NEARSHORE SOFTWARE DEVELOPMENT

More than just a trend? A guide for companies

If your company needs a specific software solution, outsourcing software development is a strategically sensible decision in most cases. But even if you don’t want to build your own team or hire anyone new, your service provider still has to get the developers for your project from somewhere.

And this in times when, for example, the industry association bitkom in Germany is reporting a record shortage of skilled workers! This is where nearshore software development comes into play. In this context, software development companies work together with highly qualified specialists from geographically nearby regions.

But is this the right thing for your company? We will show you exactly how nearshore software development works, what advantages it offers and how it can be implemented so that you can make an informed decision.

The most important advantages of nearshore development are:

Cost efficiency: cheaper development resources, no HR costs and no compromise on quality and expertise
Flexibility: access to IT specialists without the lengthy recruitment process, for a quick project start and high scalability
Proximity: cultural and geographical proximity and uniform time zones make collaboration, coordination and – above all – communication easier

What is nearshore software development?

Nearshore software development refers to the outsourcing of IT and software development projects to service providers in nearby countries, e.g. in Central or Eastern Europe. This geographical proximity enables better collaboration due to similar time zones and culture, while cost advantages remain compared to local onshore service providers (e.g. from the DACH region).

Nearshore, onshore or offshore?

When outsourcing custom software development, companies are faced with the decision between onshore, nearshore or offshore development:

Onshore means that the development takes place locally in the same country, which minimizes cultural and linguistic barriers, but often results in very high costs.
Offshore outsourcing, on the other hand, is to far-flung countries, usually with significantly lower costs. However, there are challenges such as time differences, resulting almost always significant communication problems and cultural differences.

We have summarized for you how the three models compare:

Criteria	Onshore	Nearshore	Offshore
Geographic proximity	Very high (DACH area)	High (rest of Europe)	Low (e.g. Asia)
Cultural proximity	Very high	High	Low
Time zone	Same	Same, possibly slight differences	Major differences
Costs	Very high due to wage levels and shortage of skilled workers	Comparatively low	Comparatively very low
Communication	Efficient due to geographical proximity and similar mindset	Efficient due to geographical proximity and similar mindset	Complicated by different time zones and sometimes significant cultural differences
Risks	Low in terms of quality; high in terms of costs	Low, as very good quality at comparatively low costs	Medium, as costs are low but project success is not guaranteed

Reasons and advantages for nearshore software development

When we compare the three models, nearshore software development seems to be the middle way. And indeed, nearshore development offers your company numerous benefits. We have listed the most important advantages of nearshoring for you:

Cost efficiency: qualified specialists come at a price, and you have a limited budget. With a nearshore software development team, you can halve your costs compared to a local service provider and still save around 30 to 40 percent of the costs compared to your own developers.
Better communication: Since there is little or no time zone difference, you can communicate with your nearshoring partner in real time. This leads to faster decision-making processes and smoother project execution.
Cultural similarities: A similar cultural mindset is beneficial when working together, making communication and mutual understanding easier, as are shared work ethics and collaboration within teams.
Legal framework: Working together on nearshore software development increases the chance that similar legal requirements will apply to all parties involved. This helps you to avoid potential conflicts regarding working conditions or data protection.
Skilled talent: The shortage of skilled workers is real, and nearshore software development gives you access to international talent. Nearshore locations such as Slovakia, Poland and the Czech Republic have a large pool of highly qualified IT specialists and a robust education system that ensures a steady supply.
Flexibility: Nearshore software development offers companies more flexibility thanks to the large number of specialists and enables you to quickly scale your development teams as needed.

How to find the right nearshore partner for your software project

If you now think that nearshore software development is basically a good idea, then the next step is to select the right nearshore partner to manage recruitment and project management.

You should consider the following factors when making your decision:

References: Check whether the nearshore partner has worked in your industry and has already successfully implemented projects that correspond to the functionality you require.
Location: The nearshoring locations in Europe differ, so find out exactly which location your partner has chosen and for what reasons (at Riwers, we conducted a study on the subject and evaluated 21 countries in this regard).
Flexibility: Clarify at an early stage how flexible and capable your nearshore partner’s team is and whether it can be increased if your project requires it.
Competencies: A nearshore software development partner must demonstrate that it has mastered the specific technologies required for your project.
Transparent costs: A clear and transparent pricing structure is crucial to avoid cost traps. Avoid all-inclusive offers that do not meet your individual requirements.

With Riwers, for example, we rely on a dual concept. This means that we are available to you as a local service provider in Switzerland, but can flexibly scale our services through nearshoring software development. This way, we combine the advantages of both worlds: we are approachable, can work with you remotely as well as on-site and operate under local law.

5 tips for efficient & successful nearshore outsourcing

Once you have found the right partner, the journey is not over yet. Now it’s about getting your software successfully developed. You should pay attention to the following:

1. Transparent & regular communication

Open communication and regular meetings ensure that everyone involved is on the same page and that misunderstandings are avoided. To do this, the service provider must have established procedures for working together. Geographical proximity allows you to hold on-site meetings if needed. However, virtual meetings at continuous intervals are particularly important to keep up to date and discuss possible challenges in a timely manner.

2. Agile development & project management

Agile working methods such as Scrum or Kanban should now be the standard for nearshore software development. These include routines such as daily stand-up meetings, sprint planning and reviews, as well as iterative development in cycles in which testing and reprioritization are carried out continuously. A good partner involves you in the collaboration from the very beginning, because transparency is essential for sustainable success.

3. Clear expectations & milestones

Nearshore software development can only be successful if you agree on clear and achievable goals and milestones at the beginning of the partnership. The roles and responsibilities of both teams should also be clearly defined in advance. This will help you avoid misunderstandings and clarify expectations on both your side and that of the development team.

4. Quality assurance & testing

Quality assurance (QA) and software testing are essential steps that should not be left to the very end of the development process. In line with agile methods, your service provider should also be able to present a concept for how it recognizes and resolves problems early and continuously in the development process for nearshore software development.

5. Thorough documentation & clean code

In outsourcing in general, but especially in nearshore software development, a cleanly written code and thorough documentation are important. On the one hand, this ensures transparency and clearly defines responsibilities, but it also protects you from legal risks. Furthermore, you simplify the transfer of knowledge into your own company, if relevant.

Nearshore software development is not just a trend, but a model with a future

In view of the growing demand for qualified developers, it is highly likely that nearshore software development will establish itself as the preferred model for companies in the DACH region. Some model projections even predict market growth of more than 30 percent.

And for good reason: after all, the nearshore model for software outsourcing offers you a number of advantages. You can work more flexibly and cost-effectively without having to compromise on communication, quality or expertise.

If you would like to learn more about nearshore development or need support with your next project, please feel free to contact us. Let’s talk!