I’m based in London, UK, but I’ve had teams in South America, USA, Eastern Europe, the Middle East, South Africa, and India. Some of those locations worked for me and some didn’t.
In 2017 I opened a software development operation in Sofia (Bulgaria) for one of the world’s leading news organisations, headquartered in London (UK). Sofia met our criteria for selecting a nearshore location (and still does). I thought others might be interested in the nine criteria we used to select a nearshoring location. Particularly since I’ve inherited teams in other locations that did not meet these criteria.
1. Cost Efficiency – The Numbers Have to Add Up
Reducing costs is nearly always the primary driver behind nearshoring. But don’t just focus on salaries; a proper cost analysis should include:
- Labour Costs: Aim for 30-50% savings compared to your home country.
- Real Estate & Operational Costs: Office space, utilities, and local expenses should be significantly lower than in Western Europe or North America.
- Tax Incentives & Subsidies: Some governments offer tax breaks, grants, or incentives to attract foreign companies. If you’re not factoring in tax benefits, you’re leaving money on the table.
Business cases usually have to span 3 or 5 years, so factor in any inflationary increases you expect. In our case was added 8% year on year increases to the Sofia salaries … and it was still economic to move.
2. Timezone – Do you have enough overlap with HQ?
You’ve chosen nearshoring over farshoring for a reason, and I’m guessing time zone is it. Timezone misalignment can kill productivity so the best nearshoring locations offer enough working-hour overlap to enable real-time collaboration, faster decision-making, and smoother handovers.
Here’s what to consider:
- Core Working Hour Overlap: Aim for at least 4 hours of overlap with your HQ team. This ensures meetings, code reviews, and problem-solving happen in real-time rather than through sluggish asynchronous messaging.
- Flexibility of the Local Workforce: Some cultures are more willing to adjust work schedules for international collaboration. If overlap is limited, make sure employees are open to shifting hours to align with HQ.
- Impact on Productivity & Team Culture: If teams are constantly waiting 12+ hours for feedback or decisions, expect delays, frustration, and inefficiency. Time zone friction can quickly erode any cost savings.
Timezones are a killer. In one company I had teams spread across Colombia, UK and India. That was an 11 hour difference from east to west. It had huge ripple effects on communication and delivery speed. We could adjust slightly with Colombians starting early and Indians working late. But that isn’t great for work-life balance. Better to have complete teams in each location or, at worst, spread over two nearby locations. The 2 hour timezone difference between London-Sofia was good enough, although the Londoners had to get used to Bulgarians seeming to start lunch at 11 AM.
So go “near”.
3. Flight Time – Can you get there quickly?
I believe Leaders Turn Up so I expect to visit my nearshoring locations. Initially this is setup, leadership check-ins, or team-building sessions. Later it is to keep my hand on the pulse of the organisation. So, if your location is too hard to reach, those trips become expensive, exhausting, and disruptive to work-life balance.
Key factors to consider:
- Direct Flights from HQ: A destination with frequent direct flights to your home country is a game-changer. Layovers and limited flight options waste time and reduce flexibility for leadership visits. You need direct flights (2-5 hours max preferred) for key staff to visit regularly.
- Total Travel Time: Aim for a location that keeps your door-to-door travel under 5–6 hours. Anything longer turns what should be a quick business trip into a logistical headache.
- Airport Connectivity & Reliability: Some locations have cheap flights but unreliable schedules, leading to delays and unpredictability. Always check flight frequency and punctuality.
London-Berlin was a 2 hour direct flight. London-Sofia was 3 hours direct. London-Delhi was 8.5 hours direct. London-Tbilisi was 12 hours because it includes a change, even though much closer than Delhi. London-Medellin was 20 hours including a change. Hmm. I hope you can see the pattern. Shorter, direct, is good. Long is painful and unsustainable.
Flight time matters more than people think.
Rule of Thumb: If the round trip takes longer than a workday, reconsider—because at some point, you (or someone important) will have to make that trip.
4. Talent Pool & Technical Education – Can You Hire and Scale?
Obviously you have to find the right people. So your potential location must have a deep enough talent pool to support hiring, scaling, and retaining your team.
Key considerations:
- Size of the Skilled Workforce: Look for a large pool of IT, engineering, and business services talent.
- Quality of Technical Universities: A strong university pipeline ensures a steady flow of well-trained graduates.
- Language Proficiency: English (or your preferred business language) is a must. Check language skills early, or you’ll regret it later.
I’m a fan of co-locating all disciplines needed for my software teams. At least having them live in the same city so they can meet up if they need or want to. Obviously that includes engineers, but also product, delivery, QA, DevOps, UXD. All the skills you need to get the job done. So you will need to be able to find all of those skills in your potential nearshoring location. Expect push back from your colleagues in the headquarters. Everybody is precious about their discipline: “No. Sofia is no good for UXD”. “No. Product has to be near the business. And anyway, Sofia doesn’t have a good reputation for product management.” “No. Bulgarians don’t know what a ‘delivery manager’ is – the role doesn’t exist here”. it doesn’t matter what the discipline is, they will say they can only hire in the base location. It isn’t true. None of it is true. Ignore the noise and check for yourself. I’m sure you’ll find talent when you look for it. We did.
5. Business & Legal Environment – How Easy Is It to Set Up and Operate?
Setting up operations in a new country means dealing with bureaucracy. Some places make this painfully slow, while others have streamlined processes that make life easier.
