Many businesses are outsourcing a handful or many of their operations these days. It’s generally viewed as a cost-effective option that allows organizations to focus on their objectives while entrusting experienced professionals with their software development and other important services.
If you’re considering software outsourcing, you probably know the benefits. Still, the terminology can sometimes be difficult to decipher. What’s offshore software development outsourcing? How does it differ from onshore and nearshore? Which is the best option for you? Keep reading to find out the differences among onshore, nearshore, and offshore software outsourcing and the advantages and drawbacks of each model.
What is onshore outsourcing?
Onshore outsourcing refers to hiring professionals within your country to complete projects and tasks for you. These teams or individuals aren’t on-site or part of your full-time staff, but they could be operating close by, even in your city or state.
Pros
• Onshore teams are generally the least risky. These teams must follow the rules and regulations of your home country because that’s where they operate, too. They are also more likely to be aware of laws regarding issues like intellectual property and can help ensure that your products meet the requirements. They will also be easier to track down should anything go awry since they’re close by.
• You won’t experience any cultural, geographical, or language obstacles with an onshore team, as can sometimes be the case with offshore software outsourcing services. Moreover, given the close geographic proximity, you may be able to forge longer-term relationships — for one, you’ll be able to visit and see their operations firsthand, which may make you more comfortable working with the team.
Cons
• Onshore companies tend to be the most expensive options among the three. If you’re based in the United States, hourly rates for software developers are particularly high. So, if you’re looking to save money by outsourcing, an onshore development company is unlikely to be your best bet.
• It sometimes difficult to find the talent you need close by. One of the main reasons why companies outsource software development in the first place is because they’re having trouble finding local talent for their projects. When you use nearshore or offshore software developers, you’re able to access an entire world of talent that you may not be able to find in your home country.
What is nearshore outsourcing?
Nearshore outsourcing means you’re working with developers in nearby countries or in similar timezones. If you’re in the U.S., this means Canada or Latin America. Countries like Mexico, Argentina, Brazil, and Peru are known as top nearshore outsourcing destinations for US-based companies.
Pros
• Nearshore developers are in close geographic proximity and share the same or similar timezones with you. That means you’ll share working hours, which is helpful for communicating about projects. You’ll also be able to make visits if need be, which can sometimes prove difficult when you’re working with offshore development services across the world.
• You’ll be working with teams with similar cultures to yours. The close physical proximity also means you’re often dealing with people who speak English fluently and have work styles like your own, something that can be an obstacle in the case of offshore software development outsourcing.
Cons
• The price tag is often higher than it is for offshore software outsourcing companies. Given that the economies of countries in the Americas are stronger than those in many offshore sites, you’ll likely be paying more to work with these teams. However, reputable companies make up for this by providing superior quality services.
• It can be a riskier investment than using onshore services. While these services are close by, they’re not in the same country as you, meaning they don’t have the same laws and may not understand yours as well as onshore developers might.
What is offshore outsourcing?
Offshore software development outsourcing is using the services of developers in another part of the world. For U.S.-based companies, that usually means countries like India, the Philippines, China, Ukraine, Poland, or other countries in Asia or Eastern Europe.
If you’re considering software outsourcing, you probably know the benefits. Still, the terminology can sometimes be difficult to decipher.
Pros
• Offshore development services will almost always be your cheapest option. So, if keeping costs low is important to you, this may be the best route for you. An important consideration to keep in mind is how you will be sending money to countries like the Philippines, India, etc.
• Offshore destinations are typically considered hubs for the most talent in terms of STEM graduates. For example, codeinwp.com ranks India, Ukraine, China, and Poland as the best countries for outsourcing software development, based on their data.
Cons
• Geographic differences can sometimes present obstacles. For starters, you’ll be in vastly different timezones, so real-time communication will be difficult. This is especially an issue when emergencies occur. Visits will also be more expensive and time-consuming, so you may not even be able to meet your offshore software developers face to face.
• Offshore software development outsourcing presents language and cultural barriers. These issues, which don’t exist for onshore developers and are less common among nearshore teams, can lead to miscommunication and may even result in delays or slower turnaround times.
Which model is right for your business? Each has its benefits as well as some downsides. To make your decision, consider your objectives and what qualities you want most in a development team.
If you’re looking for the cheapest option, for instance, offshore software outsourcing services are the way to go. But if frequent, real-time communication is a necessity, an onshore or nearshore team is a better bet. In any case, make sure you carefully vet any prospective partner — this could be the start of a long-term, successful working relationship.
