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Nearshore Development Guide

The Full Guide to Nearshore Development and Outsourcing

Nearshore, offshore, onshore, in-house… there are so many options when it comes to hiring software developers that it seems impossible to figure out which one is right for your company.

But what is nearshore outsourcing? And how does it measure up to the other forms of outsourcing and hiring developers?

We spent hours doing the research and learning from personal experience of nearshore outsourcing so you don’t have to.

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What Is Nearshore Software Outsourcing?

What Is Nearshore Outsourcing

Nearshore software outsourcing is the process of hiring developers (dedicated teams or full-stack developers) from neighboring countries to complete software development tasks and projects.

In recent years, software companies, apps, and websites have started outsourcing various software development tasks and filling gaps in their team using developers in other countries.

Nearshore outsourcing is a good way to save money on labor costs while working with a developer who is in a similar timezone and is physically closer than an offshore developer.

Let’s take a closer look into the differences between onshore, offshore, nearshore, and in-house developers.

Onshore Outsourcing vs. Nearshore Development

Onshore vs Nearshore

Onshore outsourcing means outsourcing projects and tasks to a developer within your own country.

Outsourcing work to a freelance developer often saves costs when compared to hiring someone on in-house. But how does it compare to nearshore outsourcing?

Onshore Outsourcing
Nearshore
Cost
$50-$200 per hour
$20-$150 per hour (MX)

$30-$160 per hour (CA)
Experience
U.S. is ranked first in the world in the skill and experience of software developers.
Both Canada and Mexico have created initiatives to improve the tech industries in their countries.

120 tuition-free specialist tech universities.
Canadian programs help young people get more involved in the STEM fields.
Pros
Can have in-person meetings, developers will most likely speak English, skill-level is high.
Slightly cheaper, time zones are similar, highly-skilled developers available. English proficiency in Canada is high, making communication easy.
Cons
More expensive
Not quite as inexpensive as offshore outsourcing, English proficiency in Mexico isn’t ideal. Hard to have in-person meetings.
Size of Talent Pool
4.3 million developers
Over 700,000 developers (MX)
Main Programming Languages & Sectors
JavaScript, Python, PHP, HTML5/CSS, SQL.

Data Science, Cloud Computing, Artificial Intelligence, DevOps, Blockchain
JavaScript, PHP, Ranked #1 in the world for Python development.

IT, data center infrastructure, integration services.(MX)

Java, Linux, javascript, SQL, Python

Data engineer, back-end developer, software engineering manager.
English Proficiency
Native language.
92nd place on Education First’s 2021 EPI. (MX)

80% Canadian population is proficient in English. (CA)

Offshore Outsourcing vs. Nearshore Development

Offshore vs Nearshore

Offshore
Nearshore
Cost
$10-$150 per hour (Asia)

$20-$170 per hour (Europe)
$20-$150 per hour(MX)

$30-$160 per hour (CA)
Experience
Experience varies depending on region, but Moldova, Romania, Ukraine, and Poland are in the top 10 for most skilled developers globally. (Europe)

In Asia, experience also varies vastly. 56.7% of developers in China have only 1-3 years of experience. India has a larger proportion of developers with a degree in a CS-related field as compared to the entire world. (Asia)
Both Canada and Mexico have created initiatives to improve the tech industries in their countries.

120 tuition-free specialist tech universities.
Canadian programs help young people get more involved in the STEM fields.
Pros
Tpically cheaper than hiring in-house or onshore. Both regions also have many highly skilled developers.
Slightly cheaper, time zones are similar, highly-skilled developers available. English proficiency in Canada is high, making communication easy.
Cons
Some regions have a smaller pool of talent than others and you will find more unskilled developers in certain countries.

The time difference is pretty significant in most overseas countries, making collaboration more difficult.

Taxes and payment methods will also be different depending on region.
Not quite as inexpensive as offshore outsourcing, English proficiency in Mexico isn’t ideal. Hard to have in-person meetings.
Size of Talent Pool
Europe has an estimated 6.1 million developers.

Asia is the largest IT talent pool.
Over 700,000 developers (MX)
Main Programming Languages and Sectors
Java, Javascript, SQL, HTML, PHP, C++, C#, and Python

Mobile developer, software developer, web developer, front-end developer. (Europe)

C++, JavaScript, C#, Java, Python

Software development, mobile development, AI (Asia)
JavaScript, PHP, Ranked #1 in the world for Python development.

IT, data center infrastructure, integration services.(MX)

Java, Linux, javascript, SQL, Python

Data engineer, back-end developer, software engineering manager.
English Proficiency
Western Europe countries have the highest English proficiency, with Eastern European countries moderately high in English proficiency.

Most Asian countries rank moderate to low English proficiency on the EPI.
92nd place on Education First’s 2021 EPI. (MX)

80% Canadian population is proficient in English. (CA)

Nearshore vs. In-House Development

Nearshore vs In House

Nearshore
In-House (U.S)
Cost
$20-$150 per hour(MX)

$30-$160 per hour (CA)
$198,974 per year
Experience
Both Canada and Mexico have created initiatives to improve the tech industries in their countries.

