Nearshore Software Development: Guide For Startups
Aug 19, 20218 min read
Chief Marketing Officer of Ideamotive. Travel addict and remote work advocate.
Today every business needs IT backup for effective operation and competitiveness in the market. Outsourcing is a key for a successful leading business that poses many challenges to companies. The IT outsourcing industry is witnessing a sharp increase. It is expected to reach $397.6 billion throughout the next five years, growing at a CAGR of 4.5% during the forecasted period.
Startup companies are vulnerable to market changes, therefore, having support from foreign partners would be an excellent way to avoid unexpected outcomes. Relocating IT services abroad has many advantageous reasons, including cost-efficiency, a rich talent pool, expanded agility, and more. If your in-house developers lack sufficient expertise or their services are too expensive for your startup, you can move activities to a neighboring country or a country within the same geopolitical region. Read the article and find more useful data that will help you make the right decision.
What Is Nearshoring and Why Should You Choose It?
Nearshoring is a process of transferring activities to a service-providing company abroad to a country that is geographically located not far from your region. It is a part of a broader concept that is called outsourcing and differs from offshoring, farshoring, and onshoring exclusively in terms of geographical context. If you want to know more differences between offshoring and nearshoring, read our blogpost on the Pros And Cons Of IT Nearshoring And Offshoring.
There are many reasons why you should resort to this way of business leading, but you have to clearly understand what you want to achieve and potential risks on your way. Nearshoring will enable you to find professionals with similar cultural backgrounds and insignificant time-lag. You can contact your employees easily or arrange an offline meeting if needed as your countries are part of Europe. If you are still hesitant whether to use this model, move on to get more insights. World-leading business owners advocate outsourcing in all its manifestations, saying that:
“We are certainly more open to hiring more remote contractors than before. Although there was an adjustment period, my team is now very comfortable and productive while working remotely. We also now have a better understanding of what is needed to onboard new hires remotely and are confident that we can integrate them into our team despite our physical distance. It’s no longer necessary to have physical face-to-face meetings with candidates to make a hiring decision, thanks to video conferencing. That way of thinking will follow us into 2021 and beyond.”
Derin Oyekan, Co-founder & CMO of Reel Paper Los Angeles
Take a look at the video to find more details about IT outsourcing market insights:
Pros and Cons of IT Nearshoring Model
When looking at a nearshoring way of service moving, there arise several questions on its effectiveness and possible negative features. We tried to collect the most useful aspects of the nearshoring model, outlining its advantages and disadvantages.
Nearshoring offers people a plethora of positive features that make this outsourcing model the most widely used. But before accepting this type of activity transferring, you need to familiarize yourself with specific aspects concerning outsourcing for product owners vs CEO. Depending on your role and position, you will face different challenges and opportunities. Take a look at a list of nearshore advantages and make sure your choice is right:
Geographic proximity. It enables you to easily travel to meet your team members for personal meetings. Thus, you will better control the process and reduce the chances of misunderstandings and unpredicted costs. Seeing employees face-to-face allows keeping the team members’ spirit high.
Cost-effectiveness. Investing in a neighboring country’s talent pool is a great choice from a geopolitical viewpoint, but the expenses are not so high if we take other software development methods. In the CEE countries, you can find a team of professionals for a reasonable price and benefit from lower labor costs and tax incentives.
Cultural affinity. There are situations when culture plays a huge role in successful communication. Speaking the same language is not enough as cultural compatibility allows people to build their relations and avoid possible misunderstandings.
Fast problem-solving. Since a client and a service provider are in the same region, they can better coordinate to tackle different issues. They are practically in the same time zone, have similar cultural backgrounds, and are not far away from each other for a personal meeting.
Outsourcing poses many challenges for businesses seeking the external talent pool, and here you can explore their main manifestations. Ideamotive COO Kamil Osiecki outlines possible problems and ways of managing them. Using the nearshoring principle of business leading, you will not face most of them, such as timezones, team communication, and dropping out of projects. Nevertheless, there are specific cons to consider; let’s find them all:
Limited range of choices. Your choice is limited to neighboring countries where service providers can be in high demand. Therefore, take care of collaborating with an expert team in advance.
Expensiveness. We choose nearshoring if services provided in our country are costly, but if we compare it with offshoring, the price is higher.
Nearshoring Work Principles (on the Example of Poland)
Nearshoring is one of the most popular work models involving a third party. The reasons for action transferring are cooperating with a less expensive and geographically closer company. When choosing a service developer for your startup, pay attention to the country in the center of Europe with a rich talent pool and cost-effective services. Nearshoring work principles will look the following way:
You analyze economic and IT sectors in adjacent countries and choose the most appropriate region.
For example, Poland is your neighboring country; therefore, you decide to resort to its IT service provider.
Study their tax system and law to be fully prepared for cooperation.
You search on the internet for software developers, providing services for foreign companies. In Poland, there are such popular IT companies as Asseco, Comarch, Integrated Solutions, NTT System, Ericpol, CD Projekt, Sygnity, Transition Technologies, and J-Labs.
