Why should businesses consider nearshoring?

by Donald Lowe,
CEO Forbytes

May 2, 2017
Reading Time: 6 minutes

This article is for businesses and people that are new to the concept of nearshoring their software development. We will quickly describe what nearshoring is, then look at a couple of benefits that you can expect to gain from nearshoring.

​What is nearshoring?

​You may have heard of the terms “nearshoring” and “offshoring”. Nearshoring is a means of gaining greater access to talented software developers, often at a competitive rate. With the improvement in communication tools, it is possible now to expand the reach of nearshoring from within the region you are in, to other regions that are in similar time zones. Offshoring, on the other hand, is working with regions where the time difference is more than 2-3 hours.

​Why nearshoring?

​When faced with a shortage of technical and software development process expertise, nearshoring is an effective way for companies to become more viable and sustainable within their own business area. As a general rule, nearshoring will enable you to optimize your costs. Software development is a knowledge based profession and we advise you to look at using nearshoring as an opportunity to fill any talent gaps.

​Benefits of nearshoring

​Make your business more efficient

Delivering fit for purpose software solutions is in effect a complex interaction 

Great software solutions are born from a combination of technical talent and the knowledge of processes needed to bridge the gap between the business and the technical experts. A good software development team is made up of end users (your staff and customers) and technical experts formed into one cohesive team.

The section below, ‘7 Top Tips on How to Start’, will give you a few tips on identifying the right partner for you.

​Create business opportunities

Digitalization is something that cannot be avoided, especially if you want to be competitive.

By implementing a digital solution you are able to automate any repetitive processes that you and your staff are carrying out. With the implementation of a software solution, you will often find that you free up time to do more with your existing and experienced teams. In essence, it allows you to get more work done in less time – and we all know that effective productivity is essential.

Create more jobs at home and away

The UK, European Union countries and the USA currently have a deficit of software engineers. This shortage in talent can often lead to businesses being unable to grow – it is a serious constraint to many businesses. Nearshoring and outsourcing the development and management of your software solutions can often allow you to continue growing your business, thus enabling you to employ local dedicated development team – especially if you find you are expanding. The bringing in of external expertise can often help contribute to the overall market not only within the company but also your region and country. Nearshoring isn’t taking away jobs – it is providing opportunities for companies to continue to grow and bring more people in to cover other needed roles (sales, marketing, warehouse staff, etc.).

​7 top tips on how to start

  • 1
    ​​Nearshore firstly for talent and social skills... then for price

​If you are new to nearshoring, you may have heard business colleagues talking about reducing costs by outsourcing or nearshoring. Do not fall into the trap of going into a nearshoring partnership primarily to reduce costs. Focus on getting the right talent, as a general rule this will result in two benefits; reduced costs and improved productivity. As you would align your talent strategy and business strategy at home, do the same with your nearshoring partner. Otherwise, there’s likely to be a big gap between what you aim to do and your ability to do it.

  • 2
    ​Processes and management do matter

​Processes matter even in your own offices. When talking to prospective nearshoring partners ask them to take you through the processes for delivering software. They must be able to explain why each step is important for your business and how it will contribute to realizing benefits. Avoid partnering with companies that only supply people and leave all the process management and people management to your organization.

  • 3
    ​Clear simple management skills

​A simple communication strategy goes a long way to building understanding and trust. Have a set of simple strategies for the critical management areas so everyone knows what is expected and can do their jobs. Most people want to do a good job, so a few guidelines will clarify what is needed. Your nearshoring partner will have experience in these areas so they will be able to help.

  • 4
    ​Work with partners who demonstrate they will take a keen interest in your success

​While you will want day-to-day contact/management of your software team, it is important to work with a partner who can help you in managing it. Having a trusted partner that can give personal on-site leadership can help you in making sure your software dedicated development team is following relevant processes. They can also take care of administrative duties, leaving you free to take care of business where you are.

  • 5
    ​Visit your nearshoring partner's offices

​Visit your prospective Nearshore partner and get a feeling for how they work with existing clients. Live a day or two in the life of your nearshoring partners, see their day-to-day routines. Talk to the developers, testers and quality assurance people and find out how they work, at the end of the day “seeing is believing”.

  • 6
    ​Appoint a senior person to take the role of product owner at your home office

The product owner role should be filled by a person who ideally has the responsibility for using the tool being built or someone who has the authority to represent these interests. This is true for in-house development teams as well. Dedicated development teams are made up of business side people who will use the end products, collaborating with technical people who build what you need. Having a senior person with extensive knowledge of the business and an interest in getting the right tools developed, involved in the software development team is therefore vital. By being involved throughout the development process the product owner can identify issues in the evolving product and get them fixed early on at a much lower cost. Having them work closely with the digital solution and being responsible for achieving business benefits ensures that you have someone in place that is engaged in the project and is responsible for ensuring the finished product is exactly what you need.

Get them involved and engaged and you can be sure that they will be on top of the project and take pride in making sure your company is getting the most out of your nearshoring team and software solution.

  • 7
    ​Plan who will fill the required roles for a software development team

​Your nearshoring partner should be able to advise you on the different roles that need to be filled. You can then decide which of these roles you will fill with in-house personal and which are to be filled by your nearshoring partner.

Examples of roles that will be needed when developing a software solution are:

  • Product Owner: should always be an in-house person who has knowledge of the business
  • Project Manager: ideally be an in-house person if you have a senior person who has project management experience. You can also ask the nearshore partner to coach a suitable person. As project management requires specialist skills you may just want the nearshoring partner to take this role
  • Business Analyst: to define and manage software development requirements. For small teams this role can be taken on by the Product Owner if their other operational responsibilities allow. As your team grows you will need to assign someone full time to this role
  • stop
    Usability Expert: building usable digital tools and web sites requires expert knowledge on how people interact. Usability is a professional knowledge area and requires the relevant experience to be done well
  • stop
    Frontend developer and backend developer: technology in both these areas is changing rapidly, as well as expectations from the end users becoming more demanding of quality. Gone are the days where end users are happy with the mediocre quality, as a result developers tend to be good at one and average at the other. While it is possible to find one individual to fill both roles, on most development projects it is most probably more cost effective to employ different people to fill these roles
  • stop
    Testers: the most underestimated people in software development. While on small development teams of 2 or 3 developers the product owner or members of you staff can take on this role. I recommend that you get a professional tester as soon as possible. For a team of 3+ developers testing will start becoming a full-time role, for smaller teams you can discuss with your nearshoring partner to have someone work 50% or 75% of the normal week on testing).

For further advice on such areas of expertise as UI and UX design, e-commerce development, MVP development feel free to contact us.

Read here about what you can and should do once you have started working with your nearshoring partner!