Stakeholder management is essential for successful nearshoring

In the current competitive IT market, finding and retaining talented software developers is a major challenge. As a result, many companies turn to nearshore outsourcing, where part of the software development process is outsourced to nearby countries. This is a highly lucrative way of software development due to access to a large pool of specialized knowledge and experience at relatively low costs. While nearshoring is an attractive option, it also comes with challenges, particularly in the area of stakeholder management. In this article, we will discuss the key aspects of stakeholder management in nearshoring and how to handle them.

Nearshoring versus offshoring

Nearshoring, where work is outsourced to partners in nearby countries, is gaining popularity because companies can access a larger talent pool at significantly lower costs than what is available on the local market. At the same time, time and cultural differences remain limited, making communication and collaboration easier. Companies in Western Europe often choose Eastern European countries, but Spain and Portugal are also popular nearshore destinations. In contrast, with offshoring, people and teams work together in different time zones, with significant cultural differences. This can present major challenges for daily communication, efficient collaboration, and quality outcomes.

Insights into stakeholder management in nearshoring

Although limited, there are still differences in time, distance, and culture in nearshore software development. This does not have to be a problem and can even provide advantages, but it must be addressed.

• Cultural differences: Are the differences between the Netherlands and Eastern European countries smaller than, for example, between the Netherlands and India? Opinions on this differ. Those who regularly do business with Germany or France know that cultural differences always exist. For instance, the Dutch are known for their directness and may find that Eastern European colleagues do not ask many questions or do not express their opinions quickly. Additionally, some cultures are more reserved in sharing ideas or expressing opinions that differ from their superiors’. Iris Bloem: “Your team of developers has to make various decisions daily. You want the team to have the right information to make the right choices. It must always be clear to them why a particular component is important and how it contributes to the product vision.”

• Language: When working with offshore teams, English is almost always the working language. Nearshoring generally does not have an advantage over offshoring here. Written English proficiency is often better than spoken English. However, language can cause misunderstandings, especially with long emails or other written communication that can be interpreted in multiple ways. Language barriers can also be a challenge when testing (Dutch-language) software.

• Planning and communication: Time pressure, language differences, cultural differences… Many factors can cause communication to not go smoothly. Communication and expectation management are necessary to address your stakeholders’ concerns at any point in the process. Iris Bloem: “You need to respond in a timely manner and realize that you can never do it perfectly for everyone. It’s better to be clear upfront and exceed expectations at the end than to promise too much and fail to deliver.” In a nearshore situation, it is also important to truly immerse yourself in the culture and communication style of the remote location. “I would always make sure to meet the people at the location, preferably in a relaxed setting.”

• Motivation and team spirit: No matter how structured the planning and collaboration are, remote colleagues often feel less involved. Cultural differences can play a role here. For example, in Eastern European countries, the workplace culture is often more hierarchical than in the Netherlands. When the motivation and engagement of the remote team decrease, it always affects the quality.

Crucial role of the product owner

The product owner serves as the central point of contact and is responsible for aligning expectations between internal teams and the nearshore development team. They must foster effective communication, create clarity around project goals, and manage the inevitable cultural differences. This includes building a shared understanding of processes, objectives, and expectations. The product owner possesses strong stakeholder management skills and keeps all parties informed throughout the entire product lifecycle, ensuring everyone remains engaged.

Turn insights into action for successful nearshore projects

Nearshore software development offers great opportunities, but success requires effective stakeholder management. Download the 7 Tips for Successful Stakeholder Management in a Nearshore Setting now!

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