How to Distinguish Onshore, Nearshore, and Offshore Software Development

Are you running a software development company? Do you find that a dedicated development team would offer more benefits than hiring developers in-house but don’t know how to choose one? This article will help you understand the concepts of onshore, nearshore, and offshore model, finding the IT outsourcing companies that fits with your business.

Before we start, we have to tell you that the nature of the mentioned models shall be modified depending on its geography. In order to make it clear for you, we have to choose a geographic landmark. So, let’s make the assumption that your company is located in the US and get started.

What Are Onshore, Offshore, and Nearshore?

Onshore, nearshore, and offshore are three common types of IT outsourcing services. The main difference among them is the “shore” term, otherwise speaking is the distance from IT outsourcing companies to your head office.

Onshore means that outsourcing software development is located in the same country. In short, both your company and IT outsourcing are located in the US.

Nearshore means your outsourcing vendor in a neighboring country a short distance away. This means your common nearshore software outsourcing shall be in Mexico, Costa Rica, or Colombia.

Offshore, on the other hand, indicates that the company you hired is in another country with a different time zone, including the other side of the globe. This means your IT outsourcing shall be located in oversea countries such as Vietnam, China, India, etc.

Why Onshore, Offshore, and Nearshore?

Onshore Software Development

By definition, this model is the closest to you in terms of location. Which means having local outsourcing with the same time zone, language, and culture.

Choosing an onshore development also means your contractor is able to work in your office within working hours. Every idea, document, and information can be sent and received in moments.

Besides, having the same language and working culture are huge advantages of this model. With the onshore model, there are no language barriers or cultural differences to be concerned with. That means everybody will be on the same page from the beginning to focus on your projects. What a big plus!

But life is not that easy, the problem of the costs of this comfortable option can be a nightmare. Especially in the US, rarely are onshore hourly rates are below the rage of US$ 75 – 125. The talent shortage in this country will also make your search process longer, more difficult, and expensive. As a result, if your goal is outsourcing to maximize your budget, you have to think about this carefully.

Offshore Software Development

On the opposite, offshore is a different story. Hiring an offshore development team means hiring labor from abroad, including on the other side of the globe.

This model will not give you development with the same time zone, which makes communication a lot more difficult. All of the work and information transference has to be done via email, fax, and video call meeting. This makes the work take longer and miscommunication can be a real barrier.

However, this model also has a big plus. Choosing an offshore development team is an attractive option for IT outsourcing with high-quality works and cheaper costs. The advantage of this model is the hourly rates. The range for this model is only US$ 25 – 50, which means you save almost half of your budget compared with the above model for a work having the same quality and even better.

According to the data from HackerRank, it is difficult to deny that there are so many agile offshore developers on the other side of the globe. If you are in the US searching for the best software developers, you will find out that offshore software development companies in Vietnam, China, India, or other Asia countries are extremely popular.

Nearshore Software Development

This is the last model in the trio of common IT outsourcing models. Nearshore is quite similar to onshore. Nearshore software development provides you with combined advantages of onshore and offshore outsourcing.

This model also has different time zones, but it is low. With the nature of this model geographically, the difference in time zones ranges from 1 to 4 hours away, and the countries have the same borders, which gives you a higher chance to work directly with your contractors. They also have the culture and language quite similar to your company depending on the countries.

The hourly rates, in Latin America for this case, ranging from US$ 40 – 75, a good price for maximization of your budget. Besides, the available pool of talent is expanded, which means you have more options to consider.

In short, nearshore software outsourcing is the most balanced type of IT outsourcing for your consideration.

Conclusion

Nowadays, software outsourcing has become a global working trend, IT outsourcing is no exception to that. To find out what models are suitable for your company, you have to figure out what your specific needs are at this time and what to focus on. The right outsourcing partner will help your company grow stronger and reduce risks.