And if you’re building complex enterprise solutions, for example, this translates to hundreds of thousands of dollars wasted.
So, you need to do your due diligence. An unreliable partner can set you back months or even years.
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You need to have a strong vetting process and choose a partner based on evidence,not just promises.
Make sure to verify their track record and check their technical expertise before putting pen to paper.
And if you’re looking for a partner on a demanding, enterprise-scale project you should start with a low-risk pilot project.
This will help you get a feel for what it’s like to actually work with them on a day-to-day basis and how they fit with your culture.
You’ll minimize the risks involved and set yourself up for a successful collaboration.
And that’s exactly what you should want.
How to hire a reliable nearshore development partner
Have a thorough vetting process – Check their case studies, client testimonials, and technical expertise before committing to a contract.
Start with a pilot project – Test their capabilities with a small, low-risk project before scaling the partnership.
Sign a clear contract – Set specific deliverables, deadlines, and put in performance clauses to ensure accountability.
Cultural and communication barriers
When you outsource development, communication and culture matter a lot.
Although nearshore companies are geographically close to you, that doesn’t mean cultural and communication barriers can’t derail your project.
Even small misunderstandings can lead to costly rework and unnecessary delays down the road.
And the stats back that up, too.
Ineffective communicationcosts U.S. companies up to $1.2 trillionper yearin productivity losses.
And cultural incompatibility is one of the main reasons why outsourced projects fail.
So, what can you do about it?
First, you need to adjust your communication style.
Workplace culture varies across different countries. Some prefer hierarchical decision-making, while others prefer open debate.
A direct approach in one country might feel too aggressive in another, so make sure you don’t inadvertently cause tension.
So, you need to double down on open and transparent communication.
In short, cultural and communication differences won’t be deal-breakers, if you hire the right people.
You just need to proactively manage them and find a reliable development partner.
And that’s how you set yourself up for success.
How to handle cultural and communication barriers
Standardize communication tools – Make sure the team you hire uses the same synchronous (Slack, Teams) and asynchronous (Jira, Trello) communication tools as your in-house team does.
Share detailed documentation – Provide clear instructions and guidelines so everyone on your nearshore team knows what’s expected of them at all times.
Establish a clear reporting structure – Assign a dedicated project manager on your end who your nearshore team will report to in order to simplify collaboration and minimize these barriers.
Lack of control and accountability
Outsourcing means trusting an external team with critical tasks. But, you still need proper oversight.
A lack of control and accountability leads to missed deadlines, scope creep, low-quality work, and unexpected costs.
And scope creep, i.e. uncontrolled changes in project scope, is one of the biggest project killers out there.
If you want to learn more about the dangers of scope creep, DECODE CEO, Marko Strizic, discussed it in detail on our podcast, The Roadmap:
So, how does this happen? And how can you prevent it?
Here’s a few reasons why:
No clear project ownership – When too many stakeholders are involved but no one takes full responsibility for decision-making.
Unstructured reporting – Teams that work in silos and don’t know who they report to.
Lack of real-time progress tracking – When you don’t use tools like Jira to track development progress.
No consequences for missed deadlines – When there are no consequences for unnecessary delays.
To prevent this, you need to build a transparent partnership with your nearshore development team.
Make sure there’s clear project ownership, everyone knows who to report to from day one, and define clear KPIs the team should follow.
It’s the best way to maintain control over your project, no matter the size.
How to maintain control and accountability
Clear project ownership – Make sure the team has a dedicated project manager and clearly define who is responsible for each deliverable.
Set up structured reporting – Implement weekly progress reports with key metrics and hold daily stand-up meetings for regular, real-time updates.
Define clear KPIs – Measure success (or failure) based on clearly defined metrics and deliverables.
Security and data privacy risks
Outsourcing software development means sharing sensitive data with a third-party.
And that’s risky by default. That’s why security and data privacy should be your top priorities.
If they aren’t, you risk data breaches, intellectual property theft, and reputational damage.
On the whole, poor security costs businesses a lot of money.
In 2024 alone, cybercrime cost businesses $9.22 trillion, with the costs expected to rise to an incredible $13.82 trillion by 2028.
But, even that’s not the most worrying statistic. Some 60% of companies end up going out of business after suffering a data breach.
So, when you hire a nearshore team, security can’t be an afterthought. You should know about common risks like:
Weak access controls
Lack of encryption
Poorly secured data
Regulatory non-compliance
Make sure your nearshore partners have relevant security certifications, like ISO/IEC 27001, before you hire them.
