Offshore vs Onshore Software Development

• By Victoria Puzhevich
• 25-08-2020
• Software

If you’re thinking of outsourcing software development, then you need to decide which company type you’ll opt for – onshore or offshore. Both types work great, however, much depends on your business demands and expectations. Thus if you don’t want to put your business at risk of making the wrong choice, it’s essential to examine the difference between onshore and offshore software development.

In this article, we sort out the advantages and disadvantages of each outsourcing business model and share useful tips on how to get the best of both. We hope that it’ll help you to draw to the conclusion which model will benefit your business the most.

Onshore vs Offshore Main Difference
The major difference between onshore and offshore business models is determined by the location of a software development company you’re planning to outsource to.

The onshore model represents a traditional way of work when you outsource to local companies. It means that if you have your business in the US, then the company you outsource to also resides in the US. A lot of businesses prefer this model type as it lets them have complete control over the outsourced processes.

The second type of outsourcing is offshore. It’s an unconventional way of work that has become increasingly popular due to rapid globalization and internet connection acceleration. It implies that the company you want to outsource your software development to is registered abroad, often on another continent. For example, you live in Canada but outsource your software development to an Eastern European country like Belarus.

You may ask why an outsourcing a mobile app company location is so important. It determines the rules of how your business will interact with your software development company and it also heavily influences other factors that may be important for your business growth.

Costs
Both onshore and offshore software development are cost-saving strategies in comparison to establishing an in-house IT department due to the following reasons:

● no need to buy costly software and hardware equipment;
● you don’t have to spend money on recruitment, pension contribution, bonuses, and health insurance;
● no necessity to train and upgrade the skills of your software development team.

The offshore development model is more advantageous in this regard as you can outsource to developing countries that have lower rates. For instance, outsourcing to Eastern European countries will cost you $35 per hour on average for a senior developer, while in the US the price can start from $60 per hour.

Talent Pool
When considering the diversity of specialists you can get with onshore and offshore models, offshore easily wins the competition. This has to do with the fact that an offshore development model isn’t limited by certain geographic areas. Offshoring allows you to choose from a broad range of developers from all over the world. It can be particularly important if your development project requires special skills since it increases your chances of finding unique specialists.

When choosing an offshoring company check out the rankings of software development companies on specialized platforms like Clutch. These rankings are usually based on customers’ feedback so they may be of great help when looking for a development partner.

Team Scalability
While outsourcing, you can easily scale your development team up or down. Software development can be quite tricky because you can’t know beforehand how many developers you will need. It’s much easier to add a few more developers to your onshore or offshore team than to hire new ones for your in-house one.

Moreover, you can scale up your team and add the needed specialists any time as outsourcing companies usually have employees “on the bench” that are ready to back up any software development project. This strategy works great for those companies that need employees to perform one-time tasks.

The only disadvantage of offshore outsourcing is poor communication. Time differences and language barriers may decelerate the communication with the outsourcing company. Fortunately, there are many technologies nowadays to help you streamline cmmunication, even when you have a huge time difference.

Time Zones
Onshore companies have no issues with time zones as they are located in your country. If you outsource somewhere to Hong Kong while residing in the US the time difference accounts for 12 hours. It may have a detrimental effect on the communication with your offshore developers, resulting in project delays or deterioration of the software quality.

The good news is that many outsourcing companies are ready to adapt to your time zone. For example, though the maximum time difference between the USA and Eastern Europe is 10 hours many Eastern European outsourcing companies have flexible working hours which still makes it possible to set up efficient cooperation.

Communication and Cultural Differences
When it comes to communication and cultural aspects onshore model certainly wins. That’s because you can meet your outsourcing team at any time, have a face-to-face conversation, and communicate openly without any cultural or language barriers.

If you want to outsource software development to an offshore company, then spend a bit more time to learn about the culture of the region you’re planning to outsource to. If you live in the US or Europe then outsourcing to Eastern European countries is a great decision as they have little difference from European or American culture and often have a high degree of English proficiency.

Product Quality
Product quality is one of the major factors to consider when choosing between onshore and offshore companies. Unfortunately, none of the models can guarantee you high-quality standards as in most cases it depends on the company you hire. The good news is that in case you run into a low-quality service, you can quickly terminate the contract with the outsourcing company and find a new one.

Conclusion
Offshore and onshore outsourcing are great options for companies that don’t have the right talent available right away or want to delegate their non-core tasks to highly-qualified professionals while cutting down their expenses.

Both of these models have their pros and cons. Therefore, before choosing any of them, you need to examine how the above-mentioned factors can impact your business. What matters, in the end, is experience, expertise, communication, and dedication. Before making a final decision, do your homework regarding what kind of outsourcing can prove to be a perfect option for your company.