The world has become a small space. Quite not literally though. But technologically. Communication has become faster and efficient. So have businesses.

onshore-vs-offshore-vs-nearshore-main

A business in North America is teaming up with talents in South Asia to deliver world-class solutions. The physical boundaries no longer are barriers to companies seeking exceptional talents for their projects at budget. And, we have the new grounds of onshore, nearshore, and offshore teams.

As per Clutch, IT services saw 37% of outsourcing in 2019 through nearshore, offshore, and onshore means. Besides this, North America & South America (42%), Europe, Middle East, and Africa (35%), and Asia and Oceania (23%) have their own outsourcing priorities, as found by KPMG from its report.

To say the least, outsourcing software development companies or trend to hire dedicated developers has caught up on the winds. As a result, companies with demands for enterprise solutions or app development are moving past their in-house resources towards outsourcing.

The trend has had many companies confused about the difference between onshore, nearshore, and offshore outsourcing. If you are someone looking to hiring an outsource team but are unsure about the onshore-offshore model, read on to clear your doubts.

What is offshore outsourcing? How to hire offshore developers?

Offshore outsourcing literally means hiring offshore developers from a country far away from your own locality. Companies often extend dedicated development teams by hiring dedicated programmers from other parts of the world to yield a successful project at a reduced cost.

When you hire offshore developers in India or similar economies, you tend to have cost benefits and benefits of expertise. Hence, it is a mutual gain for the employee and employer.

The virtual offshore development center is set at your place, from where you instruct and plan sprints for your project. The offshore development center is set up in another country, from where offshore developers operate.

If you want to hire virtual employees to upgrade your development team, you need to know the right time to hire offshore developers. For instance, you can hire an offshore development team for a startup or you can opt for software development with dedicated experts for introducing automation in your existing systems.

What are the advantages of hiring dedicated developers using an offshore model?

You can outsource dedicated software development teams to have the following benefits:

  • When you hire offshore software development teams, you can tap a pool of global talents that your place lacks.
  • In addition, if you choose to build your offshore remote developers team from second or third world countries, you can safe-pocket economic benefits.
  • A dedicated software development team can undertake your IT requisites.
  • If you are able to find the best offshore development team, you will be able to receive quality development services.

What are the disadvantages of hiring dedicated developers using an offshore model?

You can hire remote developers using an offshore model and may encounter the following shortcomings:

  • You might suffer from a significant time-zone difference at different altitudes.

    Solution: It is better to ask your software development company about their operational hours prior to hiring. Some companies like Peerbits curb the time-zone differences by prioritizing the business hours of clients.

  • You might not be able to receive transparency over the processes.

    Solution: Hire a software development team from an IT company with numerous experience years. A professional software development company operates on transparency, thereby handing over complete control to you.

  • You might face an altogether different working culture.

    Solution: Cultural differences are prevalent. However, if you hire offshore developers, who have previously worked with clients from your locality, it’d be easy for you and them to come to common grounds.

onshore-vs-offshore-vs-nearshore-cta01

What is onshore outsourcing? How to hire onshore developers?

Onshore outsourcing implies hiring an onshore development team from the same region that you dwell in. For instance, when you hire developers in your area, you opt for local outsourcing solutions or an onshore model. These developers can come to your office and work for you if they are in the same city.

However, this does not mean that you are hiring them as permanent developers. The interaction between your company and onshore software developers can be based on the project requirement.

In the onshore software development model, you get to work with remote onshore development teams located in the same country, which counters many disadvantages of the offshore model.

What are the advantages of hiring dedicated developers using an onshore model?

You can outsource dedicated software development teams using an onshore model to have the following benefits:

  • When you hire outside programmers using the onshore model, you are less prone to suffering from language or cultural differences.
  • One of the onshore outsourcing benefits is that the time zones are not too different but are closely aligned.
  • If your project requires an in-person discussion, it is easy for you or the onshore development team to travel and be present.
  • Responsiveness, control, and reliability are the true assets of the onshore outsourcing model.

What are the disadvantages of hiring dedicated developers using an onshore model?

You can outsource dedicated software development teams using an onshore model but with the following drawbacks:

  • If you want to hire an onsite software development team, the cost will be higher, primarily if you are residing in a developed country.

    Solution: The overwhelming benefits could help justify the high cost. In other cases, you can always look for offshore developers.

