Globally, as human beings we are using more and more devices for growing quantity of activities, and not just at school or work. Nowadays the entertainment industry has also moved to these platforms, as well as food delivery and other types of products and services.

To achieve this, apart from what they do in their traditional physical stores, companies has been forced to turn to online offerings with websites, web and mobile applications, and internal process optimization software to improve the quality of their services and customer experience, as well as internal processes.

Within this context, it is completely understandable that several small and medium-sized enterprises must adapt to their customers´ needs, and also to their specific industries´ demands, as they are becoming increasingly competitive as most companies are looking to innovate in order to take advantage of business opportunities.

If you've made to decision to outsource software development, you may have heard about nearshore, onshore and offshore. However, you may not be entirely clear as to what each one entails.

Outsourcing software development

Incorporating an IT (information technology) team into a company is very expensive for two reasons. First of all, because you need several professionals with different specialties and skills to be able to develop all the tasks.

Then, because they have to innovate, and to do so, they have to be paid for training, activities and research that allows them to continuously build competitive and innovative systems. It is no coincidence that outsourcing of software development is a trend in the world.

Be aware that there are software developers onshore, offshore and nearshore. Understanding what offshore outsourcing, onshore and nearshore means with their differences, advantages and disadvantages on a case-by-case basis, can help you make better hiring decisions.

Although the definition of onshore and offshore does not tell us much about this type of contract, it can be understood from tracing the difference between onshore and offshore, but in any case, we must keep in mind that they are not precise definitions.

If you think about these meanings, they can be explained by the location of the contract company in relation to the contractor.
Let's start with the basics.

A nearshore company is simply a company that is based in a different country than yours. To be more precise, these types of companies generally offer a service or product to other businesses or companies that are located in different regions of the world.

In other words, nearshore outsourcing is the practice of getting jobs or services performed by people in neighboring countries rather than in the organization's own country. The most common types of jobs that are outsourced include software development, technical support, and call center jobs.

While offshore outsourcing includes contracted services in further countries, and onshore in the same country, nearshore involves using or contracting services in closer countries.

For example, for US companies, nearshore outsourcing can be done in countries such as Canada and Mexico. However, offshore subcontracting can be done in Asian countries such as India or the Philippines or European countries such as Ukraine. The choice of outsourcing directions largely depends on the requirements of the company and the type of work.

Pros of nearshore outsourcing

- Great geographic proximity. This means that travel and communication is easier as the subcontractor is likely to have a similar time zone. For overseas outsourcing companies, time zone differences can be difficult to manage when meetings are needed or a quick response is required.

- Cost savings. Nearshoring can be more beneficial depending on location and type of work, although this is not always the case. For example, software development is considered a very specialized skill, while a call center is not.

Cons of nearshore outsourcing

- Language barriers. There are some cases where language barriers and cultural differences can make it difficult to maintain flexible working relationships. However, this is not always the case, as there are many neighboring countries that show cultural similarities.

For organizations interested in outsourcing, a nearshore outsourcing company can help provide quality services at a lower cost, as well as help facilitate the adoption of organizations' business processes and protocols that their internal team uses.