Onshore vs Offshore vs Nearshore Software Outsourcing

The advent of software outsourcing has become a go-to business strategy for businesses of all sizes and domains. Every business wants to empower themself with tech-enabled business solutions and software outsourcing seems to be an invidious option with considerable advantages. Businesses can collaborate with other businesses based on their unique business requirements and convenience. One of the vital reasons why businesses use software outsourcing is to save on hiring and training new in-house software developers, reduce operational expenses, and save time. The productivity and success of outsourcing software development depend on the business model one chooses. You can get access to software engineers and development teams with extensive experience developing software applications of international standards and quality.

Other than financial engagement models, businesses can collaborate with Software Outsourcing Companies based on geographic convenience. “Shore” is not only related to beaches and seas but in the software development industry, Shore means the Geographic location and based on that there are different types of engaging models for businesses to partner. These outsourcing models differ according to the geographical location of the client and its software development services partner. Enlisted are the three types of software outsourcing models:

  1. Offshore Software Outsourcing
  2. Nearshore Software Outsourcing
  3. Onshore Software Outsourcing 

The main difference between the three can be based on factors such as Cost Savings, Timezone and Geography, Effective communication and Collaboration and Convenience. So, without much delay let’s explore each model individually with their added benefits and limitations.

1. Offshore Software Development Outsourcing

In the custom software development outsourcing business, Offshore Outsourcing is the most popular and renowned method for businesses to partner with software outsourcing companies. “Offshore” as the name suggests it means outsourcing services to a distant location like some foreign country based on specific criteria and project goals such as talented and high-skilled professionals, cost, communication, information security policies, and many other promising factors. Offshore developers make use of best practices to keep work transparent, and communication easy.

Offshore Development Outsourcing is highly adaptive and is meant to benefit businesses at all levels of outsourcing. From hourly cost-cutting rates to high-qualitative work- it is an all-inclusive solution for businesses to aid a set of gains with offshore software outsourcing. Popular offshore countries such as India, Indonesia, China, Ukraine or other European nations, typically apply to collaborate with development teams at a distant location using technology. Among these India is considered a preferred option Let’s discuss some benefits of offshore software outsourcing

1. Benefits of Offshore Software Outsourcing

  • The first and foremost reason for considering Offshoring is that it is cost-friendly with an array of other added benefits too.
  • Technology has enabled various tools and techniques to collaborate hence coordination on regular updates is quite easy with Offshore Software Development Outsourcing.
  • Time zone is considered as a benefit as the employees of outsourced development companies work round the clock and deliver the requirements on time.
  • Easy to escalate the pain of managing larger employee size.
  • Large Flexibility in business offerings.
  • High-Quality deliveries and Faster Turnaround time to expectations.

2. Limitations of Offshore Software Outsourcing

  • Reliability is a questionable
  • Transparency and Trust issues prevail at times
  • With different region, different policies are applicable to intellectual property rights that creates roadblock some times.
  • Language, time zone differences and Culture barricade the overall Software development process.

2. Nearshore Software Outsourcing

It may be a real challenge for businesses in the Software development industry to find an exact match as per their current technology trends and outsourcing partners. The second one from the three outsourcing models is Nearshore outsourcing and it means to contract with businesses in the nearest geographic location or neighboring countries or within a proximity to the main head office. This type of company collaborates with outsourcing companies near to the same time zone and no cultural gaps.

Nearshore software development services are considered as an in-between option between the two and preferred with the convenience of traveling to the outsourced software development company. This is one of the most flexible options which provides benefits of both the types of engagement modes. Your business is outsourcing to an offshore location and with an added advantage of being nearby. Nearshore Outsourcing offers several positive and negative aspects that are discussed further.

1. Benefits of Nearshore Software Outsourcing

  • The highly skilled workforce at ease and a nearby location with an availability to travel anytime.
  • Enabling Personal meetings  with software development teams for discussion is expedient.
  • Minimal Time zone difference.
  • Extended Cultural Alignment between the Client company and outsourced Software Service provider.
  • Average hourly rates are quite affordable.

2. Limitations of Nearshore Software Outsourcing

  • Lower Labor charges which can make the quality of service questionable at times.
  • The talent is restricted to a region or country.
  • The possibility of Copyright issues or Patent Violation in bordering countries is complicated to enforce.
  • Information security Rules may vary and might cause disputes as per the rules in the client’s country or outsourced business country.

3. Onshore Software Outsourcing

In the Software development business, companies can hire software development companies providing outsourcing service providers from a specific region- i.e their own country. “Onshore” itself means on the shore, within limited proximity of the location. They know how to handle complex projects and maximize the quality of your project. This option is mostly preferred because it is closest to the client’s location and businesses can easily save on travel costs in case of any disputes or emergencies.

By collaborating with this model, businesses are connected more to local networks of the software development industry with a skilled set of resources within the city, state, or country following the same time zones. So what makes businesses get hitched with this type of Outsourcing model? So here are some of the advantages it offers:

1. Benefits of Onshore Software Outsourcing

  • Highly skilled software engineers within your vicinity i.e your own country.
  • Best Fit for Smaller software development projects with Limited budgets.
  • No Cultural Gaps or language Barriers.
  • Follow the same time zone which is beneficial when you want something urgent and you don’t have to wait for that country to open or start their day to get your work done.

2. Limitations of Onshore Software Outsourcing

  • Firstly businesses may face a common challenge of higher developer cost compared to businesses that tend offshore.
  • Lack of global access to Talented workforce.
  • The cost of Operations and software developers’ expenses are high.
  • The progress of a business is at stake and they cannot globalize.

4. Sum Up

The ultimate aim of this blog was to elucidate business on varied types of Outsourcing models and their advantages and disadvantages. Choosing one from the lot depends on the convenience and capability of the selected outsourcing software development partner. If your nearshore outsourcing provider offers the same facility as the offshore then it is obvious you will partner with the nearshore provider. However, it is always advisable to partner with an offshore company with a local office in the same country or city which enables businesses to leverage cost benefits and save on travel costs as well. A few of the leading software outsourcing companies are TCS, Infosys and Wipro. Also, the major element in outsourcing is the service provider and the results that their software development services show up. So, start exploring the possibilities with Software development outsourcing and notice the difference.

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.


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