  • When opting to hire an onshore development team, you might not have a lot of choices. The pool of talents would be with limited or standard expertise in your area.

    Solution: You can hire the best onshore development team available and train them for the technology you wish to incorporate.

onshore-vs-offshore-vs-nearshore-cta02

What is nearshore outsourcing? How to hire nearshore developers?

When you are confused about which model you should opt for having an agile software development team, you should know about the nearshore outsourcing model. The nearshore outsourcing model lies in the intersection between the onshore and offshore outsourcing model.

Nearshore development services are offered by countries that can bridge the gap to offer onshore, offshore team management in a proper way. With onshore partners, the dedicated team of developers is located near your headquarters, making it easy for you to communicate and share your requirements.

What are the advantages of hiring dedicated developers using a nearshore model?

You can outsource dedicated software development teams using nearshore model to have the following benefits:

  • When opting for nearshore software outsourcing, you can be relieved about the significant time zone differences.
  • Another advantage to the nearshore outsourcing model is less expensive labour cost as compared to the onshore model.
  • Nearshore outsourcing makes it easier for teams to collaborate in case of in-person visits or training sessions.

What are the disadvantages of hiring dedicated developers using a nearshore model?

You can outsource dedicated software development teams using nearshore model to have the following benefits:

  • The nearshore model, in most cases, has only a little cost difference from the onshore model.

    Solution: You can opt for offshore developers with better expertise in the domain you seek.

  • You might get developers with standard expertise as that of nearshore.

    Solution: You can widen your peripheries of development to look for hiring developers from other parts of the world.

onshore-vs-offshore-vs-nearshore-cta03

What are the differences between Onshore, Offshore, and Nearshore outsourcing models?

While numerous debates are going on across the world pertaining to the onshore vs offshore team, here’s our take on the subject. We have presented a snapshot of differences, and in the section below, we have justified the verdict presented in the table:

Parameters Onshore Nearshore Offshore
Cost Savings Low Medium High
Time Savings High Medium Medium
Convenience & Collaboration High High Medium
Efficient Communication High High Medium
Impact of Time Zone Differences Low Medium Depends on Software Development Company, Business hours, Operational Hours
Impact of Cultural Affinity Low Medium Medium
Expertise Level High Medium Medium
Trustworthiness and Transparency High Medium Medium

Cost savings

Cost savings actually hinge on the idea of the project, the duration of the software development, and the hourly cost of developers. Again, the hourly cost of developers overshadows the other criteria. Hence, it is crucial to find out the per hour cost of developers when choosing a model for the project.

If you are residing in developed geographies such as North America, South America, Europe, or Australia, a nearshore or onshore outsourcing model might prove as expensive for the overall development. However, offshore hiring to countries such as the Philippines and India might help create opportunities to reduce your overhead cost.

Time savings

Companies often come up with strict development timelines as they have to respect the time to market or launch times. It is crucial to identify the smallest of factors that can cause the development duration to enlarge in such a case.

Onshore development offers better time-saving instances as compared to nearshore. In contrast, the nearshore outsourcing model offers relatively more time value than the offshore model, on the back of the low barriers to proximity.

However, it would be entirely wrong to have the upper handeliminate the offshore model here since numerous IT companies operating offshore provide maximum support even at odd hours.

Convenience and Collaboration

If there’s one aspect that the offshore outsourcing model lacks, it is the charm of in-person conferencing and training. Onshore and nearshore outsourcing models enables developers and clients to come to common grounds for discussions and training, which improves the level of collaboration and convenience.

On the contrary, when it comes to the offshore model, technology is the only resort to collaborate. These days, the availability of sophisticated project development and management tools are trying to replicate the in-person experience, which will prove as an effective way to collaborate in the near future and be a norm in the distant future.

Efficient communication

Effective communication is crucial for quality project development and deployment. Besides this, in the case of support and maintenance, a seamless channel of communication soothes the challenges and helps keep the project up and running.

During the project life cycle, there are instances of difference in opinions and change in requirements. In such cases, effective communication helps respect the timelines and get to the solution.

The onshore outsourcing model does have an upper hand over the other two models since travel is a convenient option to initiate an in-person visit. However, under the influence of pandemic, companies are relying on communication and conferencing apps to keep the project going.

