Tiếng Việt
When it comes to software outsourcing, many companies tend to choose Offshore for lower costs or Onshore for easier management. In practice, however, the Nearshore model is increasingly becoming a smart choice for many Vietnamese enterprises that want to improve productivity while still controlling the risks associated with working with partners located too far away geographically.
What is the Nearshore model?
Nearshore software outsourcing refers to a model in which a business hires a software development vendor in a nearby country in terms of geography and time zone, usually within the same region or economic cooperation bloc.
Unlike Offshore models which involve long distances or significant time zone differences, or Onshore models which are limited to the same country, Nearshore helps reduce communication barriers, improve collaboration efficiency, and still achieve meaningful cost optimization.
Advantages of Nearshore software outsourcing: the advantage lies in “proximity”
Geographically close, same or minimal time zone difference
- When working in an almost real-time setup, businesses receive faster responses from Nearshore partners.
- Companies can also easily organize online meetings, training sessions, or coordinate QA and UAT activities.
- The Nearshore model helps reduce delays in business discussions and enables timely updates when changes occur.
More similar working culture compared to Offshore
- Countries in Southeast Asia tend to have fairly similar corporate structures, which makes collaboration smoother.
- Thanks to cultural similarities, most Nearshore software development teams are flexible in mindset and willing to adapt to the working style of the client country.
- Communication within the same economic cooperation bloc is generally easier compared to working with India, Bangladesh, or African countries.
Costs remain significantly lower than Onshore
- Nearshore labor costs in the ASEAN region are typically 15%–30% lower than in Vietnam, for example in Cambodia and Laos.
- Some countries such as Malaysia or the Philippines have strong capabilities in English communication, QA, and BPO, offering competitive pricing compared to Offshore options.
Flexibility in hybrid deployment
- Businesses can use Nearshore as an intermediate hub when organizing hybrid project delivery models, such as a Vietnam-based team managing the project, a Malaysia-based team handling core development, and a support team located in the Philippines. This approach helps accelerate product delivery without expanding domestic headcount.
Barriers and mandatory considerations
Legal differences, even if “close” does not mean “the same”
- Intellectual property laws, source code transfer regulations, or corporate income tax rules may differ.
- Some countries in the region do not yet have strict data protection frameworks, so Vietnamese businesses need to prepare robust NDAs and closely monitor compliance.
Not every country in the region is ready
- Cambodia, Laos, and Myanmar offer low-cost outsourced software development resources, but often lack deep technical expertise and familiarity with modern frameworks.
- Singapore is very strong in processes and security, but its costs are close to or even higher than Onshore development in Vietnam.
- Malaysia and the Philippines are popular for BPO, QA, and mobile development, but backend development capabilities should be carefully assessed.
English communication is still required
- Most Nearshore teams in countries close to Vietnam do not use Vietnamese. Vietnamese enterprises need at least one PM or BA who can communicate in English with the Nearshore technical team.
When should you choose the Nearshore model?
- Businesses need to expand their engineering or QA teams while reducing pressure on internal staff.
- Projects require fast response times and cannot afford 12-hour delays caused by Offshore time zone differences.
- Products are targeted at the Southeast Asian market and require an understanding of regional user culture.
- Businesses already have quality control in place and need additional execution capacity.
Quick comparison: Offshore – Nearshore – Onshore in Vietnam
| Criteria | Offshore | Nearshore | Onshore (domestic) |
| Geographic location | Far, different regions | Near, within ASEAN | Within Vietnam |
| Time zone | Large difference (5–12 hours) | Small difference (0–1 hour) | Fully aligned |
| Communication | Difficult to control | Relatively easy | Very convenient |
| Cost | Lowest | Medium to low | Medium to high |
| Legal risk | High (cross-border) | Medium (regional FTAs) | Low, governed by Vietnamese law |
| Suitable for | Global products, MVPs | Regional projects, hybrid teams | Domestic products |
Potential Nearshore software outsourcing countries for Vietnamese businesses
| Country | Key strengths | Risks to consider |
| Philippines | Strong English communication, strong in QA and BPO | Development quality needs careful evaluation |
| Malaysia | Standardized IT processes, diverse full-stack teams | Higher cost than regional average |
| Cambodia | Low cost, easy connectivity from Vietnam | Lack of deep technical expertise |
| Laos | Can support BPO, simplify certain tasks | Limited capability for complex systems |
| Singapore | High security and standards | Costs close to or higher than Vietnam |
Nearshore software development process and the 6 steps Vietnamese businesses must understand
Nearshore software outsourcing offers advantages in terms of geographic proximity and time zone alignment. However, without a clear process, these advantages can be completely neutralized by coordination ambiguity. Below are six standardized steps to help Vietnamese businesses effectively implement projects with Nearshore partners in ASEAN:
Step 1: Define project objectives and scope (Project Scoping)
Businesses need to clearly determine:
- Is the project an MVP or a full product?
