Selecting the best region for nearshore product development can be challenging. As a company that specializes in building product development teams in Eastern Europe and Latin America, we can say that a variety of factors may influence your choice of country, including the availability of skills, time zone, rates, English proficiency of developers, and more. We put together this research to show you the opportunities awaiting you in the most popular destinations for product development nearshoring, such as Eastern Europe and Latin America (LATAM). Let’s begin.
Providing a reasonable quality to price ratio, Eastern Europe has a reputation as an IT outsourcing oasis on a global scale. The biggest beneficiaries of this region as a nearshoring hub include most of Western Europe with an emphasis on Germany, Norway, Denmark, Sweden, the UK, the Netherlands, or any other country located in Western Europe. The largest hubs for nearshore product development worth mentioning in Eastern Europe are:
Overall Eastern Europe has approximately 1 million software developers. Let’s review nearshore product development opportunities in this region in more detail.
Software development skills
The driving force of nearshore software product development in this region is its educated workforce. A reputable QS World University Ranking in 2022 shows that 63 out of 468 top European universities are based in Eastern Europe, which guarantees European-quality education in many fields, including STEM disciplines. Overall, the region produces up to 60,000 IT graduations annually according to data from Eurostat, including all countries mentioned in our review. It’s worth mentioning that 95% of engineers at nCube are university degree holders who are successfully taking up nearshore product development opportunities for our European clients. The rest 5% are experienced engineers without formal education in Computer Science.
The difference in time zone between Eastern Europe and Western Europe is inconsequential, ranging from 2 to 3 hours ahead, allowing for a solid time window for real-time collaboration. That’s why nearshore product development in this region guarantees full alignment between your nearshore and in-house units working on your product. That’s one of the key reasons to choose Eastern Europe for product development nearshoring if you’re based in Western Europe.
According to Accelerance, nearshore product development rates in Eastern Europe vary from $21 to $118 per hour, minus vendor’s fees. Some countries are more affordable than others: For lower rates, it’s best to look for opportunities in Ukraine, Moldova, Romania, and Bulgaria, whereas Czechia, Hungary, and Poland have a higher cost of living, which significantly affects the pricing.
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English proficiency level
According to EF English Proficiency Index, countries in Eastern Europe boast the following English levels:
Developers from this region are generally comfortable with the English language, given that most of them have vast experience working in a multi-cultural, English-speaking environment. The best cities to look for developers with profound skills in English are Budapest (Hungary), Warsaw (Poland), and Kyiv (Ukraine).
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When you plan to nearshore in Europe, several destinations come to mind. Let’s review some of the common countries that are popular for IT nearshoring in Europe.
Ukraine. The leading nearshore software development in Eastern Europe, the country stays strong as a tech hub despite the war. With nearly 300,000 software developers involved on the IT nearshoring scene in Europe, Ukraine offers access to the second-largest pool of technologists in Eastern Europe. Moreover, the country offers lucrative developer rates coupled with strong technical expertise, especially in such areas as Healthcare, Fintech, Automotive, Telecom, e-Commerce, and more.
Poland. One of the major advantages of this destination for nearshoring in Europe is its compliance with European laws and regulations. Poland also offers a favorable time zone for collaboration with European-based teams. Other notable benefits include a solid IT infrastructure and a focus on tech education.
Romania. Another hotspot of nearshoring software development in Eastern Europe, Romania is close enough to Western Europe to offer hassle-free nearshore collaboration. It’s also a formidable competitor of Ukraine when it comes to the rates of software developers. The core focus of Romanian developers lies in Fintech, Healthcare, and e-Commerce.
Portugal. This popular nearshore software development in Europe offers strategic geolocation, especially for UK-based companies. With the potential for innovation, software developers in Portugal are skilled at digital transformation, web and mobile development, as well as AI and ML technologies.
These locations for nearshore in Europe are just a few examples where you can farm out your software development activities. Now, let’s shift our focus to another prominent region on the other side of the world: Latin America.
Opportunities to find a solid partner for product development nearshoring in LATAM abound – all thanks to a growing pool of software developers that occurred in recent years. As a strong player in nearshoring, the region combines affordability and ultimate geographic proximity to the US, which makes it a meeting point for US organizations and vendors of nearshore product development.
