IT Nearshoring in Europe for Your Software Development

Are you looking to develop high-quality software products while minimizing costs and maximizing efficiency? Nearshore software development in Europe offers a compelling solution, especially for startups and small to medium-sized enterprises (SMEs). 

At ProCoders, we have experience addressing the common concerns of SMEs, such as communication challenges, project management issues, and potential quality and security risks. We customize our nearshore services to meet your specific needs, ensuring a profitable partnership. 

This guide will help you understand how to use nearshore development to benefit from the region’s industrial expertise, top-rated developers, and cost-effective pricing, all while ensuring speedy and efficient delivery processes.

Key takeaways:

• Nearshore software development connects companies with teams in nearby countries that share similar time zones and cultural backgrounds, enhancing communication and collaboration.
• Europe offers a cost-effective alternative for startups and SMEs seeking high-quality development without the expense of an in-house team. Countries like Poland, Croatia, Portugal, and Romania provide a skilled workforce at lower costs due to favorable economic conditions.
• Nearshoring in Europe allows companies to scale quickly while maintaining control over the development process, utilizing agile methodologies and the latest technologies to produce superior software solutions.
• By partnering with nearshore teams, companies can reduce time-to-market and enhance project management and communication, making this model particularly advantageous for startups and SMEs aiming for rapid growth.

Definition of Nearshore Software Development and What Does it Mean for Startups and SME

Nearshore software development is a form of outsourcing where a company partners with a software development team in a nearby country or region with similar time zones and cultural backgrounds.

For example, when Frontegg, our partner from Israel, collaborates with us (ProCoders’ developers are located in Central Europe) it is considered nearshoring. However, when we work with another partner, Roth River from North America, it’s categorized as offshoring.

For startups and SMEs, nearshore development offers a number of advantages. Companies can decrease  time zone and communication obstacles by collaborating with a nearby development team, which can speed up development. 

In addition, nearshore developer teams can provide a more affordable alternative to employing an internal team. The nearshore team’s close proximity makes it simpler to travel and, if necessary, hold face-to-face meetings.

Moreover, nearshore teams often have a high level of expertise in the latest technologies and methodologies, enabling them to provide innovative and effective solutions to a company’s software development needs. This expertise can help startups and SMEs to stay competitive in the market and keep up with the latest trends.

Nearshoring Software Development Market Overview and Trends

In recent years, the trend of nearshoring software development has grown significantly, as more and more companies discover the benefits of this model. The IT Outsourcing market is expected to hit $512.50 billion in revenue by 2024. It is forecasted to grow at an annual rate of 10.99% from 2024 to 2028, reaching a total market size of $777.70 billion by the end of 2028. 

Here are some of the 2024 trends of the niche, especially speaking of the European market:

• Increasing Adoption of Agile Methodologies: More companies are adopting agile methodologies to enhance collaboration and flexibility in the development process. This trend is particularly beneficial for nearshoring as it promotes better communication and quicker adjustments, which are crucial when working with teams in nearby countries.
• Rise of Cloud-Based Technologies: The increasing use of cloud-based technologies allows teams to collaborate more efficiently from remote locations. For nearshoring, this means enhanced connectivity and smoother project flows between the client and the nearshore team.
• Emphasis on Sustainable Software Development Practices: An increased focus on sustainable practices in software development is expected. While this is a general trend across all forms of outsourcing, it can particularly influence nearshoring decisions as companies look to align with partners who share their values on sustainability.
• Economic Stability in Nearshore Regions: Economic stability is crucial for nearshoring decisions. Central Europe, known for its economic resilience and supportive IT outsourcing policies, offers a predictable and secure business environment. In 2024, companies will prioritize nearshore regions that provide economic stability to ensure reliable and uninterrupted operations.
• Technological Advancements and Specialization: Regions specializing in advanced technologies like AI, blockchain, and cybersecurity are increasingly preferred for nearshoring. In 2024, businesses will seek nearshore partners who not only provide cost benefits but also bring technological expertise and innovation to projects, enhancing the value of their investments.
• Data Security and Privacy Regulations: As data privacy becomes a global concern, compliance with regulations like GDPR is paramount. Nearshore providers in regions with strict data security laws are becoming more attractive. Businesses will look for nearshore partners in 2024 who prioritize robust security measures and compliance with international data protection standards to safeguard sensitive information.

Types of Software Outsourcing by Location And Their Pros and Cons

Outsourcing can take several forms, each with its own advantages and disadvantages. Let’s consider the three main types of software outsourcing by location: onshore, offshore, and nearshore software development. Make sure to check out software development outsourcing models!

Onshore Software Development

Onshore software development means collaborating with a team based in the same nation as the company.

