How Nearshore Software Development Can Give Your Company a Competitive Edge?

Interested in nearshore software development? You’re in good company.

Tech giants routinely hire nearshore software development firms to get their projects off the ground faster — often for a fraction of onshore development costs.

It’s widely known that Google nearshored Project Ara and that WhatsApp relied heavily on outsourced talent before Facebook acquired it. But did you know that Skype also used nearshoring to develop its platform, which boasted 300 million monthly active users during its heyday?

Even Slack nearshored its mobile app design to stand out from similar technologies — a decision that eventually helped it reach a $25 billion valuation.

And it’s not just big tech that’s embracing nearshore outsourcing. In 2022, 21% of small businesses intended to work with a nearshore firm — a 6% jump from the previous year.

Companies of all sizes realize the rewards of staying closer to home. In this blog, we cover everything you need to know about nearshore software development so you can decide if it’s the right approach for your project.

Table of Contents

• What does Nearshore mean in Business?
• Differences between Onshore, Nearshore, and Offshore
• How to choose a Nearshore Outsourcing Company
• Hiring Cheesecake Labs as your Nearshore partner
• FAQ about Nearshore Software Development

Nearshoring Definition

Fundamentally, nearshoring means outsourcing development projects (especially software development) to companies in neighboring countries that offer lower labor costs.

For businesses in North America and Western Europe, this often means looking to Latin America (LATAM) — especially an IT powerhouse like Brazil — for web and mobile app development.

Nearshoring to LATAM is especially attractive for companies looking to reduce labor costs without the challenges of managing cultural and time zone disparities.

It also affords greater project management oversight by letting clients and their nearshore partners work closely.

Onshore vs. Nearshore vs. Offshore software development

Nearshore is just one of three software development outsourcing models, the other two are onshore and offshore. Here’s how the three models stack up against each other.

	Onshore	Nearshore	Offshore
How it works	Projects are outsourced to companies in your home country	Projects are outsourced to companies in nearby countries in adjacent time zones	Projects are outsourced to companies in countries on the other side of the world, in a different time zone
When to choose	You want to remove concerns about language barriers and cultural differences You want to meet with your development team in person Budget is less of a concern An onshore team is required for security purposes	You want a similar culture You want easier collaboration, without worrying about a language barrier You need a team immediately and don’t want to go through an internal hiring process You need to extend the budget runway	You want to reduce costs as much as possible
Benefits	Common culture and language Easier to potentially meet in person	Similar or same working hours Fewer language barriers Lower labor costs than onshore, and similar-quality output Fewer cultural differences Faster than hiring an in-house team	Lower costs
Risks	Higher costs than nearshoring or offshoring	Security or confidentiality concerns Could run into some language barriers, but this can be mitigated by working with the right nearshore partner, setting up the right kind of contract, and putting protections in place (like NDAs, etc.)	Language barriers make communication difficult Different time zones can mean that working days don’t line up, extending the length of projects Cultural differences between countries can add challenges Quality might be harder to guarantee

As you can see, nearshore software development is the middle ground between hiring a local team and hiring a company halfway around the world. It combines onshoring’s collaborative advantages with offshoring’s cost-effectiveness.

3 Benefits of Nearshore Software Development

Key takeaway: Nearshore software development offers the advantages of onshore outsourcing at a reduced cost. Cultural and time zone compatibility also facilitates effective real-time communication, which can be especially valuable when managing complex software development projects.

For these reasons, nearshoring makes sense for Agile projects where consistent collaboration can be the deciding factor between success and failure. Working with a nearshore partner is also recommended for full project outsourcing that requires close cooperation and for sizable projects that require frequent on-site visits. 

1. Access to a large pool of advanced-skilled developers

Nearshore software development in LATAM provides access to world-class software engineers specializing in UI, full-stack, mobile, enterprise, and game development, among other areas.

Brazil is a particularly good source of tech talent. Just look at these numbers:

• Brazil has over 500,000 software developers and the largest population of Java developers globally.
•  It has 10.5 million fluent English speakers and a government keen on investing in technology education.
• Its robust higher education system produces 46,000 IT graduates every year.

In addition, Brazil has one of the most innovative economies in the LATAM region. It’s the largest LATAM ICT market and the regional IT investment leader.

Add in an excellent tech support infrastructure (including more than 74 technology parks), and it’s obvious why the country is a frontrunner in AI innovation, too.

2. Better communication and project management:

Several factors make communicating and streamlining project management with neighboring developers easier.

• Time zone alignment

When your regular working hours align with the vendor’s, there’s no need to work overtime or take calls at odd hours, which can be disruptive to both the team and the project.

Think about it — if you’re in San Francisco, meeting with someone from Mumbai during business hours is impossible because of the 13-hour difference between these cities. This communication gap could potentially result in less control over quality and deadlines.  

You’ll only deal with a two-hour time difference by nearshoring to a nearby country like Brazil. You can work with the vendor in real time and conveniently track progress.

• Geographic proximity

With your vendor only a short flight away, it’s relatively simple to arrange live meetings whenever in-person communication is necessary. You can make onsite visits more frequently because the cost of travel shouldn’t be too restrictive.

• Cultural compatibility and ease of communication

Effective communication goes beyond just English proficiency. It also involves awareness of cultural differences, societal norms, and nonverbal cues. Not surprisingly, countries that are geographically farther from each other have a greater cultural distance, and offshoring to distant locations increases linguistic and cultural obstacles.

