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Nearshore vs in-house software development

Discover three core benefits and three important risks of using a nearshore partner and an in-house software development team. 



In order to expand, today’s businesses need to make important decisions regarding their operational and strategic agility and technology plays a big part in ensuring they can act competitively. One of these decisions may be choosing whether to start software development in-house or look for an outsourcing partner.

The problem companies come up against is assessing whether their chosen team will be able to cope with the upcoming project successfully.

We have already written a guide on what to consider for a successful software project team, and now it’s time to focus a broader scale and explore the risks and opportunities that in-house and nearshoring present.

We have compiled for you a list of three benefits and three risks of using a nearshore partner and an in-house team.

 

Discover Nearshoring

Nearshoring has become one of the most popular choices while considering outsourcing projects.

What is nearshoring?

Nearshoring is a type of outsourcing where a given company seeks a development partner in a different country or region. However, what distinguishes nearshoring from other types of outsourcing is the fact that the development partner is still in close proximity. Since companies are usually in the same time zone, this facilitates communication and allows for frequent visits.

1. CULTURAL COMPATIBILITY 

Communication styles can heavily affect how our relationships function and how the cooperation develops. Not many of us realise that cultural differences in communication have the potential of breaking an outsourcing partnership.

Gestures, eye contact, words and behaviours that seem completely normal to us can be extremely offensive in other countries. There are also differences in values, beliefs and expectations.

That is why nearshoring is gaining ground.

By choosing partners whose culture, as well as work ethics, are very similar to yours allows you to experience far less, if any, uncomfortable situations and misunderstandings.

 

2. PROXIMITY 

  3. EASIER ACCESS TO TALENT POOL

As you probably know, problems within projects usually occur at the least appropriate moment. It is very often the case that the success of the entire endeavour depends on their fast and positive resolution.

Additionally, projects require a lot of planning before they start and decision-making while they run. These processes are without a doubt time-consuming and involve close cooperation between both parties. Doing so on two different hemispheres is extremely difficult.

When both parties share a similar time zone, it is very likely that you and your partner will be at work at the same time. In case of urgent issues, they are just a one call away.

Nearshoring caters for those who appreciate or require frequent communication, personal visits and quick availability of an additional talent pool, in case of emergencies.

Deciding on an endeavour to develop a new product usually comes with many reflections. Can we do it? Do we have the budget for it? And the most important one - do we have the necessary skills?

Nearshoring opens access to experts in their fields who aren’t new to the modern technologies and most probably have experience, having dealt with projects which in many ways can be similar to yours.

Having access to such talent pool makes the development process more effective and valuable.

Instead of spending time recruiting people with the right skills locally, you can start pursuing your business goals right away.

     

 

What are the risks of nearshoring?

With all its benefits, choosing nearshoring also carries some risks which must be considered before making a decision.

                                                                                                      

 1. ADDITIONAL COSTS

Development of a product is similar to building a house. You never know what may come up or what may go wrong.

Software development may also be full of surprises, especially if your development team does not know your core business well. This is the reason why extra costs can occur or completing the project can take longer than expected. 

However, there is a way to protect yourself against these dangers – choosing the right type of contract, e.g. fixed price, frequent communication and being committed to the project are the very things that can work against any fears.


 

2. CONFIDENTIALITY

3. LANGUAGE BARIER

There is some information that should never leave the proverbial four walls of the company. However, in order to complete the project, your vendor must get to know your enterprise, to some extent at least.

How do you stay safe? Before making the decision to outsource – prepare an NDA which will prevent your vendor from exposing any delicate information that may be damaging to your business.

When choosing a nearshore company, you must be prepared that, in the majority of cases, their first language will not be the same as yours. This however, does not mean that you will be unable to communicate effectively as language level, even when taught as a foreign language, can be very high.

To gain a better understanding of who you’re dealing with, check your language version of their website, read through their materials or book a phone or video call with the prospective partner.

                                                                  

What is in-house development?

In-house product development is opposite to outsourcing, which means that the development of software takes place within the organisation – on company’s premises, with use of company’s own employees and resources.

 

What are the core benefits of in-house development?

                                                                                                                                                                                   

1. HOME-MADE PRODUCT 

When you come up with an idea for a product, you usually have a vision of it. You know exactly what it should look like, what features it should possess and how it should work.

This is why the development of your own product may seem simpler, because you don’t have to convey your vision to the outside party.

Additionally, the vision and the development usually take place within the same office, so the reaction time is not only faster when something goes wrong, but the process is also under constant upkeep.

        

2. CONTROL

3. COMMUNICATION

Since your in-house team develops the product, you can regularly check if it fits your needs and control its functionalities.

You can choose the technology and methodology, eliminating the need of looking for a partner who ticks all your boxes.

There will usually be no language barriers so communication will be easier. Your own employees will have worked for you for a while now which means they understand the strategy and the wider context of your business.

This can, however, sometimes limit their ability to think outside the box!

What are the risks of in-house development?

 

1. TALENT SHORTAGE 

The decision to develop the product in-house is usually proceeded by looking for specialists, preferably ones who not only feel comfortable in programming, but also are on top of their fields. All this ensures that they perform their tasks well and deliver the product that meets your needs.

However, hiring specialists for the in-house team often isn’t cheap or quick, especially when you need a myriad of different skills in your project.

                                                                                                                       
 

2. PROJECT’S PRICE

3. RISK OF OVERSIGHT

If you do have a team of experts available onsite, you need to be sure  they have the resources necessary for them to be able to materialise your vision.

This may mean additional training for your employees, but most importantly investment in licences, hardware, not to forget about equipment.
In-house projects may seem cheaper at the beginning, nevertheless, with time they may consume much more money than you expected.

Even if you have a dedicated IT department in your company, software development may not be their strongest suit.

This means many vital aspects of the development may not be known to them and may cause problems in further stages of development. For example, before embarking on development, the analysis and design stage is recommended. Conducted by specialists in Analysis and Design, it will ensure the findings and conclusions result in a well-suited software solution without the risk of an oversight.

                                                                           

What IT Decision Makers think about the differences? Find out in the video:

 

As we presented, both nearshoring and in-house development have their pros and cons.
The decision of which one to go with requires, without a doubt, a careful consideration of your priorities.

Contrary to a popular belief, cost is not the only factor that drives enterprises towards nearshoring. The decision is nowadays rather based on whether or not the necessary skills and resources and in place in order to deliver a successful software project that will suit your business.

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Being a software development company, we recognise that complicated problems often require solutions that bring together the strengths of many disciplines. Therefore, our team at Future Processing has a broad range of expertise in a variety of fields and industries.

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