Nearshoring as a way of using external forces to effectively work on IT projects grows in popularity in 2023. The IT market is expected to be more demanding due to the macroeconomic situation, inflation and increasing business needs.
Comparing the costs of hiring a software development team in-house and choosing a nearshore IT partner may seem easy. It is all about a single developer’s salary, right? But let us take a deeper dive into different elements of a total cost of hiring to see, which option is better.
Business is looking for cost-effective solutions
Companies worldwide consider various models and search for the best-fitted ways to optimise costs of software development. One of the crucial questions is: What is more profitable: hiring the development experts in-house or choosing nearshore IT partner?
In-house option means the software development work takes place within your company, with use of your own employees and IT resources. The whole responsibility of the organisation lies with you.
The nearshore option means choosing an external company that:
- operates in a country on the same continent,
- works in the same or a slightly different time zone (1-2 hour difference),
- offers elasticity and reasonable prices of services,
- provides the opportunity to meet in person,
- fits in terms of work ethic and culture.
Let’s see how it is in 2023.
In-house VS nearshore development – what to consider?
While comparing in-house and nearshore development we need to consider such elements as:
Various costs
The big picture includes detailed costs of hiring, depending on the country your company operates in. Costs include also potential office and equipment use, onboarding, overtime work, insurance and other costs.
Time
How much time does it take to hire best-fitted software developers? In-house option requires the whole recruitment process that can take a few months, while hiring an external team usually takes only a few weeks (it is because tech companies have access to a talent pool, e.g. their own bench).
Quality
The area of quality includes the quality of work, quality of talent pool and last, but not least, quality of relationships. Especially in complex, demanding projects, it becomes essential to work with people with a strong work ethic and high organisational culture.
Elasticy
When time pressure is high and challenges in the project increase, agile actions and scaling the team up and down can be a game changer. The nearshore option ensures elasticity as it is much easier to work with an IT partner who has an existing talent pool rather than hire devs one by one.
Costs of hiring an in-house developer in the UK
To make a fair comparison, we need to take all the essential elements into account. That is why it is crucial to see an example from the market. Let’s take a cost of hiring a Senior .NET developer in-house in the UK.
When thinking about a total cost of hiring, we need to include:
- Personnel costs
- Recruitment costs
- IT systems costs
- Facility costs
- Other costs
But let the numbers speak for themselves. Here are some costs you need to consider when recruiting a Senior .NET Developer for your in-house development team:
| SENIOR .NET DEV COSTS What? |
How much? |
| Senior .NET developer approx. salary | £61k/year £5083/month |
| National Insurance (NI) contributions | £596,85/month |
| Employee Pension Scheme | £152,50/month |
| Statutory Sick Pay (SSP) | £99,35/week |
| Annual Leave 28 days/year | Approx. £5000 |
| Statutory Maternity/Paternity/Adoption/Pay or Shared Parental Pay | £156.66 a week or 90% od AWE |
| Perks and benefits | Varies |
| National Insurance on expenses and benefits | 14,53% |
| OTHER COSTS What? |
How much? |
| Recruitment agency fees | £15,250 |
| Job adverts | £250-300 each |
| Induction and training costs | Varies |
| Hardware costs | Approx. £1500-2000 |
| Software licences | £200/month |
| Employers’ Liability insurance (EL) | £61/year per person average for an office worker |
| + Additional strain on other departments (HR, Finance, Training, Health & Safety, IT support, etc.) | Varies |
| + Costs of working in an office (furniture, utilities, stationery, postage, printing, phone bills, cleaning, maintenance) | Varies |
Nearshore dev team ready to go
Other possibility is entering into a partnership with a nearshore technology company who would be responsible for creating a team of developers to fit the actual needs of the project and meet the deadline. The rules of cooperation and pricing model are set in the very beginning as well as all possible costs. Choosing a reliable nearshoring company ensures that the development team will be:
- Formed within a few weeks
- Tailored to your tech requirements
- Working in the agreed methodology and framework
- Access to skills across projects and industries
By choosing nearshoring company instead of hiring in-house, you don’t need to worry about developers’ leaves and holidays, insurance, trainings, basic work equipment or necessary licenses. All these elements are already covered so you can focus on your project and business goals. Discovering all the benefits of hiring a nearshore IT partner is worth considering as it may turn out to be the better and cost-effective alternative.