How to Build Your own Nearshore Software Development Team

Even before remote work ascended to new heights, nearshoring has been a road often traveled by many organizations located in Western Europe and North America. Given the many benefits, ranging from multiple overlapping hours to an abundance of specialists with varied skills and backgrounds, a nearshore team is a common solution to tackle the talent shortage in your location.

You probably wound up here in the hope of finding the right partner to build a team of nearshore developers. If so, you came to the right place, as in this guide, we’ll walk you through the concrete steps. As a company that specializes in building nearshore development teams, we can say undoubtedly that such regions as Central & Eastern Europe and Latin America, as rich repositories of technology talent, live up to the expectations when it comes to variety of talent and availability. Dive in to learn more.

What is a nearshore team?

A nearshore development team (also known as a nearshore software development center) allows companies to delegate software development to an IT workforce located in neighboring countries. As opposed to outsourcing, a nearshore team is built from the ground up and tailored specifically to the client’s project. Nearshore developers are solely dedicated to the client’s project, working under the client’s leadership. 

What are the benefits of nearshore software development teams?

Minimal (1-3 hour) time differences

A major benefit of this approach is the negligible time zone differences, which lends itself to real-time collaboration and swift communication between your primary and nearshore teams. This can result in higher productivity, timely delivery, and seamless understanding, which is crucial for remote collaboration.

Far better communication than in offshoring

Similar time zones and cultural compatibility boost collaboration and eliminate risks of delays compared to an offshore setting. Nearshore units are highly accessible, as by collaborating in real-time, you can build a more cohesive working relationship.

Linguistic and cultural alignment

Given that nearshore staff is located in nearby regions, there’s a high possibility that their business culture and language will be familiar to your local squad. On the other hand, team members stemming from far-off countries might be drastically different from your home-based staff, which doesn’t always have a positive impact on collaboration.

Cost savings

One of the reasons to go for nearshore software development is to dive into a pool of technologists with moderate rates, especially compared to the EU and the US. According to Accelerance, the cost savings from this model can reach up to 70%. In addition to that, you can also delegate the costs such as payroll, bonuses, insurance, vacations, and sick leaves to the vendor.

Greater access to niche skills

A nearshore branch can be a stronghold of talent you may lack in-house. With a provider like nCube, you can access skilled technologists in CEE (for instance, explore nearshoring Ukraine, Poland, or Romania) and LATAM (Mexico, Argentina, or Brazil), including sought-after innovative solutions like machine learning, Artificial Intelligence, Data, Blockchain, or Cloud solutions as well as web app development, mobile app development, software testing, and more.

How to build a skilled nearshore software development team

A nearshore software development team will be a tech muscle for your vision or idea, so finding the right kind of experts is essential. Let us shed light on a few aspects to help you find skilled near shore developers.

Step 1. Outline the scope of work for your nearshore team

The nearshoring approach starts with outlining your goals and drafting your Project Scope, a document where you dissect your project into deliverables and assign a time frame for each deliverable. Your nearshore development team will further use the document as a guide to what needs to be done and when, allowing your nearshore developers to move at the right pace to meet your goals. 

One more important point to include in your Project Scope is the budget. Knowing the range of developer salaries you count on can help your provider of nearshore staff augmentation source the right candidates based on their salary expectations. 

In addition, each step should include the key measures for success so you can see if your nearshore staff is moving in the right direction. 

Step 2. Define the technology stack 

A technology stack is a set of technologies that your new team members will use to execute your software development project. Knowing what technologies need to be applied for your project gives your nearshoring vendor an understanding of the type of talent you need to add to your team. Thus, based on your technology stack, your nearshoring partner will form your nearshore development team and provide the skills you may lack access to locally. 

We at nCube specialize in sourcing nearshore talent, including specialists with common backgrounds (JavaScript, PHP, Python) as well as other types of specialists capable of handling a project on a turn-key model, such as project/product managers, DevOps, Quality Assurance engineers, and UX/UI designers. No matter what technical skills you require, we’ll build the right kind of nearshore development team that meets your technology stack requirements, business objectives, and candidate preferences. 

Step 3: Choose the right location

The choice of location plays a key role in selecting a nearshore software development company. Regions like Central and Eastern Europe and Latin America offer robust tech infrastructure, skilled professionals, and a thriving business climate, making them increasingly attractive to Western companies seeking innovation and growth.

When selecting a country, consider the quality of its workforce, STEM education system, and availability of tech talent. Additionally, evaluate cultural and business similarities with your location to ensure smooth collaboration. Finally, choose a location with a convenient time zone to optimize real-time communication, which is a crucial factor in nearshoring success.

