Nearshore Software Development: Top Destinations and Key Risks

Outsourcing software development has been constantly on the rise since the year 2000. The global outsourcing market has grown to a billion-dollar market, valued at $261.9 billion back in 2022.

The current pandemic situation has also done its part in speeding up the adoption of the new form of work environments where remote teams and outsourcing teams are the new normal.

The number of workers that choose remote work has increased by 24% between 2021-2022. As organizations and employees adapt to the changing times, outsourcing IT development to nearshore and offshore destinations is expected to grow rapidly.

Since the paradigm of offshore software development has always been on everyone’s radar, in today’s article, we’ll focus on how nearshore can benefit your business and discuss the differences between the two methods of IT outsourcing.

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What Is Nearshore Software Development?

Nearshore software development is an outsourcing process where you get your development work and IT Services done via teams and employees located in neighboring countries. It is in all ways similar to offshore development except for the fact that the locations you outsource are located nearby.

Nearshore Vs. Offshore Software Development: What Are The Differences?

Both nearshore and offshore development provide you with affordable remote teams working abroad. The major reason offshore development is preferred is that it gives access to highly skilled developers on the other side of the globe at an inexpensive rate than onshore development teams.

But there are certain drawbacks to working with a distant outsourcing partner. The major ones being:

  • The huge difference in time zones makes scheduling virtual meetings and workflow coordination difficult.
  • The differences in the native local languages can impede effective communication across the teams
    The cultural differences across such distant remote teams can cause communication errors.
  • Despite the above drawbacks, the advantages of high quality, cost, and time efficiency have made offshore outsourcing an attractive option for organizations.

The difference between nearshore and offshore development teams is that nearshore development teams eliminate offshore development drawbacks to a huge extent. Nearshore development teams are located in nearby countries, thereby minimizing the time zone differences.

The geographical proximity also ensures cultural and linguistic proximity enabling better communication and coordination across the remote teams. It makes traveling to and from remote teams easier and less expensive compared to offshore teams.

Choosing a nearshore development center: Where to start

Core Benefits Of Nearshore Software Development

Nearshoring gives you many options to optimize productivity while developing quality software. It helps you reach your business goals cost-effectively. Here are some additional benefits of outsourcing to nearshore development teams:

Broader Skill Set At A Reasonable Price

With nearshore outsourcing, you get a wide range of options from neighboring countries. It saves you the cost of training new employees and equips them with the best minds across a wider geographical region.

Minor Time Differences And Convenient Locations

Nearshore teams are located in fairly nearby geographical regions, thereby minimizing the time zone inconveniences.

You can effectively schedule virtual meetings and coordinate workflow across the teams easily in real-time.

Cultural Compatibility

Nearshore software development partners will be much closer to your own work culture and adapt to your work practices quickly. This will help greatly minimize any miscommunication and friction across the teams.

Better Security

Nearshore development teams are a much safer bet to ensure security than offshore teams located on completely different continents.

Nearshore software teams can provide better security policies and standards that can match the regulations of most US companies. They will also have expert security professionals to take the load off your hands and will be able to manage security around the clock.

Freedom To Focus On Core Business Operations

Delegating the software development and maintenance work to expert nearshore trams leaves your core teams free to work on innovation and bettering your business operations.

Top Destinations For Nearshore Software Development For US Projects

Here are some nearby countries to the US that will be perfect destinations for hiring nearshore development teams for custom software development projects.


The Brazilian IT industry is growing rapidly and is projected to grow by US$12.16 billion in 2023. Here are some reasons why Brazil can be your pick

  • Brazil has about 100 well-built tech parks and allocates a good amount of funding and resources to develop its core IT infrastructure. Tech parks like the Campinas and Anprotec are fast-growing centers of research, innovation, and IT services, enabling thousands of tech jobs.
  • Brazil has a time zone difference of just 1 hour with respect to the US, making work collaboration easy and effective.