In contrast, nearshore sites often share working patterns and corporate values with their client companies, promoting easier organizational and personal collaboration. This cultural affinity creates better alignment and reduces the likelihood of misunderstandings.

• Cost flexibility

Nearshoring provides access to top talent at a fraction of the cost of onshore development. To illustrate, a software developer in Brazil earns BRL 336,000 (USD 61,658) per year on average — that’s less than half of what a US-based developer earns (USD 120,168).

What’s more, nearshore software development removes the burden of HR administration tasks like hiring, recruitment, onboarding, and training. This frees up money you would otherwise spend on retention, insurance, and infrastructure costs associated with in-house employees.

More importantly, nearshore software development allows clients to quickly scale up or down as required. This flexibility is the key to staying nimble and competitive for companies with changing requirements and limited IT budgets.

You may also like: How Much Does It Cost To Build a Mobile App?

3. Faster time to market 

In a saturated marketplace where speed is king, a fast time to market (TTM) has been shown to improve profitability, while delays can be financially devastating.

Speed is so important that products released six months late earn 33% less profit over five years. Interestingly, the profit margin is only reduced by 4% if the same product is launched on time, even if the project goes 50% over budget.

Nearshoring to a dedicated team is a well-established approach to achieving a faster TTM. There’s no learning curve because the team already has experts who specialize in your requirements.

You don’t have to set up the technology infrastructure for your project, and you can focus on your core business and pre-launch activities like marketing, target audience outreach, and end-user acceptance.

Choosing a Nearshore Partner

Of course, the only way to reap all the benefits of nearshoring is to work with the right software development firm.

Consider these 8 factors when selecting a nearshore partner:

1.  Architectural approach 

Choose a company that will take time to understand your goals and map out the best strategy to ensure your software’s performance, scalability, usability, and maintainability. They should also have well-defined development, project management, QA, and support processes in place to deliver your product on time and within budget.

Discover more about Cheesecake Lab’s approach when Developing a Product.

2. Technical expertise and portfolio

Have they successfully completed projects in your specific technology and in your industry? Review their portfolio to see what they’ve accomplished for other clients.

Find out more about their qualifications and experience by checking their awards, certifications, and even their key employees’ LinkedIn pages.

Want to partner with Cheesecake Lab? You’ll be happy to know that Clutch has named us the #1 web app development company in LATAM.

3. Infrastructure and technologies  

Do they have the necessary hardware and software to support your project and integrate with your own technology? If you need a partner who can invest in additional technologies specific to your project, ask if they have this ability.

4. Security, privacy, and data protection  

Choose a nearshore company with policies and procedures to protect your data from unauthorized access, theft, and damage.

5. Market reputation  

Look for reviews and ratings on websites like Clutch and Glassdoor to see what clients and employees are saying about the firm.

6. English proficiency and cultural compatibility 

The best nearshore partners can communicate effectively in your language and understand your culture. They invest in improving not just their technical skills but also their English proficiency. 

This is why Cheesecake Labs offers free remote English classes to all Cakers.

7.  Available Workforce 

Can they work on your project straightaway? Choose a nearshore partner that’s ready to plug and play a team of specialists with the skill sets you require, including dedicated project managers, frontend and backend engineers, UI/UX designers, and QAs, among other experts.

8. Location 

Being one of the world’s top countries for offshore business services, Brazil is an excellent choice for nearshore software development. The country is among the top five ideal locations for IT outsourcing due to its favorable investment climate and skilled technical workforce. 

Find out more about Florianopolis, the Silicon Valley of Brazil.

Cheesecake Labs as your nearshore software development partner

As the highest-ranked company in Clutch’s list of top developers in Latin America, Cheesecake Labs has the expertise and experience to develop a top-quality product tailored to your vision and objectives. We’ve honed our approach over nearly a decade with more than 300 projects. When you work with us, you can expect excellence at every stage of development. 

Our nearshoring case studies

Cheesecake Labs has helped a long list of businesses build impactful digital solutions. Check out some of the nearshore software development projects we’ve completed:

• Lockitron is among the pioneers of smartphone-controlled smart locks. See how we refactored and scaled their app to Android, iOS, and wearables.
• We also designed and built a nimble mobile and web app for FindHeli, a pioneering helicopter booking platform.
• We built the backend operations to support the US company, FINN, with their industry-leading auto subscription service.
• Built by the automotive community for the automotive community, we helped CRU design and develop their platform that’s helping redefine car culture.

Our ‘dedicated teams’ approach

Some software development firms simply send one engineer or two extra pairs of hands to augment the client’s staff. That’s okay, but that’s not how we do things.

Instead, we provide a complete package — a dedicated team of highly skilled experts carefully selected to meet your specific requirements.

A typical outsourcing development team consists of a tech lead and at least two engineers with practical experience in building the type of product you want to create. Depending on the size and complexity of your project, it might make sense to add more engineers and include a product owner and QA expert, too.

This dedicated team is an efficient unit that moves as one. They’ve worked together before, making collaboration easier. They’re also equipped with all the resources needed to ensure the development process goes smoothly.

Need more information? Find out more about our dedicated team services.

Let’s talk about your project

Cheesecake Labs’ nearshore software development services combine the collaborative benefits of onshoring with the cost efficiency of offshoring. If you want the best of both worlds, our nearshoring model might be the right fit. Interested in nearshoring your software project? Get in touch, and let’s make things happen!

FAQ about Nearshore Software Development