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Nearshore vs. Offshore vs. Onshore

Nearshoring, offshoring, and onshoring are three types of outsourcing. Businesses need to select the right option to be able to fully maximize the benefits of outsourcing their business processes.

As previously stated, nearshoring is a form of outsourcing in which business functions or processes are relocated to countries that are more cost effective yet geographically close to the parent company's location. For example, when a US-based company partners with a software development company in Costa Rica this is considered nearshoring. Costa Rica is only one hour ahead of Silicon Valley and the shortest distance between Costa Rica and the United States is 3,259 km or 2,025 miles.

Offshoring is a form of outsourcing when a company moves business processes or services to companies located overseas. When a US-based company hires a software development company in the Philippines, that would be offshore outsourcing. And while offshoring can be a great way for companies to save money, it can also be challenging due to time zone differences and language barriers.

Onshoring is a form of outsourcing where business processes are outsourced to a company located in the same country but in a different city, region, or state. An example would be outsourcing development from your office in New York City to, say, Texas.

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OnshoreNearshoreOffshore
LocationYour business and your development partner are located in the same country but in different cities, regions, or states.Your business and development partner are located in different countries but in the same or similar time zones.Your business and your development partner are located in different countries, and in different time zones.
Time zone differenceSame or lowSame or lowHigh
Cultural alignmentHighMedium-HighLow
English communicationHighMedium-HighLow
CostsHighMediumMedium
ExampleA company based in New York City outsources business processes to a company in Dallas, TexasA company based in New York City outsources business processes to a company in San José, Costa RicaA company based in New York City outsources business processes to a company in Dallas, Texas

01

Work-from-home forces companies to consider nearshore:

Work-from-home forces companies to consider nearshore: Since the pandemic forced people to work from home, many companies have experienced firsthand that it is possible to develop trusting relationships in the workplace without physically being together. Today it is widely accepted that the people on our team, as well as the external teams that we work with, are based in a different country. The increase in home-working could also lead to an increase in nearshoring.

02

Agility Methodology will continue to increase in popularity:

With customer demands changing at a rapid pace, companies need to be able to move quickly and easily. Nearshore software outsourcing firms are among the top users of the Agile methodology, which focuses on creating customer satisfaction through non-stop end-user input during the complete software development life cycle. We believe that this methodology will continue to increase in popularity in the sector.

03

Similar time zones:

Being in the same or similar time zone as your external team makes working together more efficient. It decreases the need for late-night and early-morning calls and you won’t have to wait until the workday starts in another location around the world to receive a response to your email.

04

Security solutions are becoming increasingly important:

The security of intellectual property and data protection is a key concern for most companies, even more so when working with external teams. This concern has become more pertinent following the widespread move to remote work as employees use their home Wi-Fi networks and personal devices for business purposes. More than ever, companies must prove that they can protect themselves against all levels of security threats, and safeguard their client’s data against thieves and hackers.

05

Reduces digital disruption:

Customer demands and entire industries are changing at a fast pace. Digital transformation is no longer a competitive edge, it's critical to the survival of most businesses. Instead of waiting for a digital disruption to upset their existing business models, traditional businesses have started to embrace digital transformation. Nearshoring plays a crucial role in this process because it’s easier to enable digital transformation when working with experienced professionals who have the resources and capabilities to help you succeed.

6 Benefits of Nearshoring in Costa Rica

01

Is Pixel506 an Agile company?

Yes, Pixel506 provides full-service project management including Agile Methodologies, Scrum, DevOps, and more. We ensure outstanding communication and management with client results that come quickly, regularly, and reliably through our methodologies.

02

What (communication) tools does Pixel506 use?

We have a vast array of communication tools to keep your projects running smoothly. We can integrate the tools that your business is already using or introduce you to some of the tools available to us. Some of our preferred communication tools include Slack, Zoom, Figma.

03

How does Pixel506 recruit and maintain talent?

Our team is composed of talented, innovative, and responsible professionals. We are committed to finding the right candidates for our clients; we screen resumes, conduct video interviews, and execute reference checks. But we don’t focus solely on technical skills—we are firm believers that finding the right cultural fit between your in-house team and your external team is just as important as technical skills.

04

What is the team size and roles?

Depending on your business’ needs and requirements, you can hire an individual, a delivery team, or even a dedicated team. Whenever you feel the need to reduce or expand your team, you have the flexibility to do so.

05

What are Pixel506’s policies regarding intellectual property and confidential information?

We take your confidential information and data protection seriously. We have a very clear licensing agreement that explains that all intellectual property is yours to keep. Our clients own all accounts, assets, and performance data of campaigns and projects that we have developed and executed for them. If you decide to cancel your contract with us, we will hand over all the completed work. Fortunately, pretty much all companies that give us a chance stay with us.

06

Who will be my main point of contact?

We will assign a main point of contact to form a long-term relationship with and who will ensure smooth communication between your in-house team and your remote team.

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5 Tips For Picking a Nearshore Partner

    When you have decided to outsource some of your business functions to Costa Rica, you will need to find a partner that can deliver. There is no harm in shopping around and evaluating different agencies before hiring one. There are several key factors that you should consider.