Mexico, the closest southern neighbor to the US, is popularly dubbed the new India for outsourcing services. Here are some reasons that Mexico is a great location to nearshore your development activities:

  • Mexico has top universities like The ITSEM and STEM-based school studies driven towards quality education and producing industry-ready programmers.
  • The time zone difference is either nil or very small compared to the US making collaborations Simple and Easy.


Argentina is a fast-growing developing nation with a strong educational background and IT infrastructure to support your nearshore outsourcing demands.

  • The time zone difference from the US is just 1 hour, thus enabling better communication and coordination.
  • Besides the technical expertise, you also get access to a huge pool of English-speaking developers.


Colombia may have had a slow start to a strong educational foundation but is experiencing a great improvement in the recent past. The government is currently undertaking several initiatives to boost the IT industry resulting in more than 5000 thriving tech companies in Colombia.

  • It has a minimal time zone difference of just 1 hour from the US.
  • Developers from Colombia are multilingual and are quick to adapt to your work culture.


Chile is on steady growth towards modernization, with Santiago’s city housing about 92% of the country’s software industries.

  • Chile is also welcoming of foreign investments and provides friendly options for hiring remote development teams.
  • The time zone difference is just 1 hour from the US.
  • Chilean developers are multilingual and well-versed in English communication.

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Top Destinations For Nearshore Software Development For European Projects

European countries have some excellent neighbors who can be perfect locations for hiring nearshore development teams.


Ukraine is currently ranked as the fourth top IT outsourcing supplier.

  • The country is home to more than 200000 IT specialists as of 2021, and the number is expected to double by 2025.
  • Ukrainian tech experts have a good knowledge of English, and there will be no language barriers.
  • Ukraine is home to over 110 R&D centers. It is also fostering a strong startup community with a focus on encouraging technical expertise and innovation.


Poland has a growing IT talent pool (more than 585,700 specialists), and the IT industry is growing at a steady rate of 5-10% every year.

  • They provide cost-effective remote development teams. It is conveniently located in Central Europe.
  • The time zone difference is very minimal for European countries, and the same for the US is also quite small at just 6 hours.


Romania is a popular nearshore location choice omg western European countries and is home to more than 139000 software development experts. The time zone difference between Western Europe and Romania is just 2 hours, and it is very close to other EU nations’ cultures and work practices.


Serbia is a fast developing IT center backed by a strong literate community and government-supported IT infrastructure. Serbian development companies are known for their strong work ethics, multilingual developers adept at communication skills, flexible work terms, and cost-effective hiring solutions.

Nearshore Software Development Risks: How To Stay Away

Here are some common challenges you will face with managing a remote team and effective solutions to overcome them:

Lack Of Communication

Lack of communication is the major reason behind many project failures as the requirements and client expectations end up getting mistranslated into wrong products and service deliveries. Here are some ways to avoid difficulties in communication.

  • Establish road maps, metrics, milestones, and deadlines. Make sure these terms are all clearly understood and agreed upon before the project starts. It is important to implement an effective project management framework like Scrum. It will provide a structured approach to managing projects you have.
  • Stick to project schedules have risk mitigation procedures planned to deal with missed deadlines.
  • Over-communicate before the project commences to establish a common understanding and then dial it back down as the trust between the teams develops.

Language Barrier

  • Be prepared to work with people whose first language may or may not be the same as yours.
  • Try to maintain accurate translations of the important documents in a commonly understood language or both languages.
  • Check your language version of the vendor’s website. Schedule official meetings before committing to check they are capable of effective communication with your company.

Poor Onboarding Process

A poor onboarding process for nearshore software developers can have detrimental effects. It can hinder their integration into the team and project. They may face difficulties understanding the project requirements and goals. This can result in delays and misunderstandings, impacting the overall development process.

  • Ensure that employees receive comprehensive training to understand their roles and responsibilities. Provide clear instructions, documentation, and resources to support the onboarding process.
  • Establish effective channels of communication to address questions, concerns, and provide ongoing guidance. Encourage open dialogue between new employees and existing team members.
  • Set clear expectations and goals for new employees, outlining performance metrics and objectives. Provide regular feedback and guidance to ensure alignment and progress.

