What Is Nearshore Software Development: In-Depth Guide

In recent years, nearshore software development has become an attractive alternative to in-house hiring. With nearshore development outsourcing, companies can explore beyond geographical borders for skilled IT talents to build their apps. And this is helpful when major economies are facing talent shortages.

According to Deloitte, 90% of leaders face difficulties hiring tech talents in 2023 despite mass layoffs. Nearshore software outsourcing, or software nearshoring, allows you to engage independent tech talents at reduced costs without compromising quality.

While nearshore application development helps companies fill tech vacancies, engaging the right nearshoring partner is important. Otherwise, there might be miscommunication, delays, and questionable deliverables affecting your app release.

I’m Stan Burenko, Uptech’s Head of Business Development. For the past 10+ years, I’ve helped numerous companies fulfill their outsourcing needs by matching them with outsourcing companies like Uptech.

Uptech team provides software product development services, from idea validation to designing and developing products. We level up business capability of early-stage startups and established companies. And I hope to do the same for you.

In this article, I’ll explain

  • What nearshore software development is.
  • The benefits of software nearshoring.
  • How to choose the right nearshore development partner.
  • What are the nearshoring challenges and how to solve them.
nearshore software development

What is Nearshore Software Development?

Nearshore software development is an outsourcing model that allows companies to contract app developers in a nearby country for their software projects. Often, these countries share similar time zones or are not more than 3 hours apart from the client’s location.

For example, UK companies outsource to developers in Ukraine because of the 2-hour time zone difference. Due to the smaller time-zone differences, clients and developers can communicate in real-time more easily. They can also travel to meet and discuss projects in person without spending long hours on flights.

Is nearshore development the best option for you? What about onshore and offshore outsourcing? To help you understand nearshoring practices better, we’ll compare those outsourcing models below.

nearshore vs. offshore vs. onshore

Nearshore vs. offshore development

Offshore outsourcing is similar to nearshore development, where clients engage software developers from different countries. The difference, however, is the geographical proximity between the client and the outsourced destination. In offshoring, both countries are located in time zones that are at least 4 hours apart.

For example, one of Uptech’s clients Dollar Shave Club is based in the US, but they outsourced their software project to an offshore development team, which is 10 hours ahead. Like nearshore development, offshoring is also an outsourcing solution that allows you to access a broader talent pool at a lower cost.

Nearshore vs. onshore development

Onshore development describes independent contracting activities that take place within the same country. For example, you run a fintech startup in London, and you hire freelance developers based in Manchester.

By hiring from the same country, companies can overcome cultural, time zone, and communication barriers, but at a steeper cost. Usually, onshore outsourcing in developed economies like the US, Canada, the UK, and Western European countries is expensive because of the cost of living. Besides, many of these countries lack skilled tech talents locally.

Depending on where you’re located, nearshore development can be an ideal outsourcing option. You can communicate with developers during working hours, pay a lesser hourly rate, and collaborate with skilled IT talents.

How to Choose a Nearshore Development Company: 6 Key Steps

Generally, when choosing a nearshore development company,  it’s important to consider your project needs, developer’s skills, credentials, collaboration method, cultural fit, and communication method.  We share ways to find the right fit below.

how to choose a nearshore development company

1. Assess your project needs

Every business is unique and faces different IT challenges. Before reaching out to nearshore software development teams, evaluate your project needs. For example:

  • Are you developing an entire app from scratch? Or do you need post-release support for existing apps?
  • What are the tech stacks required? If you need front-end developers, you should look for those proficient in Javascript, HTML, and CSS.  
  • Do you plan to hire one developer or an entire team?

List questions like this in your RFP. This way, vendors can come back with a clear proposal.  You can download our RFP template here to get started.

Even If you already have an in-house team, IT outsourcing allows you to access specialized skills without onboarding new developers. Moreover, some skills or expertise are scarce in certain countries. For example, some companies require nearshore software development services specializing in generative AI.

2. Research nearshore developer candidates

Globally, there is an abundance of nearshore developers. Simplifying hiring one without careful evaluation puts you at risk of subpar deliverables and miscommunication. Rather, spend time researching potential candidates who have the skills, experience, and working style that fit your team.

where to find a nearshore development partner

You can find potential nearshore software developers by:

  • Searching on Google. Type in ‘software developers’ + country, and you will find web pages belonging to nearshore software development companies. Visit their website and learn if they offer the IT services you need.
  • Using special directories like Clutch and Goodfirms. These directories list software development companies by location. Besides, you can also filter them by rate, services, and reviews. On Clutch, you get an overview of the services the software vendor specializes in. Meanwhile, Goodfirms displays the visuals of the vendor’s portfolio
  • Searching on LinkedIn. Do a search on the development service and filter the results by location and industry.
  • Speaking to your industrial peers. Some might have collaborated with a nearshore software developer and can refer you to them.
  • Attending international or regional IT events. Connect with participating IT developers from neighboring countries.

Alternatively, check out this article, where we share tips on looking and hiring a software development partner.

3. Verify the developer’s credentials

Before hiring the shortlisted developer, perform due diligence to ensure they have lived up to their claims. This way, you reduce the risks of miscommunication or fallouts after commencing collaboration.

