetings, parties, and team-building activities to establish friendly relations with team members
  • invite your vendor team to conferences and workshops to make sure you share the same vision for business growth

Note: This is a summary of a guide.

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