120 tuition-free specialist tech universities.
Canadian programs help young people get more involved in the STEM fields.
The U.S. is ranked first in the world in the skill and experience of software developers.
Pros
Slightly cheaper, time zones are similar, highly-skilled developers available. English proficiency in Canada is high, making communication easy.
Can have in-person meetings, create more of a team, developers will most likely speak English, skill-level is high.
Cons
Not quite as inexpensive as offshore outsourcing, English proficiency in Mexico isn’t ideal. Hard to have in-person meetings.
More expensive
Size of Talent Pool
Over 700,000 developers (MX)
4.3 million developers
Main Programming Languages (java, PHP, python…) and Sectors (like IT, web dev, software dev)
JavaScript, PHP, Ranked #1 in the world for Python development.

IT, data center infrastructure, and integration services.(MX)

Java, Linux, javascript, SQL, Python

Data engineer, back-end developer, software engineering manager.
JavaScript, Python, PHP, HTML5/CSS, SQL.

Data Science, Cloud Computing, Artificial Intelligence, DevOps, Blockchain
English Proficiency
92nd place on Education First’s 2021 EPI. (MX)

80% Canadian population is proficient in English. (CA)
Native language.

Who Should Consider Nearshore Development?

Any company needing software development tasks or projects should consider nearshore development.

Since other developers in the U.S.’s neighboring countries of Canada and Mexico are slightly cheaper, it can help businesses of all sizes save a little bit of money without compromising on quality.

Why Consider Nearshore Development?

Nearshore development is worth consideration because it combines the advantages of onshore outsourcing with offshore outsourcing.

It’s always worth considering all of your options for software development since it is such a large part of anything tech-related and also one of the pricier investments you’ll make.

Nearshore Outsourcing: Advantages

Nearshore Advantages

Some of the many advantages of nearshore outsourcing include the following.

Save Money

The most common reason that companies use nearshore outsourcing is to save money.

Since the cost of living could be lower than the U.S.'s, software developers there charge much less per hour than developers in the U.S.

Skilled Developers

In Mexico and Canada particularly, the government has made investments in growing their tech industries and better equipping a future generation of developers with the education necessary to succeed.

Because of this investment, software developers in nearshore countries are just as, if not more, skilled and experienced as software developers in the U.S.

English Proficiency

English is one of Canada’s national languages, with over 75% of Canadians fluent in English.

Similar Timezones

Since these countries are so close to the U.S., there won’t be a significant time difference between you and your nearshore developer.

This makes collaboration easier and communication faster, which can lead to projects getting done in a more timely manner.

Nearshore Outsourcing: Disadvantages

Nearshore Disadvantages

There are a few drawbacks to nearshoring, like:

Pricier Than Offshoring

Unfortunately, businesses will pay for that high skill level.

When compared to many European and Asian countries, nearshoring development in Mexico and Canada is typically more expensive.

Hard to Have In-Person Meetings

Though nearshore developers are relatively closer than offshore ones, they will require leaving the country to have any in-person meetings, so the work will still be remote.

English Proficiency

Though Canadians are mainly proficient in English, the same can’t be said for Mexico, which ranks in 92nd place on the English Proficiency Index.

Outsourcing Nearshore Examples & Use Cases

Here are a few companies that saw success using nearshore outsourcing for development.

IBM

DemandTec, a division of IBM, was facing challenges with speed in hiring developers in Silicon Valley.

Using Sonatafy, they were able to quickly source qualified developers living in Latin America and the Asia Pacific, growing their business from 5 million to 65 million dollars annually.

Dropp

Startup Dropp offers quick and efficient last-mile services for eCommerce sites.

By using Zartis, Dropp was able to design software architecture and launch quickly and efficiently.

How to Outsource Nearshore Software Team

How to Outsource Nearshore Team

You have a few options when it comes to nearshore outsourcing.

Third-Party Staffing Service: Upstack

Using a third-party staffing service like Upstack is the quickest, easiest way to find a nearshore software team that you can be sure is highly skilled and qualified.

Upstack vets each of the developers on its site, picking only the top 1% of all talent that they interview to work with.

Upstack works with software developers all over the world, so they can match your company with a nearshore developer in Mexico, Argentina, Brazil, Chile, Colombia, or Uruguay.

Find Freelancers Yourself on a Large Freelancer Marketplace

If you’d rather go the cheaper route and don’t mind taking a risk, you could also try building a nearshore team yourself on a freelance marketplace site like Upwork or Fiverr.

Best for Elite Talent

Upstack

UpStack

  • Best for well-vetted software developers and engineers (Top 1%)
  • Ideally 6+ months and longer term projects
  • No commitment required. 14-day risk-free trial.
  • Requires $12-15k monthly budget

Learn More

Largest Pool of Freelancers

Upwork Logo Featured

Upwork

  • Find the widest variety of technical talent and specialties
  • Good for short term projects and tasks
  • No minimum budget

Learn More

Frequently Asked Questions

Why should I consider nearshoring?

You should consider nearshoring because it saves you money on labor without compromising on quality or dealing with a large timezone difference.

Is nearshore development cheaper than hiring in the U.S.?

Nearshore development is usually cheaper than hiring in the U.S.

What are the best countries for nearshore outsourcing?

Costa Rica, Argentina, Brazil, and Mexico are among the best countries for nearshore outsourcing.

Where can I find nearshore software developers?

You can find nearshore software developers through a high-quality staffing company like Upstack or a freelance marketplace like Upwork or Fiverr.