Guide to nearshore software development by Software Sauna
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Guide to Nearshore Software Development

Domestic software development outsourcing is commonplace, but things get more complicated when some or all of the action is outsourced abroad. This is a fairly common assumption on the subject. Preconceptions or real horror stories of failed overseas ventures are unfortunate.

Software Sauna was initially set up precisely to correct this flaw in the market. We want to change the common perception of outsourcing software development. Cost-effectiveness should not be reflected in a compromise on quality under any circumstances. 

We want to share good tips and practices based on our own experiences. Successful software development projects are also done from distributed locations or by an independent remote team. So if you are considering outsourcing abroad or have encountered challenges, we are sure this information package will help you. In this article, we share our expert insights on nearshore software development services and teach you how to maximize the benefits of this trending outsourcing strategy.

What is nearshore?

When a part of the software development team is outsourced to a nearby country, it is called nearshoring. In practice, nearshoring follows the same laws as buying domestic consultancy work. There are service providers for every need, from small and large consultancies to specialist consultancies in a particular niche. Often you can get a single developer from a nearshoring partner to support your development team or even a whole project team.

Nearshoring is the best option when a company wants to buy services from the same time zone (Europe +/- 2h) and minimize the challenges of cultural differences. Of course, there are also differences in working cultures within Europe, but these are not so significant compared to, e.g., Asia. Language skills, most notably in English, are also good in EU countries and neighboring regions.

Nearshore Software Development in Europe. Timezones compared to Croatia.
Embracing nearshoring in Europe. Software Sauna operates in Croatia, meaning that more than 80% of Europe lives in the same time zone, and the rest of Europe is only an hour away from us.

When choosing a nearshoring partner, it is a good idea to check the company’s background and references and talk to their developers, not just their sales team and management. Take your time in the selection process to find the right people and a partner company that fits your needs. Competence and smooth communication play a significant role in the success of remote projects.

If language skills, the way of working, and the way of thinking meet, cooperation has a good chance of success. Nobody wants a partner whose processes are lacking, or whose consultants cannot independently add value for the client. So simply comparing hourly rates does not necessarily guarantee the best quality and fast delivery. We recommend that you also consider softer values and the consultants’ experience. 

Good planning, communication, and implementation are the cornerstones of a successful project. This is even more important when all or part of the project team works remotely.

Why go software outsourcing and nearshore?
Why go software outsourcing and nearshore?

Why go software outsourcing and especially nearshoring?

1. Price

Nearshoring software development usually offers a significantly lower price point. In Finland, the price of a consultant is over 100€/hour, while in Eastern Europe, a senior developer can still cost less than 50€/hour. And with a partner relatively close by, travel costs do not skyrocket. The core purpose of nearshoring is to improve your services and increasing quality while saving costs.

2. Expertise

Finding appropriate resources in the domestic market can sometimes be a challenge. Outsourcing gives you access to a broader range of skills. You can focus on your company’s core competencies at home and leave the rest to remote teams.

3. Scalability

With an overseas partner, you may be able to grow your development team with talent surprisingly quickly.

When should you hire a nearshore partner?

  1. You want to improve efficiency or profitability.
  2. You need support for technology breakthroughs or niche expertise.
  3. You want to speed up your product launch.
  4. You’re looking for flexibility to work on a temporary development project.
  5. When you’re looking for the right people for the job.
Eight points to consider when outsourcing software development
Eight points to consider when outsourcing your software development

What to consider with a remote development team?

A successful multisite project requires a little extra effort from all parties involved. Especially if

  1. The project is to be implemented using agile software development methods.
  2. The client is working with a remote team for the first time.

We recommend that the client treats remote and onsite teams equally in distributed projects. The boundary between “us” and “them” should be blurred to get the best out of the collaboration.  Below we list eight essential points to consider when outsourcing a part or a whole of a product development project based on our experience.

1. Communication

  • Open and constant communication is the basis of everything.
  • A sense of belonging – “our team.”
  • Developers should communicate directly with the client without any intermediaries.
  • Facetime: weekly or daily meetings via video rather than telco. Slack chat alone is not enough, either.
  • A Team Lead, who is responsible for most of the communication, may work better for large outsourcing projects. 

2. Meet with the customer or remote team

  • Onsite kick-offs (powerful recommendation)
  • Periodic meetings, e.g., quarterly if the project is long
  • Visit your remote team regularly

3. Reasonable division of labor

Try to allocate tasks and responsibilities sensibly between different locations, according to the team’s abilities. A self-directed team decides on their tasks and division of labor, whether onsite or remote.

4. Give responsibility for technical decisions

Experienced developers often want to improve both themselves and the product they work with. As consultants, they are often eager and capable of providing improvement ideas and developing new ways of thinking. If you want to purchase a backlog clearance with as little room for interpretation as possible, that is a different service altogether.

At best, working with a remote team improves the organization through cross-learning and knowledge sharing.

5. Pay attention to the remote team’s performance

Following the performance of a remote team can be challenging, but there are ways to make it easier. A few simple ways to get started include a proper onboarding to the project, a project plan, clear goals and expectations for team members, and regular check-ins on how the team is performing.

6. Continuous feedback

The importance of communication and feedback cannot be underscored enough. Provide your remote team with the opportunity for open discussion and feedback. You should be interested in how they are progressing in their work and how you can improve together.

Give them the accountability they deserve. Feedback is essential even to an external partner, as this increases team spirit and further engages the team members.

Small things can make a big difference, but tackling them early can change things in the right direction. Be open, communicate, and listen.

