You are 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 development in your country is expensing. So, you are searching for other possibilities.

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

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

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

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

‘How many developers you have that works in SomeTechnology and what are your hourly rates for Seniors, Mediors and Juniors?

I would like to convince you that this questions and answers you got would not help you find a right partner.

Why hourly rates are not the key parameters for nearshore service?

Let say, that you asked the question we mentioned above and that you got different answers:

Company A: We have 6 developers works in SomeTechnology, price for senior is 50 money units, for medior 40 and for junior 30.

and, another answer:

Company B: We have 2 developers, experts — they rock and cost 60 units per developer

and, let say, you also got this answer:

Company C: We have 4 developers, seniors costs 80, juniors 40.

So, from the perspective of money and number of resources, you would probably choose Company A, and….that’s it.

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

What did you miss?

  • You have no idea about real knowledge and experience level of developers, so you can not compare and now which one is ‘more expensive’;
  • You asked for particular types of software developers regarding your opinion what type of resource you need. What if you are wrong? If you want a software development nearshore service, you want to find an expert company. Let them decide and propose which type of engineers and experts you would need. Nearshore service is more than hiring individual outsourcer. Nearshoring is about taking care for the whole, or a part of the software development activity in client’s company. You don’t need only software developers. You would maybe need project managers, business analysts, quality assurance engineers…
  • If you asked that way, companies would not know what your intention are. Do you just want to hire an individual to solve the problem you have with your software, or you want a long-term nearshore cooperation. And why is that important? Because, nearshore service providers are willing to invest from they side for a long-term partnership;
  • Good nearshore companies would not consider you as a serious potential customer;

And, at the end, you can also got answers like this:

Company D: We have as many developers as you want and we invoice 10 units per senior and 5 for junior.

So, should you choose Company D? Well, you would probably be suspicious, and say that it didn’t look serious. But, obviously, conclusion is — asking for rates in the early phase of negotiations doesn’t make sense.

How to choose software development nearshore partner?

If hourly rate is not a KPI, what is ?

In one word — outcome. 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 inquire what are cost per resource, ask potential nearshore/offshore partners about what can you expect from them.

This could be an approach:

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

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

We have a budget of 10000 money units per month — we have to fix existing problems in application that is written in technologies A, B, C, and also 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. We would need 10 developers. We know you don’t have it right now, but can we expect that you can scale as we scale? We can pay for training for first 3 developers. Can we expect that costs for setup all other developers in the future would be on your side?

Cooperation and relation with Nearshoring software development provider

At the end, I would like to point out that when you choose your nearshore service provider, you are not choosing ‘some resources’ that will do a task and then disappear. You are choosing strategic cooperation with a company and their team. You will do the job with that people. So, like you are recruiting a people inside your company — you would like that people to be good people. You would like them to be kind and to have similar professional and ethic norms like people in your company.

Nearshoring part of your processes to other company should be beneficial to both side. A win-win modality. So, knowing that both company would success with making this cooperation better and making it scale, you will get additional benefits — honest and valuable suggestions, ideas for further development, consultancy, an external team who will warn if there are problems and issues and new colleagues who will help your success.