Offshore vs Nearshore Software Development: Which Route To Take?

Emilien Coquard
3 min readJun 16, 2022

With the pandemic speeding up diversification, and the post-pandemic landscape looking transformation heavy — tech leaders are looking for different ways to scale up their engineering teams. Looking locally only is no longer an option, as talent shortages at home mean they can’t find the right skillsets in the required areas. As a result, they’re exploring outsourcing, offshoring and nearshoring — which aren’t new concepts but have become more central to many organisations’ strategic thinking due to the widening talent gap.

The engineering seller’s market

There’s a battle for talent that’s hotting up as transformation drives become more central to business priorities. Banks, automotive OEMs, retailers, insurance providers — all these and more are becoming software-centric, as they seek to compete in the race to digital-first business. They need expertise in areas around cloud-native applications, AI and ML, data and analytics, and more.

The major players in the tech industry have a monopoly on elite engineers, and it leaves smaller enterprises struggling to obtain and retain developers when only looking locally. This acute shortage of developers in the right disciplines, combined with a fierce seller’s market, has prompted more and more companies to assess their options.

First things first, let’s take a quick look at traditional outsourcing and how it can help your business, but also some of the drawbacks…

What are the benefits of traditional outsourcing?

Outsourcing means partnering with third-party vendors — or software houses — on a contract basis to deliver software. The developers aren’t yours, and they’re often working with multiple clients and projects simultaneously.

It’s a good solution for temporary pipeline bulges when you need extra hands on deck to develop a piece of software quickly. Or, when you need project-based development that doesn’t require a long-term team.

The primary issue with outsourcing is that the new development team isn’t hired by you, nor aligned to your vision and mission. In the discussion about offshore vs nearshore, it’s safe to say that outsourcing is a different conversation altogether.

What are the benefits of offshoring?

There are a lot of benefits to offshoring when compared to recruiting at home. You get elite engineers with the specialist skills you need, on a permanent basis, with favourable arbitrage — not to mention savings on premises costs in expensive metro areas like London or Amsterdam.

Put simply, you have access to wider talent pools, making building a team of top talent a faster process — with less time spent on recruitment than at home. In addition, the talent brought into your organisation has the skills required to develop a best-in-class product, test rigorously, and quicken time to market. The engineers are often sourced by an experienced offshore partner, while you make the final decisions on who gets picked.

When it comes to the question of offshore vs nearshore, let’s look a bit closer at the latter and see how it differs.

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