LATAM’s nearshoring hotspots are:
The pool of IT talent in these countries is estimated at approximately 1 million, and Brazil alone accounts for half of this number. Let’s take a closer look at what LATAM has to offer to a tech leader looking for a provider of nearshore product development.
Software development skills
The IT labor market in LATAM is in bloom thanks to the solid IT sector, vibrant startup culture, and newly emerging tech education initiatives.
If we take a closer look at different reports, such as Coursera’s Global Skill Report, Global Innovation Index, and SkillValue Ranking of developers’ skills, we’ll see that Brazil, Argentina, and Mexico are ranked highly when it comes to tech and innovation skills.
The World’s top universities ranking reports that 151 out of 1300 top universities globally are scattered across LATAM. The number of IT graduates is on the rise in all countries we review:
The Best Global Universities ranking shows that 6 Mexican universities enter the top 50 in Latin America, whereas Argentina has 3 universities in the same rating. Brazil boasts 123 institutes of science and 6 Brazilian universities belong to the top 500 universities in the world.
With such a focus on high-quality tech education, Latin American software engineers are graduating with top skills and are ready to join nearshore software product development ventures in the USA.
The overlapping time zones enable the two sides of the nearshore product development partnership to boost real-time collaboration.
Mexico is in the same time zone as the USA, which guarantees the teams may have up to 8 hours of overlap. It’s highly beneficial to work during regular hours, especially when it comes to daily meetings.
Brazil and Argentina are located in the same time zone as EST (GMT-3), which means that businesses located in this part of the US can enjoy real-time collaboration, while the rest of the States can share up to 7-5 hours of their regular work hours.
Accelerance’s report shows that in Latin America the cost of nearshore software product development ranges between $28-$105 per hour, without vendor’s fees. According to Clutch, the rates for an hour of developer’s work are higher in Brazil than in Mexico and Argentina.
English proficiency level
According to the EF English Proficiency Index, Argentina stands out with an advanced English proficiency level among the three countries, whereas Mexico and Brazil score a mid-level proficiency level.
It means that you have higher chances to find developers who speak English more fluently in Argentina than in Mexico and Brazil. However, Mexican and Brazilian developers tend to have solid communication skills and the capacity to forge strong relationships with US-based companies despite their mid-level English proficiency. If you hire for an advanced level of English, it’s best to search for candidates in Argentina.
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Whether you select Eastern Europe or Latin America, building a stable nearshore product development unit can be a tall order, especially for companies without experience in managing distributed product teams. That’s why you should focus on selecting a reliable vendor who will help you get the most out of the talent pools in the country of your choice.
We at nCube will be happy to guide you in your nearshore software product development journey by helping you build a skilled, experienced, and sustainable team in Eastern Europe and Latin America. Contact us and let’s discuss your product development needs.
Delegating product development activities often boils down to two main approaches, such as offshore and nearshore product development. While both options let businesses enjoy a slew of similar benefits, such as cost reduction and access to vast hubs of tech talent, each of them comes with its own peculiarities, knowing which will help you choose the optimal solution for you.
As a company that specializes in providing both offshore and nearshore product development services, we will shed light on the definition, similarities and differences between these approaches when it comes to such aspects as time zone, communication, talent pools, budget, time-to-hire, and management. So, should you send your product development activities offshore or nearshore? Let’s define these concepts first.
What is nearshore software product development?
Nearshore software product development means building a team located in another country with the same time zone or in one with negligible time zone differences. Alternatively, some definitions focus more so on location as in they define that nearshoring focuses on setting up a team in one of the neighboring countries.
What is offshoring?
Offshoring is also about moving product development activities to a team based in another country – but with a significant difference in time zone. This approach usually implies building a team overseas.
For a more in-depth understanding, let’s do a head-to-head comparison of their similarities and differences.
Time zone differences
Time zone differences are an inevitable challenge for distributed teams. It’s clear that your tech units should be aligned to work like a well-oiled machine, even when they are scattered around the globe.
The geographical proximity of nearshore product development teams significantly reduces or eliminates time zone issues. This approach places an external team in the neighboring country, which lends itself to better synchronicity between you and your team.
