Offshore vs Nearshore Companies: Which One to Choose and Why?

While considering the idea of outsourcing some enterprise functions, the companies’ management often suggests hiring offshore or nearshore teams.

4 min readSep 8, 2021

Offshore IT outsourcing implies using the services of third-party developers located at quite a great distance from the customer’s location. Nearshore outsourcing is supposed to use the development teams and IT specialists, geographically closer to the customer when there is no time zone difference or it’s just 1–2 hours. Which of these two options is the best for US clients? Let’s figure it out.

Offshore vs Nearshore

The majority of offshore adepts note the price as a leading factor when choosing the company to cooperate with. Nevertheless, one cannot ignore the product or service quality factor. The good news is that the salaries of offshore developers are many times less than in Europe and North America, and the quality of services provided is sometimes even higher. The result is an almost perfect price/quality ratio.

On the other hand, nearshore companies win in terms of geographical accessibility and cultural compatibility. In the case of the latter, everything depends on the country. Sounds like a great reason to take a closer look at popular outsourcing destinations.

A Comparison of Offshore and Nearshore Countries

While we used some pretty general terms up to this point, let’s be more specific now. Below we compare Brazil, Mexico, and Ukraine as the most popular destinations for software development outsourcing in the Americas and Eastern Europe, respectively. The first two countries are nearshore companies for the US, while Ukraine is an offshore option for this country.

Brazil

The country has a good geographical location and can organize delivery centers (mostly near Sao Paulo) to serve customers in Latin and North America. Some time ago the Brazilian government upgraded labor laws, making outsourcing services more attractive to customers worldwide. Brazilian software developers’ hourly rates range from $30 to $50. Moreover, its proximity to the U.S. makes it attractive to U.S. and Canadian residents looking for software development services.

Mexico

Generally speaking, it is quite an attractive country for outsourcing development. First of all, due to the overlap of the time zones with the United States. Nevertheless, despite the seeming geographical proximity, English proficiency in Mexico leaves much to be desired. Often customers have to choose from companies located in border areas with the U.S. or in tourist areas. Otherwise, you’ll need a Spanish-speaking manager. In general, the IT market in Mexico is more focused on domestic clients, which is typical for the whole of the Latin America region.

It’s not so clear-cut with rates, either. According to Payscale, the average developer’s salary is $60 an hour. However, former customers of Mexican companies indicate an $80 per hour rate.

Ukraine

Mindfield Consulting believes that Ukraine is one of the leading and promising countries in outsourcing. This country has a huge technical talent pool as well as institutions specialized in engineering education. In addition, Ukrainian mentality isn’t so different from Western European and doesn’t have major cultural differences. The overlapping time zones with Europe and the U.S. only add some points to choosing this direction.

Besides, 80% of offshore workers from Ukraine speak English. There will be no problems with communication. Ukraine’s IT sector is growing at a good pace thanks to government support. Hourly rates for software developers in Ukraine range from $20 to $40, making it one of the most cost-effective countries for outsourcing.

And now let’s sum it up. As you can see, when it comes to software development, choosing nearshore companies seems to be not such an attractive option. This is especially true for customers from the US.

Let’s put it straight. Most likely, you’ll have to choose from countries located south of Texas. Among these countries, only the largest, like Argentina, Brazil, or Mexico have a sufficient level of technological development. Moreover, the development will cost you 30%-60% more expensive than if you select a company from Ukraine. So maybe it makes sense to choose offshore companies in the first place? Especially considering that for a lower price you will get much more developers’ expertise, a higher level of customer service, and ultimately better results.

But how do you find good developers in another part of the world? Well, you can always cooperate with a reliable partner in the USA that will help you assemble your offshore dream team. We at UNITEDCODE will take care of that. We provide a unique UNITEDCODE delivery service, during which we bring together teams of software developers from Eastern Europe and provide their services to you. In addition, we check the professional and communication skills of each engineer and help them to get into the project as efficiently as possible.