Pros:

• Same time zone and language
• Better cultural understanding
• High level of control

Cons:

• Potentially higher labor costs
• Limited access to specialized talent
• The brain drain phenomenon

Offshore Software Development

Offshore software development is partnering with a development team located in a different country, typically with a large time zone difference.

Pros:

• Lower labor costs
• Access to specialized talent
• A large pool of resources
• Round-the-clock development cycles

Cons:

• Language and cultural barriers
• Time zone differences
• Less control over the development process

Nearshore Software Development

The nearshore model involves partnering with a development team located in a nearby country with a similar time zone and cultural background. 

Pros:

• Cost-effective solution
• Similar time zone and cultural background
• Access to specialized talent
• Better communication and collaboration
• Diversity in business culture

Cons:

• Potential language barriers
• Limited cultural differences

Each type of software outsourcing has its own advantages and disadvantages, and the choice will depend on a company’s specific needs and budget. Onshore software development offers the highest level of control and collaboration, while offshore development provides cost savings and access to specialized talent. 

Nearshore offers a balance between the cost savings of offshore and the collaboration benefits of onshore.

Business Profits of Nearshore Software Development in Europe

There is a great chance for businesses to save and significantly increase profits by nearshore software outsourcing in Europe. We at ProCoders know all the nearshore outsourcing advantages, and we are ready to share them with you:

Cost-Saving due to High-Quality Code

With access to the European market, businesses can benefit from a wide variety of experienced developers who are well versed in the latest technologies. ProCoders, for instance, follows a rigorous development process that prioritizes security, business responsibility, and timely delivery of solutions. We leverage our industrial experience to produce top-quality software products from Central Europe.

Easy Paperwork

Moreover, nearshore software development company in Europe helps to reduce the cost of paperwork, as well as other administrative costs associated with international collaboration. Our experienced team at ProCoders has an extensive network of contacts that help to streamline the paperwork necessary to set up a successful nearshore project. We take care of all the documentation and legal formalities so you can focus on your core business activities.

Zero Communication Loses

Central European culture emphasizes efficient business communication, using workflow transparency to minimize the impact of time differences and ensuring continuous online availability of code versions. Additionally, Central European developers possess strong English language skills and have achieved success in global project collaborations.

Flexible and Fast Scalability

Nearshore development in Europe allows businesses to easily adjust the scope and size of the project depending on their needs. Companies can scale up or down quickly in response to changing market conditions and customer demands. At ProCoders, we understand the importance of agility and are ready to provide a flexible solution that allows businesses to quickly adjust their development processes.

Reasonable Costs Per Hour and High-Performance

Several companies seek outsourcing opportunities to benefit from lower costs and faster delivery. Albania, Estonia, Romania and Croatia are considered among the most cost-effective countries for outsourcing software development projects, offering a beneficial balance of rates and quality solutions.

Risks of Nearshore Software Development in Europe

Nearshore software development outsourcing in Europe comes with certain risks that need to be taken into account. We at ProCoders used to hear some of them from our European clients, so here is our top 4 nearshoring software development in Europe risk:

Cultural Differences

Nearshore software programming in Europe involves working with teams located in nearby countries, but cultural differences can still exist, and it’s essential to recognize and manage them. These differences can include communication and project management styles, work ethics, hierarchy, and decision-making processes, to name a few. 

In order to overcome these differences at ProCoders we foster cross-cultural understanding through effective communication, respect for cultural norms, and building strong relationships between all team members. 

Language Barriers

Language barriers can be a significant concern when dealing with European nearshore software developers. In Europe there are many different languages spoken, and it’s not uncommon for businesses to outsource work to countries where the primary language is not the same as their own. As such, communication can become a challenge, and misunderstandings can occur, leading to delays and inefficiencies. 

At ProCoders, we use hiring developers with proficiency in English as an international communication tool is the best solution to this challenge.

Quality Control

The development team in nearshore software development is external to the company. This can cause quality control issues if the team is not vigilant or there is a misalignment of priorities. 

At ProCoders, we ensure stringent measures in the development process. We establish clear software development specifications, monitor the project’s progress through close communication, and conduct comprehensive testing to check for bugs and errors. 

Data Security Concerns

Data security is crucial due to the challenges of protecting data when the development team is located in another country. A non-compliant nearshore development team can result in expensive fines, legal problems, and damage to reputation. 

ProCoders ensures data protection through measures such as data encryption, secure storage, regular backups, and clear access policies. We also have legal contracts detailing data handling and commit to regular audits for compliance.

Top Destinations for Nearshore Software Development in Europe

Selecting the optimal location to outsource app development can pose challenges. A significant number of software firms in Central Europe offer cutting-edge solutions at reasonable rates. However, specific countries in the region have emerged as the preferred nearshore IT development in Europe options, given the varying needs of each project.