If they can successfully follow rigorous security procedures and globally accepted standards, you’ll know you’ve made the right choice.
How to handle security and data privacy risks
Implement strict access controls – Use role-based access controls and limit your nearshore team’s access to sensitive data unless strictly necessary.
Ensure legal and regulatory compliance – Verify that your nearshore team follows all relevant laws and regulations, like GDPR, HIPAA, and SOC 2 standards.
Use encrypted communication and storage – Protect sensitive data with AES-256 encryption and require VPNs for remote access to protect network security.
Notice what most of these hidden costs have in common?
They are mostly related to the quality of work done by the outsourced team. So, the best remedy is hiring the right team.
Although this will help you avoid most of these costs, you still need to plan for them upfront.
Make sure to clearly define your project’s scope and plan for long-term expenses from the start.
It’s the best way to prevent financial surprises down the line.
How to handle hidden costs in nearshore software development
Define project scope upfront – Lock in your requirements, core features, and deliverables early to prevent unnecessary changes from derailing the project.
Plan for long-term expenses – Make sure to budget for long-term expenses like post-launch maintenance, updates, and potential redesigns. Consider the total cost of ownership (TCO) instead of just development costs.
Include change management clauses – Clearly define how additional work will be estimated and billed and set up a process for approving changes to prevent sudden cost spikes.
Quality and technical expertise gaps
Not every nearshore team delivers high-quality code.
And that costs their clients a lot more money in the long run.
Poor software quality is a huge problem and it costs U.S. businesses at least $2.41 trillionevery year.
One major reason why these costs are so high is the fact that the sooner you find and fix bugs, the cheaper they are to fix:
Fixing them after deployment can be up to 100x more expensive than right at the start of development:
And a bad development partner won’t be able to catch bugs early, which leads to higher costs.
But, what exactly is behind those quality issues?
Some common reasons are:
Inexperienced developers
Poor coding standards
Weak QA processes
Rushed delivery
Once again, it’s all about choosing the right partner.
Nearshore development only works if the team you hire has high coding standards and deep technical expertise.
So, take your time.
Don’t cut corners, vet them carefully, and make sure they have the right skills before you sign a contract with them.
How to ensure quality and expertise in nearshore development
Vet technical skills before hiring – Make sure you have the right experts on your nearshore team. Request CVs, review their past projects, and conduct technical interviews to make sure they’re the right fit for your project.
Enforce strict QA standards – Make sure your nearshore team implements strict QA standards, including code reviews, automated testing, and CI/CD pipelines.
Continuously monitor performance and quality – Use tools like SonarQube to track code quality and technical debt.
Nearshore software development risks: FAQs
To pick the right nearshore software development company, you need to:
Review their portfolio and case studies
Evaluate their tech stack
Check their reviews
Review their development process
Look into their pricing
Also, you should pay attention to:
Cultural and language compatibility
Their quality and expertise
Security and IP protection
The answer to this questions will depend on your specific needs.
Large companies often have a broader range of expertise, access to more resources, and the ability to scale quickly if your project grows in scope.
However, working with a large company often means you don’t get personalized attention, since they often have a huge number of clients simultaneously.
Smaller firms are often more flexible and can provide highly personalized service. They may specialize in a specific technology or industry, making them a great choice if you need niche expertise.
But, they might have limited resources, which could affect scalability if project demands increase significantly.
Your project timeline will depend on a number of different factors, like:
Project scope
Project complexity
Team size
Timelines can range from 2-4 months for simple apps while complex, enterprise-grade projects can take 9 months to over a year to build.
Discuss a realistic timeline upfront and include buffer time for unforeseen delays.
Looking for a reliable nearshore development partner?
Are you on the lookout for a nearshore development partner you can trust but can’t seem to find the right fit?
Well, you’re in the right place.
We’re an EU-based, high-caliber software development company and we’ve got 12+ years of experience in building software products for a wide range of industries.
So, if you want a partner you can trust, feel free to reach out and we’ll set up a quick meeting to discuss your needs in more detail.
Damir knows how to build partnerships that last. With 20+ years of experience in sales leadership, business development, and tech consulting, he’s helped companies grow, scale, and adapt - whether by leading teams, building businesses from scratch, or driving digital transformation. He started with a degree in history and archaeology before adding an MBA and training in negotiation, web development, and more. That mix of curiosity and drive is what makes him great at what he does.
Outside of work, you’ll find him on the trails, pushing his endurance limits, or at home keeping up with his three kids. And when he's not on the move, he's diving into the latest and greatest history books and documentaries.
