Nearshore Software Development: 5 Signs It’s Time to Switch

In May 2020, the median wage for software developers, quality assurance analysts, and testers was $110,140 per year in the US. By 2024, the annual wage for workers in the same field was $131,450.

As companies seek cost-effective ways to expand their teams, nearshore software development has emerged as an increasingly popular option. Nearshore outsourcing, where US companies partner with teams in neighboring countries, provides a middle ground between the cost benefits of offshoring and the convenience of US-based teams. It allows firms to access high-quality talent in nearby countries without the high prices of US-based hiring. 

If you’re trying to grow your team but want to keep costs under control, switching to a nearshore staffing partner might be the right move. 

What is Nearshore Development?

Nearshore software development is a type of outsourcing where companies partner with development teams located in nearby countries. For US-based companies, this means working with teams in Latin America (LATAM), where developers share overlapping working hours and cultural similarities, but offer significantly lower labor costs.

Nearshore development is different from offshoring in several key ways:

1. Time Zones: Nearshore development companies typically have at least four hours of overlap with your time zone. Offshore development, in contrast, typically involves working with talent in distant counties that could be on opposite schedules. 
2. Cultural Alignment: Countries geographically closer to your home base often share similar cultural values and alignments. For instance, most Latin American countries share similar holidays and observances to those in the US, making it easier to keep schedules aligned.
3. Geographical Proximity: Although you may never visit your outsourced team members or development company, some companies do need to ship specific equipment, such as cell phones, monitors, or computers. Nearshore developers are easier to work with when it comes to shipping and any necessary travel considerations.

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When to Consider a Nearshore Software Development Partner

Nearshore software development isn’t a one-size-fits-all solution, but for many teams, it offers the right mix of affordability, flexibility, and access to skilled talent. If you’re unsure whether now is the right time to make the switch, here are five signs it could be time to make the change.

1. You’re Ready to Expand, But Hiring is a Challenge

A Gartner HR survey found that, within a 12-month period, 50% of respondents had accepted a job offer but ultimately backed out before starting. The same survey found that 59% of HR leaders expected more talent competition in the next three months. 

Unfortunately, while competition might be on the rise, many companies have found that their teams lack the necessary skills to stay ahead in their markets. In a survey of 190 HR leaders, 41% reported that their workforce lacks required skills, 50% agreed their organization doesn’t effectively leverage skills, and 62% said that uncertainty around future skills poses a significant risk.

If you’re looking to hire new talent, but you’re struggling to find workers, switching to a nearshore partner can help fill the gaps. Nearshore software development makes it easier to access skilled engineers without competing in the saturated US hiring market.

2. The Price of Onshoring is Too High for Your Budget

According to the US Bureau of Labor, the median wage for software developers and similar workers continues to rise. However, according to Glassdoor, the average monthly wage for software engineers in Colombia is 9.1 million Colombian pesos, equivalent to $2,270.91. Annually, this comes to roughly $27,000—a far cry from the $131,000 that companies can expect to pay for US-based developers. 

If your budget is too tight for onshore partners, but you’re worried about the quality of offshore solutions, then nearshore software development can offer a happy medium. 

Explore how FullStack helps companies reduce software development costs with nearshore developers.

3. You’re Interested in Adding New Perspectives to Your Team

One of the lesser-discussed benefits of nearshore outsourcing is the new perspectives it brings. Teams with diverse cultural, regional, and professional perspectives are more likely to identify opportunities, approach challenges in innovative ways, and develop products that stand out in the market.

According to BCG, businesses with more diverse management teams saw a 19% boost in revenue from innovation. Similarly, McKinsey found that companies in the top quartile of ethnic representation have a 39% increased likelihood of outperforming those in the bottom quartile. 

Nearshore software development teams bring diverse perspectives, as well as varied training and industry experiences. Many nearshore developers have worked on cross-border projects or built products for different user groups, giving them a broader perspective on design, usability, and technical decision-making.

Want to work with nearshore software development teams experienced in emerging tech? Learn more about our AI and data consulting services.

4. You’re Looking for a Broader Talent Pool.

The best fit for your project may not be in your zip code—or even in your country. If you’ve been searching for candidates for weeks, you might need to tap into a larger talent pool. Nearshore software development partners are just as effective as their US-based counterparts, if not more so. 

For example, according to Deloitte, more than 2.2 million software engineering professionals currently reside in Brazil and Mexico, with over 350,000 new engineering students graduating annually.  Additionally, the International Trade Administration reports that Colombia hosts 12.8% of LATAM and the Caribbean’s digital firms, marking it as a leading player in the region’s digital economy. 

With the rise of remote work and globally distributed teams, nearshore software development offers a way to scale quickly while maintaining proximity and cultural compatibility. Companies no longer have to choose between cost efficiency and communication quality.

5. You’ve Outgrown Your Freelancer Network

Freelancers can be a great resource in the early stages of a product or startup. However, as your needs become more complex—spanning multiple platforms, tight timelines, or integrated systems—the more difficult it will be for independent contractors to keep up.

Nearshore software development partners offer the maturity and scale of a dedicated team, with the flexibility of freelance engagement. You get consistent staffing, cross-functional coverage (engineering, QA, DevOps, design), and centralized project management without having to source and manage multiple freelancers yourself. 

Need more information about working with software development partners in 2025? See the 2025 development price guide. 

What are the Differences Between Nearshore vs. Offshore Development?

Offshore development is a popular IT outsourcing trend in 2025. Instead of working with teams in the US, offshore outsourcing involves companies collaborating with providers in distant countries, such as India and Vietnam. 

What are the differences, then, between nearshore vs. offshore outsourcing?

• Affordability: Offshore development is often the cheapest option, with very low labor costs in some regions. However, nearshore software development still offers significant savings compared to US-based rates.

• Time Zones: Offshore teams may be 10 to 12 hours ahead of you, which can lead to significant communication delays. Nearshore partners, meanwhile, typically work in similar time zones as the US, making real-time collaboration much easier.
  
  
• Cultural/Language Alignment: Nearshore software development companies often have stronger English proficiency and cultural alignment compared to offshore providers. This reduces miscommunication, allowing teams to work faster and better respond to feedback. 

Interested in learning more about nearshore vs. offshore? Read up on the differences.

Why 2025 Is a Tipping Point for Outsourcing

As consumers demand better digital experiences, more companies are looking beyond US borders to hire developers. According to Deloitte, many industries, ranging from finance to food service, are shifting beyond onshore IT support models and leveraging globalized teams for two key reasons: domestic cost pressures and limited talent supply.

Nearshore software development helps counter these issues, offering access to specialized talent with fewer delays, stronger alignment, and improved day-to-day collaboration compared to traditional offshore outsourcing.

Are Nearshore Outsourcing Benefits Right for You?

If you’ve recognized one—or several—of the signs above, it may be time to reevaluate how your team is structured. Nearshore software development can offer a simpler, more flexible way to access the talent and support you need, without the overhead of hiring or the delays of offshore coordination.

A good software development partner in 2025 should be easy to work with and quick to get started. At FullStack, our LATAM-based teams work closely with our clients to build high-quality software. We prioritize real-time collaboration, strong communication, and dependable execution, which keeps our projects moving and our teams aligned. 

If you're looking for a capable custom software development partner, let’s talk. We’d love to learn more about your goals and how we can support them.