Albania

Albania is emerging as a dynamic player in the European IT outsourcing market, attracting companies with its competitive cost structures and growing pool of IT professionals. The country’s government is actively promoting technology and innovation, enhancing infrastructure and creating favorable conditions for foreign IT investments. 

Albania’s young, tech-savvy workforce is increasingly fluent in English and proficient in cutting-edge technologies, making it an attractive nearshore option for businesses looking to optimize their development costs while maintaining high quality.

Estonia

It has become a popular destination for companies seeking to benefit from the European IT outsourcing market. The country was among the first in Europe to introduce e-Residency, which permits non-Estonians to establish a business there. The entire procedure can be conducted online with the use of a digital ID.

The program has benefitted many startups and Estonia is an appealing outsourcing location due to its strong educational system in software development and technology. Despite its small size, the government’s efforts toward innovation are evident.

Poland

Poland has a significant number of IT specialists who work for numerous IT companies that specialize in nearshore software development. The country’s primary advantages consist of proficient English skills and technical expertise.

Bulgaria

Bulgaria is one of the largest IT nearshore Europe emerging markets for tech products. Companies there have access to top talent coming from local universities with specializations in computer science or information technology.

Slovakia

When considering outsourcing software development, Slovakia is a viable option due to its cultural diversity and stability, which are attractive to investors. The country has established strength in this field, despite being an emerging market.

Hungary

Hungary has a history of being a pioneer in Central European outsourcing, with some IT companies operating there since the 1990s. Budapest is considered a prime location for outsourcing software development projects due to its large developer pool.

Romania

Romania is a good choice for nearshore software development options. It has skilled tech specialists and reasonable rates. The Romanian government offers incentives to foreign investors, making it attractive for outsourcing. Romania is known for its strong research and development capabilities, especially in cloud computing, big data, and artificial intelligence. 

Portugal

Nearshore software development is becoming popular in Portugal due to its skilled workforce and cost savings. Portugal is ideal for doing business with its low corporate tax rate and friendly business environment. Companies can also benefit from the government’s innovation initiatives supporting the vibrant startup culture.

Rates for Nearshore Software Development Services in Central Europe

Nearshore software development services are a great way to start a business in Central Europe. Costs are relatively low compared to Western European countries. Also, you can easily find highly skilled programmer. This section provides information on rates for web development services in Central Europe. The following rates, annual developers’ salaries, are culled from Glassdoor.

Country	Junior	Mid-level	Senior
Albania	$13,140	$18,800	$28,704
Estonia	$38,616	$51,492	$64,368
Bulgaria	$26,280	$32,856	$45,996
Slovakia	$25,750	$38,624	$51,500
Hungary	$26,268	$30,900	$32,840
Romania	$20,695	$33,630	$38,805
Portugal	$25,749	$46,134	$51,500

IT Nearshoring in Europe for Different Business Stages

Before you hire remote engineers via nearshoring, consider how it can help at different business scales:

Startup MVP

The main objectives of an MVP is to collect feedback from users and analyze it to make product changes, if necessary. The MVP should be released quickly and efficiently — this is where nearshore team can help. By outsourcing some or all of the work, you can significantly reduce your time-to-market and save money on hiring staff.

Startups at Pre-seed and Seed Rounds

If you’ve already tested your MVP and looking to raise money for further development, you should seek a software development company to scale your idea. Software development nearshoring to Europe helps you find developers for startup, giving you immediate access to a massive talent pool with low employee costs. This enables flexibility in technology — opt for product fit instead of settling for what’s available locally.

Small and Medium-Scale Businesses

Some SMBs may struggle with various challenges because they don’t want to have additional staff costs, while others might lack knowledge about dealing with these challenges effectively. Nearshoring companies can help you to develop software while maintaining high quality standards and using the latest technologies best suited for your needs.

Large Enterprises

Large companies with a global presence who want software development done faster and more efficiently don’t often like to use outsourcing because they consider it not secure enough for their process. However, they can tap into outsourcing through an offshore research and development team as well as when they need a very narrow expertise for a one-time task.

Aspects that Influence the Quality of Nearshore Outsourcing in Europe

A question keeps popping up: what will be the crucial factors that guarantee a successful project? How can we choose the proper scope and establish control measures to prevent project failure during remote collaboration?

Educational Systems

Central European countries have always been focused on developing their education systems. This spills over into a very efficient IT talent-building system. In addition, there is the part of exposure to online courses of international standard, as well as experience with worldwide corporations that makes great impact on the developers’ level and professional abilities.

Soft Skills

One essential factor that determines the quality of an offshore software development partner is its developers’ soft skills. This includes problem-solving and critical thinking, interpersonal skills, self-awareness, accountability, time management, emotional intelligence.

Experience and IT Community

Central Europe, perhaps the most globally prominent nearshore destination, with a steadily growing number of IT specialists. The area is now a hub of skilled developers who may adapt to unique requirements quickly after onboarding a new project. Central European countries have significant communities with many specialized meetups, conferences, educational courses, etc.

