You are a company manager. Your company grows, and there is a demand for improving existing software, or creating a new one inside the company. You have a problem finding new software engineers and the development in your country is expensive and you are searching for other possibilities.

You heard about outsourcing, offshoring and nearshoring as a good business models. So, you decided to find a nearshoring partner…

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

There are many companies that offer nearshore software development, so it would not be hard to reach them. Let’s say, that you find several contacts from nearshoring companies you liked and you want to choose one.

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

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

This is the example of questions that will not necessary help in finding the right partner.

Why hourly rates are not the key parameters for nearshore 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 say, you also got this answer:

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

From the perspective of money and the number of resources, you would probably choose Company A, and that would be it! Well this is definitely wrong, for so many reasons!

Well, not, this is definitely wrong. For so many reasons!

What did you miss?

  • You are not familiar with developers’ real knowledge and level of expertise, so you cannot compare and decide about the appropriate salary.;
  • You asked for a particular type of software developers because you think it’s the type of resources you need. What if you were wrong? If you wanted a nearshore software development, you will want to find an expert company. Nearshoring service is about taking care of partial activity of software development or a 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, at the end, you can also get answers like this:

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

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

How to Choose a Nearshore Software Development Partner?

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

In one word — the outcome. The value you will get from a nearshore provider.

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

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

This could be an approach:

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

It is absolutely OK if you mention the budget, so that your provider could propose a service within that budget:

We have a budget of 10000 a month and we have to fix an existing problem in the application that is written in technologies A, B, C, and we need to continue developing. What can you propose?

If you are looking for a long time partners and expect scaling, it is normal to expect that your potential nearshoring service providers would invest in hiring new resources, education and setup process, so you can ask about if they are open for 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 training for the first 3 developers. Can we expect that costs for setup and other developers would be on your side in the future?

Cooperation with Nearshoring Software Development Provider

At the end, we would like to point out that when you choose your nearshore service provider, you are not choosing “some resources” that will do the task and disappear. You are choosing a strategic cooperation with a company and their team. You will do the job with people who will be good as people inside your company. 

When using nearshore services, it should be beneficial for both sides to know they will succeed in making this cooperation better, scalable, and with additional benefits: honest and valuable ideas, cooperation, and new colleagues who will help you triumph. A win-win situation.