1- Security
You always want to make sure that your intellectual property is protected and that your rights to it are secured. Ask potential partners about their security procedures, Master Service Agreements (MSA), and Non-Disclosure Agreements (NDA).

2- Communication
As they say, communication is key. When working with external teams, you should be able to communicate in a clear, goal-oriented way that leaves no room for interpretation. Ask potential partners about their communication styles, what communication tools they use, and how fast they are in providing answers and solutions. Don’t forget to inquire about the level of English of their staff.

3- Quality
A company that can show you a strong track record of software development projects and positive client testimonials will assure you that you are dealing with a professional agency that you can trust.

4- Turnover
When interviewing a potential nearshore company, make sure to ask them about their turnover rates and what processes they have in place to ensure new staff is well-trained before they are being assigned to your company and your projects.

5- Talent
Naturally, you want to make sure that you are working with talented, creative, and engaged professionals. Ask potential partners about their team's experience and education to better understand what to expect. You can also inquire about their hiring process and to what extent they involve clients.

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7 FAQs about Our Nearshore Software Development Services

01

Is Pixel506 an Agile company?

Yes, Pixel506 provides full-service project management including Agile Methodologies, Scrum, DevOps, and more. We ensure outstanding communication and management with client results that come quickly, regularly, and reliably through our methodologies.

02

What (communication) tools does Pixel506 use?

We have a vast array of communication tools to keep your projects running smoothly. We can integrate the tools that your business is already using or introduce you to some of the tools available to us. Some of our preferred communication tools include Slack, Zoom, Figma.

03

How does Pixel506 recruit and maintain talent?

Our team is composed of talented, innovative, and responsible professionals. We are committed to finding the right candidates for our clients; we screen resumes, conduct video interviews, and execute reference checks. But we don’t focus solely on technical skills—we are firm believers that finding the right cultural fit between your in-house team and your external team is just as important as technical skills.

04

What is the team size and roles?

Depending on your business’ needs and requirements, you can hire an individual, a delivery team, or even a dedicated team. Whenever you feel the need to reduce or expand your team, you have the flexibility to do so.

05

What are Pixel506’s policies regarding intellectual property and confidential information?

We take your confidential information and data protection seriously. We have a very clear licensing agreement that explains that all intellectual property is yours to keep. Our clients own all accounts, assets, and performance data of campaigns and projects that we have developed and executed for them. If you decide to cancel your contract with us, we will hand over all the completed work. Fortunately, pretty much all companies that give us a chance stay with us.

06

Who will be my main point of contact?

We will assign a main point of contact to form a long-term relationship with and who will ensure smooth communication between your in-house team and your remote team.

07

Do I pay in US dollars or Costa Rican colones?

You will receive a monthly invoice from us with a breakdown of the services you consumed. For your convenience, all invoices can be paid in US dollars.

Contact Us

01

Work-from-home forces companies to consider nearshore:

Work-from-home forces companies to consider nearshore: Since the pandemic forced people to work from home, many companies have experienced firsthand that it is possible to develop trusting relationships in the workplace without physically being together. Today it is widely accepted that the people on our team, as well as the external teams that we work with, are based in a different country. The increase in home-working could also lead to an increase in nearshoring.

02

Agility Methodology will continue to increase in popularity:

With customer demands changing at a rapid pace, companies need to be able to move quickly and easily. Nearshore software outsourcing firms are among the top users of the Agile methodology, which focuses on creating customer satisfaction through non-stop end-user input during the complete software development life cycle. We believe that this methodology will continue to increase in popularity in the sector.

03

Security solutions are becoming increasingly important:

The security of intellectual property and data protection is a key concern for most companies, even more so when working with external teams. This concern has become more pertinent following the widespread move to remote work as employees use their home Wi-Fi networks and personal devices for business purposes. More than ever, companies must prove that they can protect themselves against all levels of security threats, and safeguard their client’s data against thieves and hackers.

Nearshore Is about Finding the Right Cultural Fit

Co-founder and Business Developer at Pixel506, Antonio Ramirez, sat down for an interview about nearshoring trends. Specifically, Antonio was asked why North American companies should prioritize nearshore for development outsourcing, why Costa Rica is the perfect location for your remote teams, and what businesses should consider before partnering up: “I’m a firm believer that finding the right cultural fit between your in-house team and the external team is just as important as technical skills. As long as you work with people who communicate well and who cherish similar values, it doesn’t matter if they are based in different countries.”

READ THE FULL INTERVIEW

About Pixel506

If you're looking for a nearshore software development service or a technical staff augmentation service, Pixel506 can help. We are located in Costa Rica but also have Pixelians (team members) based in Peru, Nicaragua, and Colombia. We help businesses gain a competitive advantage and exceed business goals through user experience strategies, data, and innovative solutions. Founded in 2009, we have over a decade of experience helping big, medium, and small companies succeed in the digital world. Contact us today to see how we can help―we look forward to getting to know you and your business over a digital cup of coffee.

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