Establishing a Nearshore Development Center: Worth It?

Hiring a nearshore development team is an effective strategy for enterprises that want to tap into larger talent pools, and provide operational benefits such as cost-effectiveness and efficiency. The real question for most companies, however, is if establishing your own nearshore development center is more valuable than hiring a third party. Some will argue that establishing your own nearshore development center brings the benefits of having a dedicated development center alongside most of the common benefits we know nearshore software development offers, like cost-effectiveness, cultural alignment and time zone overlap. Still, this solution may not be for most companies looking for nearshore software development.

The reason why companies are hesitant to establish their own nearshore development center is a mix; mostly, the reasons are tied to legal and HR difficulties. This is why most enterprises prefer to work alongside nearshore companies with development centers already established to ease them into the process. They deal with all the HR management, compliance and administrative issues, while their clients enjoy the benefits of hiring from these companies. But is there more to it? What are all the reasons that make establishing a nearshore development center from scratch an unpopular approach? Let’s find out!

Why Setup a Nearshore Team or Nearshore Development Center?

Before getting into the weeds of the benefits of setting up a nearshore development center are, let’s answer the question of what is nearshore software development. This is a practice where companies hire software development companies from neighboring countries to bulk their team at a cost effective rate. As such, a nearshore development center is essentially their hub, housing several teams of tech professionals waiting to work on projects. From UX/UI designers, QA specialists to developers, team leaders and project managers; a nearshore development center has all the technical workings you need to succeed.

We’ve already mentioned some reasons why companies choose to establish a nearshore development team or nearshore development center; cost effective teams, as well as cultural and time zone alignment make it a very sought after option compared to other models. However, what are some concrete scenarios that make this method preferable for your needs?

• If your project requires a large team, it may be preferable to have team members close by.
• Project scope is also a big factor; usually larger projects have bigger scopes, which ultimately require more man power and maintenance that is sometimes unsustainable to do completely in house. 
• If security is a crucial part of your project, then having a fully dedicated team will be important for your project’s success. This way, there is no cross between team members and security risks occurring, perfect for financial projects and other highly security focused products.
• If you need to work with multiple teams, for whatever reason, working with a nearshore software development provider or establishing a nearshore development center can provide projects with a scalable model to work under.
• This a surefire way of expanding your team’s presence; establishing teams in through agile nearshoring practices can help your team have a wider, global presence.

What do You Need to Establish a Nearshore Development Center?

If you want to start agile nearshore software development through your own nearshore development center, there are a couple of things to consider:

1. Choosing a location. You must choose a location to best establish your nearshore development center. For effective agile nearshore development, take into consideration the talent pool available in neighboring countries, as well as cultural compatibility, time zone overlaps, legal compliances that need to be followed, and the business and economic environment.
2. Understanding local legality. With a location chosen, having legal council that fully understands the legal environment of your destination will be key to getting your nearshore development center off the ground. 
3. Legal registration. Once you understand the legal environment of your location, begin registering your business as a legal entity with the proper legal structure. Legal experts can help you with this step and the previous step as well.
4. Choosing the hub. Once the company has been registered, it’s time to find a suitable location for your nearshore development center. 
5. Complying with local tax authorities. Always start your business right; make sure your entity is properly registered with the local tax authorities to use your nearshore software services asap.
6. Building the local team. Your nearshore development center needs recruiters and an administrative team. Make sure to find those specialized in the field.
7. Time to build your brand. Your nearshore development center needs to have a strong local presence to begin generating value to your business. Participate in local events, industry conferences, and promote your activities through social media to get more eyes on your team.
8. Recruiting nearshore developers. Find the right talent to build your team based on your business’ needs and goals. Leverage the expanded talent pool the right way.
9. The final step is operational efficiency. Set up work flows, communication channels and project management tools to better help you organize your nearshore development center and set yourself up for success.

Establishing Vs. Hiring a Nearshore Development Center

Which One Works for You?

This will entirely depend on the business goals you have for your project. If you have a high tolerance for risk and you want to risk adding more costs to your business, then you are free to take a shot at establishing your own delivery center. However, if pure operational efficiency and cost-effectiveness is your main motivator, then hiring an already established nearshore development center is the right path for you. Nearshore companies with these already established delivery centers can help you achieve your goals while absorbing a lot of the risk that come with expansions. If you are looking for a company that is an expert at nearshore software outsourcing, nearshore saas development, or agile nearshore services, why not contact Teravision? We have over 20 years helping companies struggling with keeping up their business goals. Let’s get you back on track!