Step 4: Choose a trusted nearshore software development company

A reliable vendor of nearshore software development services should prioritize the following qualities during the candidate selection process:

• Problem-solving skills. Beyond technical expertise, developers should be adept at tackling complex challenges and driving projects forward.
• Candidate backgrounds. Seek developers with a proven track record in your industry. A vendor like nCube can match you with professionals who are experienced in your business domain.
• OOP/OOD proficiency. A solid grasp of object-oriented programming and design ensures scalable, maintainable code.
• English fluency. Smooth communication is critical for efficient collaboration, making language proficiency a key hiring factor.
• Culture fit. Developers who align with your company’s values and work culture will integrate more seamlessly into your team.
• Agile experience. Teams that embrace Agile methodologies can better adapt to feedback, keep up with fast-paced development, and maintain efficiency.

Step 5. The vendor screens nearshore software developers

At this step, you can put your feet up and relax as your vendor’s HR team is sourcing staff from the country’s pool of local talent. The process includes identifying strong candidates that match your candidate profile and putting them through a series of tests, including technical interviews, soft skills, culture fit, and English comprehension. Only the candidates who’ve made the cut will be recommended for your further review.

Vendors tend to maintain a personal approach to team formation, which means that the client is always in charge of whom to add to their nearshore unit. With this in mind, you’ll interview our pre-selected candidates yourself because most vendors (our nearshore development company included) want you to know who you’re going to work with. Your nearshoring partner will also help you coordinate interviews and address any challenges that may appear down the road.

After you approve a candidate, we’ll send them a job offer with your agreed start date. That’s all! Your nearshore developers are on board.

Going further, in the nearshore teams model, you’ll have direct access to every developer on the team, managing the development process as you see fit. It’ll be your own team in every sense of the word.

Step 6. Launch your nearshore development team

The screening stage is over, and all team members are defined. It’s time to finalize the paperwork and sign a Service Level Agreement that should include IP rights protection clauses. After signing all the papers, your team members will start on their agreed start dates, and your nearshore squad will be officially launched.

The process of team launch and integration will be coordinated by an account manager on our side who will make sure everything goes as smoothly as possible.

Regional overview: Best locations for nearshore development

Latin America

Unlike offshore outsourcing, Latin America offers close proximity to US markets, negligible time zone gap, and a fairly untapped pool of technologists. Besides that, the region is known for competitive pricing and cultural similarities. Some of the most popular destinations in LATAM include:

• Mexico: Robust IT industry, high-quality STEM education, and proximity to the U.S.
• Argentina: A large pool of developers and a strong tech ecosystem with a focus on AI and software development.
• Brazil: The biggest number of software engineers in the region and strong expertise in Fintech and Cloud solutions.
• Colombia: A rapidly growing, cost-effective hub with government support for the tech industry.

Eastern Europe

Nearshore software outsourcing in Eastern Europe offers a well-established software engineering landscape, highly educated IT experts with diverse backgrounds, and competitive rates. The leading tech powerhouses in Eastern Europe include:

• Ukraine: A large pool of IT specialists with a strong ICT education system and expertise in cutting-edge technologies, including AI/ML, Data, Cloud, and IoT.
• Poland: A mature IT market, the biggest pool of tech experts, excellent infrastructure, and strong alignment with EU regulations and business approaches.
• Romania: A growing IT hub filled with a well-educated talent pool, specializing in Fintech, Healthcare, E-commerce, and Automotive.

An alternative: Asia

A long-standing outsourcing leader, it can also be a nearshoring destination in certain cases. With highly competitive pricing, often lower than both Latin America and Eastern Europe, the region offers greater cost advantages. However, 8- to 12-hour time zone differences can be a major downside for businesses, limiting real-time collaboration with EU and US-based in-house teams.

Key legal and financial considerations

Contract structuring and IP protection

When working with a nearshore development partner, you should clearly define project scope, deliverables, payment terms, and termination clauses to ensure transparency and minimize potential risks. Providers typically offer various types of contracts catered to different software projects, including:

• Fixed price: Work for well-defined projects with a clear scope and time frames.
• Time-and-materials: Suits projects with fluid requirements that require frequent amendments.
• Dedicated Team: A long-term nearshore software development model where a team is deeply integrated into your project and supports it from start to finish.

Intellectual property (IP) protection is another aspect you can’t ignore. You need to ensure your company will retain full ownership of the code base, software, and know-how generated by the team. Consider the following clauses:

• Work-for-hire agreements: The contract should explicitly state that all software components and deliverables belong to the client.
• Non-disclosure agreements (NDAs): Ensure your business information stays confidential.
• IP transfer conditions: Ownership rights of code, designs, and documentation are legally transferred to the client after project completion.

In a nearshore outsourcing setting, companies must align with local regulations, for instance, GDPR, CCPA, or HIPAA to prevent misuse of personal and sensitive data.

Tax and compliance regulations in different regions

Tax rules and labor laws vary depending on where your nearshore partner is based, and it’s crucial to familiarize yourself with them. Below are some key things to consider:

• Employment classification: Are your team members independent contractors or full-time employees? Some countries (like Mexico and Brazil) require IT specialists to be officially employed, whereas others (like Ukraine and Argentina) allow contractor agreements.
• Tax incentives: Many countries offer tax breaks to attract international companies. Ukraine, for example, has a favorable tax regime for IT professionals, while Poland offers R&D tax reliefs for foreign tech investors.
• Legal jurisdiction: Specify in your contract which country’s laws will govern your agreement. This will help you avoid legal issues down the road.