Legal Environment

Talking about the legal environment, we mean law regulations and business practices that directly affect the IT industry. Most Central European countries are EU members. The countries have signed many international treaties that make their business laws more transparent, predictable, and reliable for foreign investors.

Examples of Outsourced Nearshore Software: How Does It Work for You?

But how exactly does the process of nearshoring work? We at ProCoders have extensive experience in this type of outsourcing, and we are ready to share it with you along with tips on choosing the right outsourcing partner! Here’s an example of how it worked for our client, Frontegg:

1. The client identifies software development needs: Frontegg needed a high level of software engineering to get their SaaS-based company off the ground, but they faced challenges in expanding a development team in Israel.
2. Partnering with a nearshore development team: They opted to partner with ProCoders, situated in Central Europe, to construct a team of high-level, English-speaking full-stack programmers and developers.
3. Assembling Frontegg’s team: ProCoders collaborated with Frontegg to determine the exact mix of talent they needed, and in just two weeks, ProCoders was able to assemble a small team of developers to meet Frontegg’s ongoing needs.
4. Meeting milestones and promoting business goals: ProCoders employed a team of developers, supplemented by an additional team of surge workers, to help speed up the development process and meet milestones, with time to spare.
5. Ongoing support and maintenance: The nearshore development team provides ongoing support and maintenance to the client to ensure that the product continues to function as intended.

Frontegg found nearshore outsourced development methodology to be effective.  The outsourced team was able to act as if they were inside corporate personnel, reducing human resource expenses by 38% and enhancing project turnaround efficiencies by up to 30%. 

They were able to overcome the hurdles of increasing their staff in Israel and achieve their commercial goals by cooperating with ProCoders. Furthermore, the nearshore development team may provide continuous support and maintenance to guarantee that the product is up-to-date and working properly.

How Can Procoders Help You with Nearshore Software Development and Gain Costs and Time-to-Market?

Are you looking for nearshore software development services to help bring your project to life? ProCoders can be your partner! With our range of services, we can provide tailored solutions to meet your specific needs. These are the most popular solutions we offer: 

• Discovery Phase: This phase is crucial for aligning our strategy with your objectives, ensuring that we fully understand your needs and can tailor our development process to meet them effectively. By the end of the Discovery Phase, you’ll have a clear, actionable roadmap, design prootypes, and estimates that set the foundation for a successful project execution.
• Self-Managed Dedicated Team (SMDT): Our SMDT model allows you to assemble a team of flexible software engineers with skills tailored to your specific needs. The team works as a self-sufficient unit, with all operational tasks managed by your own Project Manager. This allows for better control over the process and ensures that the team is working towards your specific business goals.
• Staff Augmentation: With ProCoders’ staff augmentation model, you can quickly and efficiently fill in missing pieces in your team. Within just a few days of the interview, We can match you with an experienced and talented developer who fits your needs perfectly, saving you time and money on recruiting, training, and onboarding.

And when you work with us, you’ll get more than just a team of developers. Here are some of the benefits you can expect:

• Direct communication: We ensure maximum transparency and control by allowing you to manage your nearshore software developers directly. This approach facilitates easy and open communication, enabling you to track progress, provide feedback, and make real-time adjustments, ensuring that your project aligns perfectly with your business goals.
• Complex project support: Each project is thoroughly examined by ProCoders to determine who and what it truly requires. To assist clients in succeeding, they share their knowledge and provide technical assistance.
• Business ethics: Our software engineers have a unique experience of integrating into almost any team and bringing their expertise to the table. They hire sociable, hardworking people who can work with other employees and offer unique solutions for your projects. With our team’s combination of technical skills and ethical values, you can trust us to deliver exceptional results while staying true to your company’s values.

One of our prominent nearshore engineering projects was executed for SDCN, a company that serves as an Uber for trucks. We helped them migrate from an old PHP version to a more updated approach and built an online payment from the scratch. We provided a dedicated team from the discovery phase which worked with Angular, Laravel, MySQL, Stripe, and Flutter.

By working with ProCoders, they saved 6 months in the search for developers (compariong with in-house team hiring). We helped raise their user base by 10% through a faster, more responsive app. Also, by migrating the previously manual payment system to an online approach, we optimised the operations efficiency for the company.

Conclusion

Nearshore software development is a viable solution for startups and SMEs looking to reduce costs, access skilled talent, and accelerate time-to-market. By partnering with a great team, businesses can benefit from greater communication, cultural similarity, and cost savings compared to onshore development.

ProCoders offers a range of services, including staff augmentation and SMDT, that can be tailored to meet specific business needs. Our direct communication, complex project support, and business ethics provide an added layer of value to clients seeking to maximize their efforts.