In today’s globalized world, businesses need to keep up with the fast-paced technological advancements to stay relevant in their respective markets. One of the most important decisions businesses have to make is whether to nearshore their software development or keep it in-house.
We’ll explain the differences between these two models to you and help you decide which one will work best for your company. To begin with, in-house development simply denotes the employment of internal IT resources and staff to develop software within your business. As an alternative, nearshore development refers to working with a partner who is based in a nearby country while outsourcing.
Cost Savings of Nearshoring
Nearshoring is becoming increasingly popular in recent years due to its many benefits, including cost savings. By nearshoring, businesses are able to access top talent at a lower cost than in-house development.
One of the main reasons for cost savings is that nearshoring companies often have lower labor costs due to the lower cost of living in their respective countries. For instance, software development salaries in Eastern Europe and Latin America are often lower than in the United States or Western Europe. This cost difference allows businesses to save money without compromising the quality of the final product.
Another significant cost-saving advantage of nearshoring is the reduced overhead costs. By nearshoring software development, businesses do not have to worry about the expenses that come with hiring, training, and retaining employees. Accordingly, nearshoring companies take care of these expenses and ensure that they provide the required resources to deliver a quality product.
Additionally, nearshoring helps businesses save money on infrastructure costs. Nearshoring companies typically have well-established infrastructures, including hardware, software, and other tools required for software development. Basically, this means that businesses do not have to invest in infrastructure to develop software. The nearshoring company already has everything in place, making the process much more cost-effective.
Cost Savings of In-House Development
In-house development involves hiring software developers and setting up a development team within the business. Although this option has its advantages, such as better control over the development process and access to specialized knowledge, it can be expensive. Below are some of the reasons why in-house development can be costly:
Hiring and Training Costs
To build an in-house development team, businesses need to hire developers, managers, and other support staff, which is expensive. Additionally, businesses need to spend time and money on training and development to ensure that the team members have the necessary skills to develop quality software.
Overhead Costs
In-house development requires businesses to provide office space, hardware, software, and other resources to the development team. These expenses add up quickly, particularly in high-cost locations. For instance, office rent in major cities can be very expensive, and businesses may have to invest in expensive software and hardware to ensure that the team has everything they need to develop software.
Management Costs
In-house development teams require management, which can be time-consuming and costly. In fact, businesses may need to hire a project manager or team lead to manage the development team, and this can add significant costs to the project.
The decision to nearshore or keep software development in-house ultimately depends on the business’s specific needs. However, as we’ve seen in this blog, nearshoring offers significant cost savings over in-house development. By nearshoring, businesses are able to access top talent at a lower cost, reduce overhead expenses, and save on infrastructure costs. These cost savings can be particularly attractive to small and medium-sized businesses that need to stretch their budget further.
It’s essential to remember that cost savings should not come at the expense of quality. When nearshoring software development, businesses must ensure that the nearshoring company has the skills, expertise, and resources to deliver a quality product. You have ITJ here to help with that, so feel free to ask any questions you may have. Get in touch with us!
About ITJ
ITJ is devoted to serving fast-growing and high-value market sectors, particularly the Internet of Medical Things (IoMT), working with innovative medical device companies looking to improve people’s lives. With a unique BOT (build, operate, and transfer) model that sources only the best digital talent available, ITJ enables companies in the US to create technology centers of excellence in Mexico. For more information, visit www.itj.com.