Finally, it’s always a good idea to consult with experts to ensure compliance with local regulations. At nCube, we help our clients navigate regional tax and employment laws across Europe and LATAM.

Payment structures and cost models

How do you pay for outsourcing software development? Several payment options are available for this type of partnership:

• Hourly payment: Best for projects with varying workloads and unclear time frames.
• Fixed monthly salaries: Suits a Dedicated Team model where developers work for you full-time.
• Milestone-based payments: Ideal for projects with defined workloads where payments are made after each deliverable.

Furthermore, dealing with multiple currencies is inevitable in nearshore software development outsourcing. Thus, when budgeting, factor in fluctuating currency exchange rates. Most providers prefer stable currency like USD or EUR to minimize risks.

Choosing the right payment model isn’t just about convenience – it can also impact tax efficiency. When structured correctly, payments can help reduce unnecessary tax burdens and ensure compliance. Note that some outsourcing companies work with global payroll providers to streamline the process, whereas others tend to consult local tax professionals.

What it comes to payments, businesses have several options:

• Bank transfers: Secure and ubiquitous but may involve higher fees and longer processing times.
• Digital payment platforms: Wise, Payoneer, and Deel offer cost-effective ways to send payments internationally, faster and cheaper than bank transfers.
• Professional Employer Organizations (PEOs): Many companies prefer PEOs to handle payroll, benefits, and compliance.

What will your nearshore development team with nCube look like?

Now that we’ve gone over the main steps of sourcing nearshore specialists, let us give you an idea of how your team will work. Below is a rundown of our nearshore development model’s features:

• We’ll build your own nearshore custom software development center or R&D team tailored to your individual needs, project specifications, and business goals;
• We’ll provide you with access to each team member so you can communicate with them directly. This way, your nearshore IT staff augmentation unit will work under your management, which allows you to have full control over the development process;
• Your nearshore developers will be solely allocated to your project, working for you full time, 5 days/40 hours per week. Given that nearshoring assumes only a small time difference (1-3 hours), it’ll feel as if your nearshore team is always within reach;
• We create nearshore dedicated teams that will be fully integrated into your workflow and engineering processes, following nearshore Agile development to ensure flexibility, collaboration, and continuous delivery;
• While you retain engineering process control, we will take care of your employee retention. Our employee benefits package includes all the perks of a modern IT company, from health insurance and HR support to a cozy downtown office with modern IT infrastructure and regular team-building events. All of this creates a comfortable environment for your staff, which lends itself to a high retention rate. Last year, we achieved a whopping 98% of unforced retention.

Case studies: Our success stories in nearshore development

At nCube, we’ve helped over 120 companies worldwide scale their IT departments with top-tier software development talent. Below are a few success stories that highlight how we made it happen:

Netreo: IT Operations platform

Challenge: Netreo, a cloud-based IT operations company, needed to scale its IT department while maintaining high technical standards.
Solution: We assembled a team of 5 professionals skilled in .NET, Python, cloud technologies and enterprise IT monitoring.
Results: nCube’s team played a key role in enhancing the platform’s scalability, accelerating feature releases, and generally improving system performance.

Life360: A family safety app

Challenge: Life360, a famous geo-tracking app, wanted to expand its mobile team while gaining a cost advantage.
Solution: We provided and maintained a full-fledged development unit of iOS and Android mobile developers and QA engineers.
Results: nCube’s professionals helped accelerate feature development, boost app stability, and support Life360’s rapid growth.

Rakuten Viber: Messaging & Communication

Challenge: Rakuten Viber, one of the world’s leading messaging and communication platforms, needed to expand its engineering unit to develop new features.
Solution: nCube built a strong branch of highly skilled IT professionals specializing in mobile and backend development.
Results: nCube’s engineers supported Viber’s mission to deliver a critical “Payments on Viber” Fintech feature.

Time to scale your team with nearshore outsourcing

Our goal is to let you work with a sustainable nearshore development team for as long as you need. If you’re interested in hearing more about sourcing nearshore software developers in Eastern Europe or LATAM, let’s connect.

FAQ

Common questions and answers about nearshoring

What is nearshore development?

Nearshore development is an outsourcing model where a company hires a team of software developers based in a nearby country, located within a 1-3 hour time difference.

What is a nearshore team?

A nearshore team is a group of software developers and other IT professionals like Quality Assurance engineers, UX/UI designers, Business Intelligence experts, and Project Managers located in an adjacent geographic region

What are the benefits of building a nearshore development team?

The greatest advantage of a nearshore development team is having 5-8 common business hours to ensure real-time communication with your local squad. Other benefits include culture fit, cost savings, and shorter travel times.