There are different approaches for growing your software development team. The most common is having it in-house. This scenario provides the advantage of enabling daily face-to-face interaction with the development team.
However, if you are starting up, your company is a mid-size firm setting the foundation for growth or if you are a well established company looking to become more cost efficient, you will find that hiring local talent in the US is expensive, with salaries constantly increasing due to the growing demand.
The traditional and lower priced option would be to outsource software development overseas. However, you must take into account various challenges most companies face: language barrier, cultural mismatch, costly management, and significant time difference. These are common pitfalls you have to make sure you address before making the decision of taking your software development across the Atlantic.
Somewhere between hiring in-house developers and outsourcing overseas, you will find an innovative approach called nearshoring, which basically means that you are outsourcing closer to home. And because its main perk is proximity, it eliminates a lot of the hurdles of traditional outsourcing.
Which software development approach is the best fit for my company?
To determine which of these approaches is the best fit for your firm, you should consider a series of factors: your product and technology roadmap, your company culture, and of course, your budget.
If you decide to take the route of working with a third party vendor, there are fundamental strategic questions you must answer in order to choose the best option for you: What does my company need? Are my company’s processes mature? Am I willing to enforce the handholding that comes with traditional outsourcing?
Despite being the least expensive option, you need to consider the fact that outsourcing overseas might not be the right fit for a company at a very early stage, or whose management team does not have the manpower, expertise and/or enough patience.
Most companies overseas focus on selling seats and coding services - no management services are offered as clients take care of that. Nevertheless, these types of clients have a strong grasp of what they need done; they are accountable for process, prioritization, defining specifications, managing risk and schedules, and are basically just paying for coding.
Similar companies can also be found in LATAM, mostly in Mexico. They operate within the same time zone, are more culturally aligned and offer shelter type services at a slightly higher price than abroad.
Nearshoring with a twist
On the other hand, there are clients that need a partner who will offer a turn-key approach, mature processes and added value services that ensure predictable results.
This is a boutique shop approach where the vendor will take ownership of the software product or service and will need minimal guidance during the development process.