Poor Technical Documentation

Technical documentation is a critical piece of the project roadmap and should be maintained properly. Failing to do so will lead to faulty software made from wrong assumptions and expectations.

  • Keep track of technical documentation and make it a priority. Hire a dedicated resource like a technical writer, business analyst, and key stakeholders in producing and maintaining the document.
  • Give detailed clarifications and include all related information to avoid any doubts.

Additional Costs

Additional costs may build up and go out of control due to frequent requirement changes and miscommunications.

  • Make sure to conduct proper business analysis before green lighting a project.
  • Choose the right type of contract that allows for a fixed price, work hours commitment, and so on.

Breach Of Confidentiality

Maintaining a client’s trust is a key part of successful nearshoring. Breach of confidentiality usually occurs as a result of improper communication.

  • Prepare legally binding NDAs to prevent vendors from exposing delicate company information.
  • Document your communications and make sure they are always clear and concise.
  • Keep all the stakeholders and the business analyst informed of any project decision.
  • Maintain the document to be up to date.

How to find a nearshore software development company

Companies can browse review websites to find nearshore software companies with the required tech stack and industry expertise. For example, clients can visit Clutch and filter development companies by location, specific industry, budget, or hourly rate.

In addition, companies can research local news and resources. For instance, they can find a list of the best software development companies in Mexico, compiled by Indeed Mexico, or a list of the largest IT companies in Ukraine, compiled by DOU.

Finally, businesses can turn to marketplaces that offer vetted developers with the right skills, experience, and culture fit, such as YouTeam and TopTal.

Choosing a nearshore development center: Where to start

Use the following guide to effectively select and start working with a nearshore development company:

  1. Understand your business requirements and create a project plan.
  2. Write down your criteria for a nearshore software development company, such as:
    • The required tech stack and domain expertise.
    • Experience working with US- and EU-based clients as evidenced by case studies and customer references.
    • Strong English language and communication skills.
    • Ability to provide documentation for due diligence (legal entity and bank account verification, talent background checks).
  3. Find a reputable development center or staff augmentation service that meets your criteria.
  4. Prepare your internal team for seamless communication with the external provider. Ensure you have the remote tools you need to work effectively and share the project documentation and detailed instructions with your nearshore development team.

How Can YouTeam Help Mitigate The Risks Of Nearshore Software Development?

1. Broad Choice Of Software Developers

YouTeam hosts a dynamic pool of expert software developers across varying geographical locations. We provide a seamless interface between your remote development teams and your organization, allowing you to hire scalable dev teams that will best suit your needs, either short-term or long-term.

2. Quick Setup Of The Development Team

As there is no extra time spent on recruitment, verification, and no extra infrastructure setup from your side, you get to quickly setup remote development teams and get to working immediately.

3. Scalability For Mid-sized Businesses and Startups

You are allowed to scale up and down your remote development teams without any accused costs involved km hiring and termination. This will help the effective management of your available resources and on-time delivery of products.

4. Strict Pre-Vetting Of Software Engineers And Web And App Development Shops

We match you to the right expertise with our extensive pre-vetting process. We make sure to recruit only the top talents who will produce quality work starting from the design phase to a bug-free, optimized, and functional software product.

Wrap Up

Remote development teams that were once a convenient option have become the new normal with the current shifts in the technology by the landscape and work culture. From a small startup to a big corporation, any organization can hire a nearshore software development company or a nearshore dedicated team to manage their workload effectively.

With minimal time zone differences, better cultural and language compatibility, and cost-effective development teams, nearshore software development services are emerging as a popular alternative to traditional workforce and offspring options. They are beneficial in many aspects and yet have their challenges too.

Proper documentation, a better understanding of remote work processes, and using the right technology and tools can help you overcome these offshoring challenges pretty easily. Partner up with YouTeam to meet all your nearshoring needs and access affordable technical expertise from all across the world.

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Written by
Viktoriia Horbunova

Viktoriia is a digital marketing specialist at YouTeam, Y Combinator-backed platform for building remote dev teams.

Viktoriia's areas of interest include content production, market research, and tech entrepreneurship.

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