7. Documentation

Well-structured and clear documentation helps all team members. When a new consultant joins the team or you start working with a remote team, the first impression of your documentation and source code means a lot. New developers will catch on much faster if your documentation is in order.
Explicit user stories in backlogs and using different systems and modern tools (e.g., Jira, Trello, Scrum, Kanban, etc.) help maintain good documentation and transparency.

8. Tools

Task boards are essential to modern development. Since the remote software development team is not in the same room as the onsite team, this can be organized with a tool like Miro. In addition to open communication, general transparency, and project tracking tools, there is more to a good development environment. What precisely is a good environment will always depend on the organization and the remote team, so there isn’t a one size fits all solution. Each team and project is unique.

In addition to the above, a good development environment should include the following:

  • Bug and issue tracking
  • Source code and repositories
  • Code review system
  • Release management
  • Version control
  • Slack, Google Meet, Teams, etc.
Software Sauna team building day in 2022.

Is agile software development possible by nearshoring? 

From a coder’s perspective on classic software development, the onsite culture is often justified, as workflow inevitably faces the so-called “integration hell” when the software is deployed. At this stage, intensive communication helps to locate and fix problems, so working remotely can have a negative impact on the process. In agile development, there is no separate integration phase because integration occurs after each code change, and each change is minimal. Because most or all parts of the integration process are automated, including testing, developers are immediately aware of problems.

The essential Agile development tools, CI/CD pipelines, perform all the steps from build to unit testing to deployment in an integration testing environment. This continuous delivery workflow eliminates the difficult integration phase and enables true agile development. Code can be written anywhere, anytime, as long as there is constant communication. For the customer, this has the positive effect of allowing them to seamlessly see the results of continuous development and new functionality in their product (eliminating the need for physical presence).

Several global pioneers in the technology sector operate in a fully decentralized organization, with all their employees working remotely worldwide. From a software developer’s perspective, the best-known of these companies are GitLab, Automattic Inc (WordPress), Basecamp, and the Finnish pioneer Leadfeeder. GitLab mentions that this allows them to hire the best and most motivated employees globally with higher productivity. The decentralized organization also allows the company to scale up more quickly.

Nearshore software development FAQ

Nearshoring refers to outsourcing tasks to software development teams in nearby countries with similar time zones and cultural backgrounds. This approach combines the cost-effectiveness of offshoring with the convenience of local collaboration, enabling more accessible communication, faster response times, and smoother project management.

Nearshoring balances cost savings with improved cooperation, making it a popular choice for companies seeking efficient software development solutions.

Nearshore software development involves outsourcing tasks to nearby countries with similar time zones and cultural backgrounds. In contrast, offshore development refers to outsourcing tasks to distant countries, often with significantly different time zones and cultures.

Nearshoring offers better communication and collaboration due to geographical proximity and shared working hours. Offshoring may provide more significant cost savings by leveraging lower labor costs in remote regions. Companies choose between these options based on their priorities, such as cost-effectiveness, ease of collaboration, or time zone alignment.

Onsite refers to a working arrangement where software developers or other professionals are physically present at the client’s location, working closely with the in-house team. This model facilitates real-time collaboration, communication, and efficient problem-solving.

On the other hand, nearshore involves partnering with a service provider in a nearby country with similar time zones and cultural proximity. This model offers cost savings and easier collaboration than offshoring (working with providers in distant countries). Nearshoring balances the benefits of onsite and offshoring by combining geographical proximity, cultural similarities, and cost-efficiency.

Nearshore is often considered better than offshore for specific companies because it facilitates improved communication, faster response times, and easier collaboration. The geographical proximity, shared working hours, and cultural similarities between the client and the nearshore partner enable smoother project management.

While both nearshore and offshore can provide cost savings, nearshoring strikes a balance between cost-effectiveness and efficient cooperation, reducing the challenges that may arise from time zone differences and cultural barriers associated with offshoring.

Companies of all scales use nearshoring in their software development. Here is a few widely known examples:

  1. Siemens: The giant industrial partners with nearshore software development companies in Eastern Europe to enhance efficiency and reduce costs in various projects.
  2. Nokia: The telecommunications company leverages nearshoring in countries like Poland and Romania for software development and R&D purposes.
  3. BBVA: This major bank employs nearshoring for software development in countries like Turkey and Portugal, streamlining processes and improving service quality in their digital transformation journey.

The top five reasons for nearshoring are:

  1. Cost savings: Nearshoring offers lower labor costs than onsite hiring while maintaining high-quality work.
  2. Access to talent: Companies can tap into a larger talent pool with specialized skills unavailable locally.
  3. Time zone alignment: Proximity enables easier collaboration and real-time communication.
  4. Cultural similarities: Nearshore partners often share cultural and language affinities, reducing misunderstandings and fostering better cooperation.
  5. Reduced travel time and expenses: Geographical closeness allows quicker and less expensive visits, facilitating face-to-face meetings when necessary.

  1. Technical expertise: Ensure they have the necessary skills and experience for your project.
  2. Portfolio and references: Evaluate their previous work and client testimonials.
  3. Communication: Assess language proficiency and responsiveness.
  4. Cultural fit: Gauge cultural compatibility to ensure smooth collaboration.
  5. Time zone: Choose a partner with a similar time zone for easier communication.
  6. Project management approach: Confirm they use methodologies aligned with your needs.
  7. Security and compliance: Ensure they meet required security standards and legal regulations.
  8. Cost: Balance cost-effectiveness with quality to achieve the best results.

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