You are a company manager. As your company grows, there is an increasing demand for improving existing software or even creating a new one inside the company. You realize you need help finding new software engineers, but software development in your country is expensive, so you start searching for other possibilities. You’ve heard about outsourcing services, offshoring, and nearshoring as good business models. So, you decide to find a nearshoring partner.

What should NOT be a criterion for finding a nearshoring partner?

Many companies offer nearshore software development as one of the outsourcing services, so reaching out to them would not be a problem. Let’s say you find several contacts from nearshoring companies you like, and you want to choose one.

From our experience and the experience of other nearshore software providers, about 8 from 10 managers would ask something like this in the first mail:

How many developers do you have that work on the application, and what would be your hourly rates for Seniors, Mediors, and Juniors?

Such a question will not help you find the right nearshoring partner.

Why are hourly rates not the key parameters for an outsourcing service?

Let’s say that you asked the same question as above and that you got different case scenarios:

Company A: We have 6 developers who work on the application, and the hourly rate for Senior is 50 money units, for Medior 40, and for Junior 30.

And, another answer:

Company B: We have 2 developers who are experts in their field, and the hourly rate is 60 per developer.

And, let’s say you also got this answer:

Company C: We have 4 developers. Seniors cost 80, Juniors 40.

Considering the money and the number of resources, you would probably choose Company A, and that would be it! Well, there are numerous reasons why you would be wrong in doing so.

What did you miss?

  • You need to become more familiar with developers’ actual knowledge and expertise before comparing and deciding on the appropriate salary.
  • You asked for a particular type of software developer because you thought it was the type of resource you needed. What if you were wrong? If you want nearshore software development, you will want to find an expert company. Nearshore outsourcing is not only about taking care of the partial activity of software development but about taking care of the company as a whole.
  • Apart from the software developers, you may need project managers, business analysts, or quality assurance engineers. Nearshore service providers are willing to invest in a long-term partnership. 

And, in the end, you could also get answers like this:

Company D: We have as many developers as you want and an hourly rate of 10 per senior and 5 per junior.

So, should you choose company D? Well, you would probably be suspicious and think it didn’t make much sense. In the same way, asking for rates in the early phase of negotiations doesn’t make a lot of sense, either.

How to Choose a Nearshore Software Development Partner?

If an hourly rate is not a KPI, then what is?

In one word — the outcome. The value you will get from an outsourcing service provider.

How should potential nearshore partners know about what your objectives and goals are? Simply put — you should tell them.

Instead of inquiring about the costs per resource, ask potential nearshore/offshore partners what you can expect from them.

You could take this approach:

Our company is looking for a long-term outsourcing service partner. We have to develop a new system and migrate data from an old system that works in a certain application A. We need an analysis and a development team to do that by the end of the year. What do you suggest?

It is absolutely fine if you mention the budget so that your provider can propose a service within that budget:

We have a budget of 10,000 a month, and we have to fix an existing problem in the application that is written in technologies A, B, and C, and we need to continue developing. What do you propose?

Suppose you are looking for long-time partners and expect scaling. In that case, it is customary to expect that your potential nearshoring service providers would invest in hiring new resources, education, and setup process, so you can ask if they are open to that:

We need to form an external team of developers, about 10. We are aware that you don’t have it right now, but can we expect that we scale somewhere in between? We can pay for training for the first 3 developers. Can you cover the costs for setup and other developers in the future?

Cooperation with Nearshoring Software Development Provider

Finally, we would like to point out that when you choose your outsourcing service provider, you are not choosing “some resources” that will do the task and disappear. You are choosing strategic cooperation with a company and its team. You will do the job with people who will be valuable assets to your company. Read more about the importance of having one provider for all phases of a software development project in our blog.

When using nearshore services, it is beneficial to both sides to know they will succeed in improving this cooperation and get additional benefits, such as scalable ideas, collaboration, and new colleagues who will help them triumph. Only then is it a win-win situation.