Offshore Software Outsourcing and its Models

Today’s business world is focused on improving its core competencies, optimizing processes, and maximizing growth. The ease in escalating business needs to an expert offshore outsourcing company has been a tried and tested method for the implementation of software development services with demonstrated success rates and improved business benefits.

It is imperative for businesses to outsource their essential part of software development and engineering to other businesses. But then businesses often misunderstand that between terms like offshore outsourcing, onshore outsourcing, nearshore outsourcing and similar terms. But each of these terms has meanings based on what it is capable to offer and the geographic preferences.

To clarify more on this, Software Outsourcing is a process of delegating the access of your software development needs to experts and proficient software outsourcing companies who are capable of bringing out the best software solutions for your complex business challenges.

1. What is Offshore Software Outsourcing?

Offshore outsourcing or offshore software outsourcing is the process of hiring an experienced team of software developers for their in-house business functions or process or services from all over the industry. Offshore is a location that is a foreign country far away from the client’s company and hence it is called “Offshore”.

Offshore outsourcing is a practice when a business decides to outsource its software development needs to an expert located in offshore geography then this process is called offshore outsourcing.

On a more specific note, let us understand the type of models that a business can collaborate based on geographic location and other potential benefits it is capable of offering.

2. Types of Software Outsourcing Models

The type of outsourcing model is based on the most preferable geographic location suitable as per the client’s requirements. In software engagement terms, shore means location, and hence software outsourcing is based on three major software development outsourcing methods, namely Onshore, Offshore, and Nearshore Software Outsourcing. So now, when you know the shore, you might have got the slightest idea of what this model means, let’s discuss each one of them in detail.

1. Onshore Software Outsourcing

Combining the meaning of two words that make onshoring effective and meaningful is its utilization in the software outsourcing industry. For businesses who decide to outsource their software development needs to companies located in the same country are termed as Onshore Software Outsourcing.

When should businesses consider using the Onshore model?

  • In cases when the businesses want the talent to be restricted in easily accessible regions.
  • When your business wants the same cultural calendar to be followed to work.
  • Locations are closely aligned so there is no timezone difference.
  • Businesses face lesser risk in terms of security and low-quality services.

2. Offshore Software Outsourcing

As we discussed, Offshore software outsourcing allows businesses to hire a team of experts or take help from experienced developers who are located at a location away from the client’s location. Thus this is called offshore outsourcing. The location can be any suitable country as per the financial aspect or software development services expertise.

When should businesses consider using the Onshore model?

  • There is no limitation to resources from software developers to business analysts or Project managers.
  • Accountability of security risks are higher and to collaborate with business with fewer risks and higher business value is preferred.
  • Time Zone difference doesn’t matter and output is delivered before the country starts their day.
  • Quality of work is of utmost importance.

3. Nearshore Software Outsourcing

Nearshore Outsourcing means the nearest location to Outsource, This goes right with an example when you wish to buy a bicycle which is available online as well as in your nearest store. So, what would you choose? Why would you go online when you have the same product or service in the nearby location? So, nearshore outsourcing is the same which offers software business needs the ability to choose the nearest software development company. 

When should businesses consider using the Onshore model?

  • They need quick and accessible teams.
  • Work meetings are frequent.
  • Transparency is a key parameter of deliveries and services offered.

3. Pros and Cons of Offshore Outsourcing

The advantages and limitations of each outsourcing model are different thus to decide for any IT-related or software-related tasks, it is important to understand its pros and cons. The hiring of outsourcing software services needs a detailed inspection of the pros and cons of each model. Here, the offshore software outsourcing model is the heart of the discussion, so let’s get deeper into offshore outsourcing services.

1. Pros of Offshore Outsourcing

  • Cost-effective model
    The most vital reason for considering an Offshore outsourcing company is because it saves a higher cost for businesses. As we have seen, leading businesses offshoring their software needs to experts located in India is because of the pricing model Indian software developers offer.
  • Efficiency and Flexibility
    Access to specialists will definitely give a boost to the qualitative work and will offer flexibility in all their service offerings. Most of the time the software developers hired by the client also work according to the timezone of the client country making them flexible to communicate.
  • Access to global talent workforce
    Offshore outsourcing company offers businesses an easy and accessible mode to communicate with experts of the industry, domain as well as technology experts. Irrespective of where they are located, these experts offer a wide spectrum of services in favor of business and its profitability.
  • On-demand knowledge and expertise
    With no talent gaps, offshore outsourcing offers businesses on-scale access to business-critical needs and services utilizing the on-demand talent and expertise that boosts core business strategies and functions.
  • Top-notch Quality and turn-around time
    Enterprises are no longer limited to their in-house talents because offshoring fulfills all these demands. To stay abreast of changing businesses and market needs, offshore outsourcing offers top-notch qualitative deliveries with no compromise on delivery schedules or sprints.

2. Cons of Offshore Outsourcing

  • Restricts in transparency
    One of the main reasons why businesses are reluctant to outsource is because the offshore company is located far away from the location, they might turn to be fraudsters and take up money. Thus, it is always advisable for businesses to showcase transparency in all realms of work.
  • Impacts budget with hidden charges
    Offshore seems to be a lucrative option for business but may surprise you with some additional charges that are never thought of. The management and implementation of software development might include additional charges which if not discussed while preparing an NDA would be an extra-budgetary spent.
  • Security of Intellectual property
    The development process must have a fixed attribute in the proposition of NDA with structured intellectual property rights for businesses, what should be made public and what should not be, ownership of source code, patents, terms and conditions, and similar vital issues before completing the outsourcing process.

4. Choosing the best-fit Software Development Outsourcing Model

If you research software development companies in India, there are innumerable options available but not one size fits all, so it is important for any businesses to understand which model will fit their business needs and which will not. There are plenty of options available for businesses but firms pay special emphasis on location, insist on specific qualities or stick to price constraints. Based on that here are a few quick tips for businesses on how to choose the right partner.

If you are a small business company or an emerging start-up with progressive plans then contracting a Software development partner for you is a nimble and effective plan which needs to be propelled, hence Offshore software outsourcing to a smaller IT company will be more beneficial.

If you are a business with long term plans, faster success rates and an established place in the market, then partner with an offshore software development company with experience in catering to your business-specific needs.

For businesses with frequent meetings and immediate need of contact must consider either an onshore or near-shore model where the availability of team and software developers is at fingertips

For any business can, offshoring is excellent if the tasks are short-lived and want quick results. Depending on the needs of the business, they can decide to outsource and stick to a specific outsourcing model. Important points to take care of while offshore software outsourcing.

  • Line of business and stability
  • Timeline of outsourcing projects
  • Business culture
  • Budget and implications
  • The superiority of in-house and external talents
  • Impact on a Business foundation

5. Final Thoughts

In the entire discussion on models, it has been observed that in comparison to other outsourcing models, offshore outsourcing has shown proven results and turned out to be a fruitful factor for businesses to augment their services and offer the best to their customers. These criteria can be used to weigh the right balance between the models and if scrutinized will offer unexpected benefits.

Itesh Sharma

Itesh Sharma is core member of Sales Department at TatvaSoft. He has got more than 6 years of experience in handling the task related to Customer Management and Project Management. Apart from his profession he also has keen interest in sharing the insight on different methodologies of software development.


  • Leave a message...