- Who is the target customer?
- Which features are mandatory and which can be deferred?
Then convert this into a Business Requirement Document or a detailed functional and system process description file (which may be combined with wireframes) for the Nearshore software outsourcing partner to implement.
Step 2: Find and evaluate suitable Nearshore partners
Businesses should prioritize companies that have:
- Experience working with Vietnamese clients or within the ASEAN region.
- Team members who can communicate in English.
- Previously delivered similar projects.
Select 2 to 3 strong candidates for interviews, capability assessment, and detailed pricing proposals.
Step 3: Negotiate, sign contracts, and NDA
Businesses must agree on:
- Scope of work
- Timeline and payment milestones
- Confidentiality commitments (NDA)
- Source code ownership (IP Ownership)
Note that contracts should be written in English or bilingual if necessary.
Step 4: UI design and technical architecture
- Both parties agree on UI and UX designs (via Figma, Adobe XD, etc.).
- The Nearshore partner proposes system architecture, technologies, and deployment environments.
- If there is third-party integration such as banking APIs or e-invoicing systems, this must be clarified at this stage.
Step 5: Development, testing, and continuous updates
- The project is divided into sprints (Agile) or phases (Waterfall, depending on agreement).
- Work management tools should be used such as Jira, Trello, or Notion.
- The Nearshore team is required to provide regular reports: daily or weekly reports and sprint reviews.
Businesses should request demos at the start of each sprint to control quality early.
Step 6: Acceptance, handover, and maintenance
- UAT (User Acceptance Test) must be conducted in Vietnam.
- After acceptance, all source code, cloud or server accounts, and technical documentation must be fully handed over.
- Businesses should agree on a maintenance period (1 to 3 months free, then paid if continued).
Conclusion
Nearshore is not a “lighter” version of Offshore. It is a software outsourcing model designed to optimize speed, reduce risk, and maintain cost flexibility for businesses.
For Vietnamese enterprises, if you are tired of endless Offshore projects or want to save costs while maintaining smooth collaboration, Nearshore is a worthwhile option, provided that you have a structured implementation plan and strong control mechanisms.
Frequently asked questions (FAQ)
How is the Nearshore model different from the Offshore model?
Nearshore involves outsourcing to a geographically close country with a similar time zone, enabling near real-time collaboration and easier communication. Offshore involves outsourcing to distant countries such as India or African nations, which may be cheaper but come with greater communication barriers.
Should Vietnamese be used when working with Nearshore outsourcing partners?
No. Almost all Nearshore teams in the region such as the Philippines, Thailand, and Malaysia do not use Vietnamese. Vietnamese businesses should have someone responsible for English communication to ensure effective collaboration.
Is hiring a Nearshore partner always cheaper than hiring in Vietnam?
Not necessarily. Some countries such as Singapore and Malaysia have costs equal to or higher than Vietnam, but they offer advantages in process maturity and security. Markets such as the Philippines, Cambodia, and Laos can be more cost-effective.
If a contract dispute occurs, can Vietnamese businesses take legal action?
Yes, but it is difficult due to differences in legal systems. The best approach is:
1. Sign a clear international contract.
2. Include arbitration clauses.
3. Split payments by milestones to limit risk.
Can businesses outsource only part of the work to Nearshore, for example QA or frontend only?
Absolutely. The Nearshore model is very flexible. Many Vietnamese businesses keep project management and backend development in-house while outsourcing frontend, QA, or mobile app development to Nearshore teams.
How can a business verify whether a Nearshore partner is capable?
Check the following:
1. Real product portfolios.
2. Feedback from previous clients, which you can request direct contact for.
3. Run a small pilot sprint or request a prototype before signing the main project.