Impact of time zone differences

Time zone does have an evident influence on the project. The ability or disability to handle a project often depends on communication. On the other hand, if the time difference is significant, both parties have to come to a mutual understanding for communicating the requirements and project status.

Time zone differences persist for the offshore outsourcing model more than in the nearshore and onshore model. This is because a client in Europe can be communicating with developers in India, which has a substantial time difference.

In such a case, the best option is to look for onshore developers or nearshore programmers. However, if you are seeking low prices, you can select the software development company that works in your time zone.

Impact of cultural affinity

Culture plays an important role when it comes to work ethics, communication, work culture, vacations, holidays, etc. There is a significant difference in the culture and operational ways in the east and the west. Hence, when it comes to the offshore outsourcing model or nearshore model, clients may face the impact of cultural affinity.

With onshore development partners, communication becomes easy due to similar cultures. Besides this, even communication and context is clear. Hence, it is crucial to work with either onshore companies or with nearshore and offshore companies with experience of having worked with clients from your geographies.

Expertise level

Expertise level plays a pivotal role in project handling and management. Since innovation is the key to venture on the top spot in the industry, it is important that your IT partners are well versed with the technological knowledge that your project demands.

Since you might find in-house developers and onshore developers with a common skill set, the offshore outsourcing model does enable you to explore talents with better expertise. In addition, the offshore software development company can have the required technological infrastructure that you lack.

Trustworthiness and Transparency

As per the traditional beliefs, human elements such as in-person visit and recognition often tend to inculcate transparency and trustworthiness. Besides this, trustworthiness helps in making the communication seamless and effective, thereby fostering transparency.

The onshore outsourcing model does offer benefits of trustworthiness and transparency for clients with opportunities to meet, greet, and know the development status.

However, the current and sophisticated work collaboration tools are narrowing the challenges pertaining to transparency with offshore and nearshore development models.

What are the factors to consider while choosing an outsourcing model?

As per the report published by the National Outsourcing Association, nearly 70% of companies are looking to improve their usage of outsourcing to receive the benefits of costs and expertise. However, in order to choose the right software development company, you need to evaluate certain factors:

Understand your requirement

Before getting to the ‘either or’ stage of onshore vs offshore teams, it is important for you to know the requirements for your project. Once you know the technology stack for your project, you can easily analyze your project requirement and identify the needs for hiring a dedicated development team.

Experience level of the company

Once you are clear about the requirements, you can exactly know what to seek. You can look for software development companies with the experience in the technology that your project requires.

In addition to this, software development companies with better project completion rate and numerous years in the field can do wonders for your project.

Portfolio and client testimonials

When hiring a software development company, do not only believe what the company is claiming to be. You can explore the website and look at the types of project it has completed. Case studies, portfolios, client testimonialss, etc., prove as valuable assets for scrutinizing the capabilities of a software development company.

Transparency level of the company

While opting for an offshore or nearshore outsourcing model, you need to be thorough about the transparency practices and communication channels of a company. You can ask them about the work collaboration tools they use or suggest some to have a definite flow of seamless collaboration.

Pricing

Pricing is an important determinant to hire a software development company. The offshore development teams often operate at low costs and offer high values.

However, it varies from companies to companies. In such a case, it is crucial for you to keep in mind the overall development duration, type of project, and expertise level in mind to identify the best model with cost-saving opportunities for you.

Resources and technology

When you outsource your project to a software development company, you need to know the value of resources and technological infrastructure offered. This helps save time occupied in setting up the environment and training resources.

Governance and contract laws

With changes in political seatings, the laws governing the contracts also tend to change. In such a case, you need to know the laws protecting contracts in the country and their impact on your project.

onshore-vs-offshore-vs-nearshore-cta4

Frequently Asked Questions

Each outsourcing model has its own sets of pros and cons. Hence, it wouldn’t be appropriate to claim any one model as superior. However, offshore is deemed as a cost-effective outsourcing model.

An experienced software development company offers transparency, a better time to market, and well-trained resources.

The typical cost of hiring a dedicated developer depends on experience level, exposure, operational years, position in the company, project requirements, development duration, etc. However, the per hour charges of developers range from USD 20 to USD 60-80.

The technological advent in Asia is commendable. Besides this, the population of millennial is high in geography. Their technological proclivity towards software development is increasing, which is creating a vast pool of talents. Countries such as the Philippines, India, Pakistan are emerging as offshore development hubs in Asia.