To do that, explore their portfolios or case studies. Any reputable outsourcing developers should have a portfolio detailing their past works. From their portfolio, you can ascertain if they have the expertise, experience, and industrial knowledge required to handle your project. If they don’t openly list their portfolio like ours, you might want to move on.

Then, learn how their previous clients feel after collaborating with them. You can go to independent directories like Clutch to read reviews their clients left. Watch for red flags in the reviews, such as slow progress updates, misaligned products, or cost overruns. On the other hand, good reviews are signs of a trustworthy vendor. In fact, 60% of our new clients heard about us from our past clients.

4. Evaluate collaboration methods

Despite similar working cultures and time zones, collaborating with a nearshore IT project outsourcing partner requires a well-managed arrangement. So, ask potential nearshore vendors what tools and communication methods they use to streamline projects.

For example, some independent developers use Trello, Slack, and Jira to update their clients on progress, discuss changes, and receive feedback.

Besides project management tools, it’s equally important that the candidate has an established collaboration workflow. Talk to them and learn how they measure progress and strive to achieve a product-market fit for your app. At Uptech, our developers apply the Agile methodology to let us quickly apply changes based on feedback we receive.

5. Consider cultural fit and communication practices

Generally, nearshoring allows you to benefit from cultural and language similarities, but there are exceptions. Some neighboring countries may have very different working cultures and languages.

For example, Australia is only 3 hours ahead of China, making the latter a possible nearshoring destination. However, most Chinese developers don’t communicate in fluent English and they share a different working approach. In this case, outsourcing to European software companies like Uptech is better for Australian clients.

6. Interview the software developer

Even if you share a similar language, timezone, and culture with the developer, communication issues can still derail your project. Therefore, it’s wise to conduct a face-to-face interview with the candidate before signing a contract with them. This way, you can identify red flags early on from how the development company’s project manager or business lead responded in the interview.

Also, use the interview as an opportunity to learn more about the nearshore developer before making an informed decision. Remember, once hired, you’re committing to a long-term partnership, and you want to reduce risks early on.

These are some questions that will help you gain a better understanding of the candidate.

  1. Which software development methodologies do you use?
  2. How do you ensure effective communication with clients?
  3. What are the tech stacks, frameworks, and programming languages that your developers use?
  4. How do you test and fix issues during development?
  5. What specialization and roles are required when assembling a team for my project?
nearshore software development

Benefits of Nearshore Software Development

Many top brands outsourced their development needs so they could focus on growth. For example, Slack outsourced its web and mobile to a Canadian agency in the early stages, taking advantage of the nearshore model. Likewise, you can also benefit in different ways when you outsource to a nearshore development team.

nearshore software development benefits

Overcome talent shortages

Nearshore outsourcing lets you hire talents to fill vacancies quickly and without extensive training. Nearshore developers have worked on different projects and can adapt to different companies. They can fit into your team almost immediately and start contributing to software projects.

Access to skilled developers

You need different skills to develop different software, and sometimes, finding talents with specific expertise is challenging. Nearshore software development outsourcing expands the talent pool beyond the local job market. Without offering an exorbitant salary, you can hire top talents with the skills you need in nearshore destinations like Ukraine.

Overcome language and cultural barriers

Precise and transparent communication is key to smooth collaboration between companies and outsourced teams. By engaging developers in nearshore countries, there are fewer risks of miscommunications that may derail the project outcomes.

Increase operational efficiency

Founders and CEOs often get overwhelmed by the technicalities and commitment involved when managing the entire software development process. Nearshore outsourcing frees up time and resources so you can focus on key business activities, like sales and marketing, to accelerate growth.

Reduce travel time

By working with software developers in nearby countries, you can visit the contractor in a matter of hours. If you choose to meet virtually, you can do so by scheduling calls during both parties’ working hours.

Nearshore Development Challenges and Solutions

Nearshore IT development seems to be the ideal outsourcing model to balance cost, quality, and delivery timeframe. However, there are challenges that you must be mindful of.

Differing expectations

Despite sharing similar work cultures, clients and nearshore IT developers may have misaligned perspectives of project requirements and goals. This could happen if the developer didn’t fully understand your business needs before commencing the project.

Solution: So, aligning expectations between your team and the contracted developer is important. You can do so by ensuring the developer provides a precise plan, documentation, and milestones based on agreed objectives.

Data security and compliance

When developing software related to finance and health, security is paramount. You’re also required to comply with industrial standards and regulations or risk being fined. However, you have no control over how the nearshore team you hire implements data protective measures.

Solution: To reduce compliance risk and protect your customer’s privacy, discuss data security measures with the nearshore developers. Learn if they’re familiar with and experienced in complying with acts like HIPAA, GPDR, and PCI-DSS. At Uptech, we take data security seriously. We sign NDAs with our clients before commencing development. On top of that, we strictly adhere to OWASP Secure Coding Practices and GPDR.

Inconsistent progress updates

Software projects might get sidetracked if the nearshore developer fails to update you on progress periodically. Without proactive communication, you’ll spend more time checking on the development status than necessary..