Offshore teams operate overseas and typically deal with a time difference of 7 to 12 hours. If you’re located in the US, such regions can be Eastern Europe or Asia. Such a significant time zone difference requires proactive management and recalibrating not only your communication style but your team’s as well to enable unimpeded work.
On the bright side, your team on the opposite side of the globe can work on getting your product done while your US team is asleep. It allows for significant coverage when it comes to the hours worked on your product, as each one of your teams can clock in 8 hours in a 24-hour timeline.
If such coverage sounds like a significant advantage for you, consider working with an offshore team. But if you’d rather have two teams working in parallel with each other with a tiny difference in time, nearshore product development may be the best solution.
Communication barriers are par for the course with both offshore and nearshore software product development units. Different languages, time zones, and cultures can potentially be a complication in establishing a smooth communication process. There’s always a risk of a project going awry due to miscommunication or misinterpretation of messages. To mitigate this risk, it’s best to build teams in regions with higher levels of English proficiency, for example, Argentina or Eastern European countries (for example, Ukraine, Poland, Slovakia, and the Czech Republic). In these regions, English proficiency is estimated between high and moderate as opposed to low or very low proficiency pertaining to Asian countries. For both offshore and nearshore product development units, a solid grasp of English should be a priority.
Both offshore and nearshore approaches allow companies to take advantage of talent pools outside their regions. The only notable difference related to this aspect is that with nearshore product development you only access talent located in the nearby countries, whereas an offshoring approach expands your horizon to include the global pool of tech talent. If you’re a US business, you can count on up to 700,000 developers in Latin America combined in such nearshoring hotspots as Argentina and Mexico. But if you expand your search to add opportunities in Eastern Europe, you can access a pool of 1.3 million developers and have a wider choice when it comes to tech talent.
Both offshore and nearshore software product development are aimed at budget optimization – each solution lets you trim expenses associated with onboarding your own internal teams, such as overhead, insurance, employee bonuses, IT infrastructure, and more. All of them are typically taken care of by a vendor.
There’s an opinion that nearshore product development can be more expensive than offshore when it comes to software developer rates. Offshoring to Asia is cheaper than nearshoring to Latin America for US-based businesses, but it often comes at the cost of software quality and communication barriers associated with teams based in this region. Thus, many EU and UK businesses choose to commit their nearshore software product development to tried-and-true regions, such as Eastern Europe.
Whichever option you choose, keep in mind that the prices tend to vary, depending on the local software development rates, the fees imposed by service providers, your tech stack choice, team size, and a billing model.
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The more extensive the pool of tech talent is, the less time it takes to build a team. You can use developer availability as a criterion when choosing between offshore and nearshore product development. Diving into offshore or nearshore regions, you stand fewer chances to compete with other companies vying for tech talent as it often happens when hiring locally. You also don’t have to search for candidates ready to move or hire not based on their skills but the ability to relocate. Not only do offshore and nearshore approaches accelerate the hiring process but also let you access the right kind of talent.
As a company that specializes in sourcing talent from Eastern Europe and Latin America, we can say first-hand that building a standard product team takes on average up to 20 days thanks to our access to a vast variety of skillsets.
A complex project that product development requires a well-rounded team member integration and management strategy. When time differences come into play, you may lack instant access to developers. Thus, every activity on your list must be extensively planned for every team member.
Whether you choose an offshore or nearshore product development approach, be prepared to manage your teams directly, as direct access to team members always guarantees better results. When managing a distributed team, it’s necessary to retain control over the development process to get a predictable outcome. That said, whichever approach you select, you will have to put a bit more effort and time into building relationships with your teams.
READ ALSO: How to Manage Distributed Engineering Teams
As you can see, offshore and nearshore product development aren’t that different. At the heart of both approaches lies a practice of delegating software development activities to teams in other locations, which comes with such benefits as cost reduction and access to diverse skill sets.
At nCube, we provide nearshore software product development solutions for our clients from the EU and the UK by sourcing Eastern European talent. Our partners from North America view Latin America as a nearshoring region and Eastern Europe as an offshoring destination. We are well capable of building skilled product teams in both regions. Contact us to discuss your product development needs and let’s see if our approach is suitable for you.