Why companies fail when using nearshoring services

By Anastasia Stefanuk 

Nearshore development services allow companies to think out of the box and hire talented and seasoned IT specialists to work remotely. Long ago, large companies came to the conclusion that software outsourcing for tremendous projects is a more profitable and beneficial solution in terms of time and cost saving, quality, and overall team collaboration.

Despite a chain of advantages in both offshoring and nearshoring, many newcomers fail in using this approach. Obviously, the spelling of both terms tells you the key difference between these two types of services: offshoring – hiring remote teams on a long distance, nearshoring – find remote development teams in a close proximity to your home country.

Let’s define what factors lead to failed collaboration for companies that use offshore software development services.

Choosing the wrong model

Both offshoring and nearshoring represent the same concept of services – remote software development teams with the necessary skill sets, experience, qualifications, and soft skills. However, based on the preferences and capacities of a company, they can choose between outsourcing and outstaffing.

Outsourcing – the client gets a remote development team where all managerial and technical responsibilities are put on the vendor. This model requires a client to give a full, detailed, and comprehensive strategic plan of the project to avoid further pitfalls as he/she will not be involved throughout the process of project development.

The hidden stone of this model is that if you decided to outsource you should make sure that you are ready to face certain challenges, such as missed deadlines, misunderstood requirements, staff turnover (the initial team composition can be changed with time), unqualified developers (it is a vendor who decides who will execute your project, not you), and hidden costs (additional expenses might occur during the project’s performance).

Nearshoring (or sometimes called outstaffing) – a vendor provides a client with a team of developers allowing you to captain the management ship. In other words, you are the one who selects employees, has direct communication with the developers, and your CTO controls the technical part of the project.

The hidden issue that can appear is that you may not possess a required level of expertise to control the technical process of a project. So, before kickstarting the outstaffing, you need to analyse your resource and define if you have enough to keep the control on flow or have a tech person capable of doing it.

Initial communication failings

Communication these days occurs mainly via online applications, messengers, and other tools. While in daily life we are not that considerably affected if the issues in communication arise, in a business world, miscommunication might bring costly consequences.

Let’s imagine that you have been provided with nearshore IT services from a well-known and respectable vendor. They convinced you on the quality, team dedication, timely delivery, and innovative input to your project.

The trust has been established and in five to six months, you realise that some of the goals were not met and delivered as you planned. Since you didn’t set the feedback scheme, your team wasn’t providing you with reports, no initiative has been received, and, finally, they didn’t inform you about changes that have been made.

Such a drawback occurred because initially, while agreeing on the terms of co-operation, you didn’t set the regulations on cooperation to fulfill your daily understanding of the project’s development. Here is why, the first crucial necessity for a nearshoring client is to organise the communication in a proper way.

Usually, the ways of maintaining reliable and constant relationships with the team includes holding daily meetings, providing feedback and reports, regular meetings with your CTO (Chief Technical Officer), scheduling personal visits, using tasks tracking applications. Since the management of the remote development team is put on you (for your comfort), you decide how to maintain the two-way cooperation to mitigate the risks of miscommunication.

Outdated technical stack

Before accepting the offer to work on a particular project, a developer considers numerous factors, the most crucial being technology. Since the world of innovations is constantly developing, frameworks are updated to new versions which bring more opportunities in terms of accomplishing the tasks faster and efficiently.

Some companies, despite coming up with proactive ideas, tend to run their business with legacy technologies.

If a remote development team has been promised cutting-edge technology but you remain conservative and feel safer with the old ones, you will probably lose your team. On the other hand, if your approach is aimed at implementing the latest innovations and technological switch is something that you have been looking for – your development team will impress you with the quality of services and dedication.

Cultural gap goes sideways

Even though, the cultural differences barrier does not possess a considerable threat to your collaboration with the nearshoring team, slight disagreement may still occur. We have all been brought up under certain rules and regulations, restrictions, philosophies, approaches, so no wonder that our viewpoints differ even on the domestic level. By hiring remote developers from another country, make sure you know the peculiarities of their culture even if the distance between you is less than 2000 km.

The profile for the required position lacked specifications

When you hire an employee, whether in-house, part-time, or remote, the first thing that draws your attention to the candidate is their CV. You want to see a clear personal characteristics section, a list of experiences with detailed descriptions for each position, education and other qualifications, as well as a cover letter to see why the person considers him/herself suitable for the job.

The same is expected of you by the recruiters of a nearshoring vendor – expanded list of requirements, clear needs, expectations, goals, project complexity, deadlines, and tech stack that will be used. Ask the recruiter for personal or online meetings before hiring, get to know the candidate, ask questions to make sure your cooperation is long-term and mutually beneficial.

Political and economic instability

Another reason companies fail in using nearshoring services, unfortunately, does not depend on you. Some countries, especially underdeveloped ones, often overcome political disturbances, which eventually lead to economic instability.

For sure, the consequences may include increased costs for developers’ paychecks, staff turnover, and slowed down development progress. With this in mind, carefully analyse the market, consider potential threats that may appear, and make the decision whether the country is worth nearshoring or not.

Key points

Companies that hold a large number of projects often decide to hire remote development teams to save resources on managing in-house employees and expand the team by involving specialists from other countries. However, hidden stones sometimes undermine the co-operation between the client and nearshoring vendor.

By properly communicating and keeping in touch with the developers you ensure the progress of the project is on, you get closer to the team to know their cultural peculiarities, and, finally, motivate them by approaching everyone in a customised manner. Before choosing the suitable model, carefully analyse your capacities and resources to avoid pitfalls which exist in both approaches.

Anastasia Stefanuk is a Content Manager at Mobilunity, a provider of development teams around the globe