Consider:
- Ease of Doing Business: How quickly can you register a company, get visas, and sign leases?
- Labour Laws & Flexibility: Are hiring and termination laws reasonable? Or will you be locked into rigid contracts?
- Data Protection & Compliance: If you’re in Europe, GDPR compliance is non-negotiable. Other regions have their own regulations—don’t overlook them.
- Access to Local Business Services – Can you easily get accounting, legal, payroll, and recruitment support? A strong ecosystem of service providers makes setting up and scaling far smoother.
Regardless of where you go, you’ll need help in dealing with unexpected legal hurdles. This is where a trusted partner can help but I’ve found I often need local legal advice as well.
6. Geopolitical & Economic Stability – Will Your Business Be Safe?
Stability matters. You don’t want to invest in a country that’s one bad election away from nationalising industries or introducing crippling business taxes. You certainly don’t want to be in a country at serious risk of war.
Key factors:
- Political Climate: A stable government ensures business continuity and protects foreign investment.
- Economic Growth: A growing economy means better infrastructure, support services, and long-term viability.
- Risk Factors: High corruption, regulatory changes, or unpredictable economic policies can make expansion risky.
Some companies ignored these warnings and paid the price. Don’t be one of them.
In the past I’ve had software teams in Russia, Belorussia and Ukraine. 2025 isn’t a great time to be in those locations.
War has an interesting spill over effect in neighbouring regions. It creates opportunity and risk. For better or worse specialist skills can suddenly become available. With the renewal of the Russo-Ukrainian War in 2022, suddenly I could hire Ukrainian engineers in Bulgaria. And in 2024 my team in Georgia were all Russians who didn’t like what was going on at home. Of course that opportunity comes with a risk; if the geo-political situation improves, and they go home, then I’ve got a resourcing problem. It is all about taking the appropriate level of risk.
7. Infrastructure & Connectivity – Can You Actually Do Business There?
Your nearshore team won’t operate in a vacuum. You need fast networks, reliable power, and a pleasant office environment.
Key things to look for:
- Tech & Internet Infrastructure: Fast, reliable broadband and cloud-ready IT infrastructure are non-negotiable. Downtime kills productivity and frustrates remote collaboration.
- Workspaces & Business Parks: Are there high-quality office spaces available, or will you be stuck in a cramped, outdated building? Look for modern co-working hubs or business parks built for tech teams.
- Energy & Utility Reliability: Frequent power cuts, unstable water supply, or poor public services can turn an otherwise promising location into a logistical nightmare. Some cities have great IT talent but third-world infrastructure—avoid them.
In Europe we can more or less take infrastructure and connectivity for granted. But that isn’t true everywhere. For example, South Africa has some very talented people, but the energy crisis makes it an unattractive location for me.
Rule of Thumb: If power outages, slow internet, or subpar office spaces will hold your team back, look elsewhere—because infrastructure issues will hit your bottom line fast.
8. Saturation Risk – Is the Talent Market Already Overcrowded?
Some locations used to be great nearshoring hubs but have become oversaturated. Too many companies fighting for the same talent means:
- Higher Salaries: If wages are rising 10%+ per year, your cost savings disappear fast.
- Longer Hiring Times & High Attrition: When talent demand outstrips supply, expect longer recruitment cycles and job-hopping staff.
- Market Maturity: Saturated hubs may have limited long-term scalability and higher office/living costs.
Saturation is real and can be extremely painful. A friend of had a big team in saturated city in Poland . At any one time a huge 40% of her team were “Vacancies” and recruitment took, on average, 18 months. That isn’t sustainable.
But saturation is not necessarily a killer. In the five years I was Managing Director for the Sofia operation, competition soared in the city. More and more internationals arrived in the city and started hiring. And this period also saw a big surge in startups. The Sofia recruitment market is now massively competitive. But, despite that, Sofia remains a smart nearshoring destination. So look at saturation but look at other factors as well.
9. Trusted Partner – Who’s Helping You Succeed?
If you are looking to expand your software team, then you’ll probably need a trusted partner. This criteria is non-negotiable if you’re setting up via Build-Operate-Transfer (BOT), outsourcing, or using a particular supplier for staff augmentation.
A trusted local partner helps with:
- Setup & Execution: The right partner ensures smooth setup, operation, and handover. Essential for a BOT.
- Scaling: A good partner makes scaling easier and less risky. This is the whole rationale behind outsourcing and staff augmentation
- Market & Cultural Insight: A strong local partner guides you through regulations, talent hiring, and cultural differences.
If you don’t have local expertise, you’re operating blind. Find someone who knows the landscape.
Final Thoughts
Nearshoring is a powerful strategy, but only if you choose the right location. The best nearshoring destinations meet all nine criteria — not just one or two.
So, before you sign the lease, hire the first engineer, or relocate your leadership team, ask yourself:
- Are the costs really competitive?
- Are the timezones close enough for effectively collaboration?
- Can you fly there, direct, in under 3 hours?
- Is there enough talent to hire and scale?
- Is the business & legal environment friendly?
- Will political/economic stability last?
- Is infrastructure strong enough for seamless work?
- Is the market too saturated already?
- Do we have a trusted partner on the ground?
If you can’t confidently answer YES to all nine, keep looking.
Photo by Austin Distel on Unsplash