Once you see the right agency, read their reviews and try to find the former clients.
Analyzing all pros and cons, contact them to find more details and costs.
If you decide to transfer some activities to the Poland company, arrange a personal meeting with team members to explain your demands and set the deadline.
It is necessary to sign a contract to avoid unpredicted outcomes when one of the parties violates arrangements.
When everything is settled you may contact a team leader online for getting reports on their work.
Why Is Poland the Best Destination for IT Nearshoring Projects?
Poland has a strategic location connecting East and West. Many European companies from the UK, Germany, and Belgium prefer this country for IT outsourcing as it is one of the leading players in the market. The country experienced rapid economic growth, becoming the first former Soviet bloc country to reach a development market.
The software development services market in Poland is also thriving, amounting to about 8% of the country’s GDP. It is the country with the richest IT specialists pool in the CEE region. Developed outsourcing hubs attract numerous global corporations to choose Poland for nearshoring. The arguments in Poland's favor are the following:
Poland is an outsourcing hub in Europe with plenty of qualified developers. It is a member of the Central European Free Trade Agreement (CEFTA) and part of the Schengen Area that facilitates international relations and trade. Take a look at numbers to see its powerful potential:
Take a look at the excerpt from our webinar to learn more about the cost of IT outsourcing:
International companies are strongly oriented towards the Polish IT market, and there are many reasons for this trend. Poland consistently ranks as one of the top three countries with the world's best programmers. Polish software developers top the charts in Java development and score second to fifth in Python, Ruby, Shell, and algorithms.
In 2018 the turnover in the IT market was projected to be $11.5 billion. The IT market is expected to amount to approximately $12.4 billion by 2021, Statista.
Poland ranks leading positions in terms of IT employee's proficiency. High-quality education allows them to prepare real experts able to tackle any challenges. By the way, the country is the largest academic hub in the EU and boosts IT graduates to 14.000 every year. Moreover, Poland has the best English language skills among the CEE countries, amounting to 63.76 that is above average.
Located in the heart of Europe, Poland has a plethora of advantages. With the time zone of GMT+2, the parties can effectively communicate both online and offline. Software developers can quickly respond to challenges as the contractor can easily reach them. You can get to Poland in just 1-3 hours from any European city as there are many international airports receiving 50 million travelers a year. Leisure culture is identical with many European countries; therefore, there will be no problems with working days.
How to Pick the Perfect Nearshore IT Provider as a Startup?
With plenty of companies providing development services, it may be challenging for a foreigner to analyze the situation in the market and make the right choice. Ideamotive has a rich talent pool and can always offer you professional mobile and web developers. Startup companies are free to resort to the IT service provider and build their teams if one of the professionals can not be found with the help of nearshoring. But what are the core indicators of a professional service provider for you to look at when building a development team? Let’s look at the following tips:
Many companies have a set budget for outsourcing work, and the price they suggest for their services cannot be higher than the one you can pay in-house. It is determined by general living costs in a nearshoring country. Consider that many developing countries provide their developing services, and the cheaper the cost of living is, the lower the price you will pay. If the nearshoring country has similar living standards as yours, the difference between costs will be insignificant. However, there are many other aspects to pay attention to when picking a software developer abroad. The most important thing is that you have to prepare the budget in advance to see which companies you can afford.
You need to consider the standard of service the development team should provide. It would be great to demand an excellent standard of service, regardless of their experience and location. Look for a company that can perform all the tasks for successful project building. Your expectations and demands must be clear and achievable. But the cost of the services influences their quality. The more expensive they are, the better they should be.
When choosing a nearshore outsourcing company, you need to think about the ease of communication with employees. It is essential to remember that an understanding of the work process and positive results are related to openness and honesty. There may be insignificant time zone differences and similar or even the same language, but cultural backgrounds and personal respect are crucial for all.
Reputation and Reviews
Service provider’s reputation means a lot as you may come across a notorious company, wasting your time and money. You are free to check their credibility using the Internet, where many people post their online reviews on different nearshore service providers. This information is available on special sites or their own pages, but it’d be better to check independent sources. Pay attention to reviews made by your compatriots to see whether the service provider can meet foreigners’ demands. You may encounter face reviews that overestimate the company, so try to find legit sources.
You can check out the article on building the Ruby on Rails development team to see the process described step-by-step. We hope that these tips and a guide will assist you in achieving set goals.
Take a look at the excerpt from our recent webinar to learn what every CEO needs to know about IT outsourcing:
There are hundreds of vetted developers in our Talent Network, ready to work on your project.
If you are not sure which language you should choose for building your product, consult your requirements with us. We can provide you with technical consultancy and put together a team of experts skilled in every technology, matched with your product and your industry.
Michał is a digital marketing veteran with a growth hacking mindset and 10+ years of experience. His goal is building high-quality technological content, with particular emphasis on React and Ruby on Rails. Traveler, climber, remote work advocate.