Solution: Before appointing a nearshore developer, establish a reporting and feedback channel with tools you’re familiar with. Then, agree on intervals and key milestones to communicate, whether virtually, by email, or in person.

5 Tips To Implement Nearshore Development Successfully

Outsourcing to a nearshore development team doesn’t automatically assure success. Other factors, including preparation, coordination, and communication, determine the project outcome. Follow these steps to collaborate successfully with your nearshore IT partner.

nearshore software development

1. Choose a suitable outsourcing model

Most nearshore development teams provide several outsourcing models, such as time and material, fixed price, and dedicated team. Each model has its pros and cons, which you need to consider before deciding on one. If you’re bootstrapping a startup, the fixed-price model lets you allocate a fixed budget. Meanwhile, larger companies have better control by engaging a dedicated team to work with their internal IT experts.

2. Decide the nearshoring region

Some neighboring countries are more ideal for nearshoring than others. For example, Eastern European countries like Ukraine offer a large pool of talented IT talents with experience in diverse industries. Moreover, they charge a relatively affordable rate compared to their peers in developed countries. Choose a nearshoring destination you’re comfortable with, considering the culture, language, and time difference.

3. Onboard and streamline expectations

Whether you’re augmenting your internal team or outsourcing the entire project to a nearshoring partner, having a systematic onboarding workflow is crucial. Help the developers understand your working culture, processes, and business workflows to collaborate better. With a common understanding, all team member, internal or remote, become aware of their responsibilities.

4. Apply collaboration framework

Preferably, the nearshore product development team you hired has an established and efficient workflow in place. This way, you can ensure that the developers can incorporate changes quickly without compromising quality. Otherwise, consider introducing software development methodologies like Agile to ensure your nearshore programming partner can keep pace with feedback and changes.

5. Monitor progress

As the client, you need to continuously check on the contracted developer to stay informed of ongoing progress, challenges, and matters that require your attention. At Uptech, we keep you up-to-date with progress reports through channels you’re comfortable with. We’re also quick to act on your suggestions and feedback.

Successful Nearshoring Developments with Uptech

Uptech provides nearshore software services for clients in neighboring countries. Our multi-disciplinary teams, competitive rate, and proven track records position us as a trusted and reliable outsourcing partner. For example, we’ve built an investment app that not only users found useful but also helped our UK client raise £400.9 K in funding.

Let’s take a look at other experiences our clients had.


Eatable is a Swedish startup that provides food businesses access to ghost kitchen facilities. They envisioned the required product but sought a reliable development partner. When they engaged our team, we were tasked to bring their idea to life.

nearshore software development

To ensure Eatable kickstarted its development on a strong foundation, our team focused on getting user feedback during the discovery phase. Then, we applied the feedback to support UI/UX design, code development, testing, and other phases in the software development lifecycle.

With a coordinated effort, we delivered a functional, user-friendly, and elegant kitchen cloud app. Besides, we also completed the app on time and budget. Also, Eatable’s founder spent several days at our office working on the project. That’s the possibility that nearshoring offers.

Listen to what Eatable’s founder said about working with us.

"It's like hiring a tech department with business-minded people. They don’t just execute their code; they ask questions, provide suggestions, and learn about our business in order to make a proper product."    

Carbon Club

Carbon Club is a UK-based startup that champions environmental causes. Carbon Club came to us with an idea to build an app that lets users contribute to charities to offset the carbon footprint they generate. More importantly, they want to validate the idea with a prototype before proceeding further.

nearshore software development

Located only 3 hours away, Carbon Club’s team traveled to Ukraine to participate in a Design Sprint session. There, we brainstorm ideas and identify challenges together before validating them. With insights from the discussion, our team built a prototype, which consists of key features their users love.

Through the nearshore collaboration, Uptech helped Carbon Club save cost and time by quickly identifying product-market fit and building a functional prototype that they could pitch to investors.

Here's the feedback from Carbon Club’s founder:

“I would definitely consider Design Sprint to get a rapid prototype. It really helped to form the product vision from the start and get to the core product very quickly, cutting down costs and making a far leaner proposition.”
nearshore software development

Future of Nearshore Software Development

Given recent trends, we can confidently predict that many companies will outsource or augment their IT teams with specific skill sets. The conventional hiring model, where businesses fully build their software in-house, is no longer financially attractive. May CEOs have or plan to outsource their development needs.

The question is, which skillsets do companies need and can benefit from working with a nearshore software development team?

With generative AI rapidly transforming industries, companies will compete for developers who can integrate deep learning models into their applications. Data security and compliance are also proficiencies that are scarce in many local markets. Yet, they are pivotal in releasing secure apps that comply with strict regulations.

As the CEO, you can prepare your business for growth and maintain a competitive edge by considering nearshore software outsourcing. The advantages of nearshoring software development far outweigh the drawbacks as long as you mitigate the risks. In this article, we’ve shown you how to do so, as well as steps to find the right nearshoring partner.

Don’t let talent scarcity hinder your next project. Outsource with Uptech for timely and affordable software development.

Let’s build your next product! Share your idea or request a free consultation from us.