Onshore IT Development: This is the process of developing software within a company’s own facilities. Simply speaking, companies that onshore their IT talent hire programmers locally, in their home country. This could be as simple as hiring a single freelancer or as complex as major staff augmentation through the use of a nearby consulting firm.
Offshore IT Development: This means developing software outside of the country. This can be a cost-effective way of developing digital products in a timely manner. To ensure quality and accuracy, companies often use offshore software houses (IT outsourcing service providers) that have acces to a large pool of developers familiar with specific coding languages and software development practices.
Nearshore IT Development: Nearshore IT development is a process that software companies use to create and maintain their software applications by outsourcing their development work to a vendor close to their country. This allows the software company to focus on their core business, while the vendor takes care of the development work with a team that can work similar hours as the parent company but on remote.
When it comes to staffing, companies often have to make a tough decision: onshore or offshore? The decision can be difficult, and it depends on a lot of factors, such as the cost of recruiting, replacing, and adding team members. The amount of time and money you have to invest are also important considerations. Let’s look at what onshore and offshore software development are and what the different options can mean for your company.
- Native speakers: Hiring local talents who speak your language, will provide your company with fewer surprises or miscommunications.
- In person interactions: Local IT consultants provide the convenience of in-person meetings. In some cases, this can result in a shorter, shallower learning curve, allowing them to learn your business much faster.
- Less turnover: Onshore employees tend to stay with a company for longer periods of time, which can reduce the cost of recruitment and replacement.
- More centralized: Onshore staff are typically more centralized, which can make it easier to manage.
- Work schedule: inhouse coordination enables a closer working relationship and the resolution of issues in real time.
- Obtaining availability from local consultants: It is well known that the demand for programmers far outstrips supply in many countries. You’ll find far more resources ready to work offshore, which is an important consideration in any discussion of offshore vs. onshore software development.
- Administrative issues: Whether you hire local or foreign talent, you will face many of the same administrative headaches that come with onboarding consultants. You must still set them up as vendors, grant them access to your data, and integrate them into your teams.
- Less flexibility: Onshore staff are typically more centralized, which can limit their flexibility.
- Higher cost of recruitment: Hiring local IT consultants eliminates the costs associated with hiring and onboarding an internal employee. However, you will not save as much as you would if you worked with lower-cost consultants in another country.
- Higher potential for growth: Offshore and nearshore employees can be more flexible and mobile, which allow them to take on more challenging projects and grow with the company.
- 24/7 development cycle: Client companies can build larger teams and move projects forward faster when developers are ready to hire in offshoring-friendly countries. Your outsourced staff is working while you are sleeping. You can benefit from a true 24/7 development cycle, which gives you a significant competitive advantage and allows you to bring your software to market faster.
- Less regulations — Because offshored employees are consultants, you can avoid the complex regulations associated with international hiring. Contract workers who are no longer required or wanted can be released or replaced within two weeks to a month. Your offshoring company handles employer taxes. You only pay for what you need, when you need it, for a completely customizable team experience.
- More international: These employees can be from different countries and cultures, which can offer a more diverse and enriching workplace.
- Cost reduction: Without a doubt, offshoring firms have an advantage when it comes to providing services at a lower cost. Indeed, countries with higher living costs, such as the United States, Canada, and much of Western Europe, can reap enormous benefits from offshoring their IT development.
- Developers who speak English are common: While this varies by country, many countries that are flourishing in IT consulting do so with a ready base of developers who speak and write English fluently.
- More opportunity for advancement: Nearshore as well as offshore employees are typically more willing to take on new opportunities and challenges, which can lead to advancement.
- High quality: Many countries are stepping up their efforts to expand their pool of tech talent by providing free education, which is attracting a large number of new students to this in-demand profession.
- Asynchronous work schedules: When you and your contractors are separated by several time zones, management issues can arise. Phone meetings during working hours can be difficult. However, most IT offshoring firms are prepared for this, shifting work hours slightly to accommodate client phone conversations.
- Culture barriers: Not every IT consulting firm understands Western culture and work standards. You may find their paid holidays don’t match up with yours, or run into strange government regulations or tax issues you’re not used to encountering.
- It’s a timely process: Finding, screening and coming to an agreement with a Software Development Outsourcing Company, takes time but it’s worth the effort. Outside agencies might also need additional time to recruit talents for a specific project if their “bench” is missing certain experts. Many of the top talent in offshore locations are available on a temporary basis, which can make it difficult to find the right people to fill key positions.
In conclusion, all three options have their own benefits and drawbacks, so it’s important to choose the right one for your business. Nearshore can be the most cost-effective solution for businesses with a limited budget. While onshore can be a good choice for businesses with a larger budget, offshore offers the highest levels of scalability and stability and would be a better choice in certain environments:
- Small businesses with limited resources that need to hire multiple specialists at once
- Limited supply of local software development experts
- Startups and companies that need to prepare MVP fast
- Offshore IT teams can be a good idea if the company needs to scale down its IT team because of a current economic or geopolitical climate.
- On the other hand, if the company is doing well and doesn’t need to scale down its IT team, then it may be a good idea to keep the IT team offshore. This is especially true when the company uses a lot of offshore outsourcing services.
In addition, offshore IT teams are often more experienced than onshore IT teams. This is because offshore IT teams are usually made up of IT specialists who have worked in the IT industry for a long time. This makes them better at solving IT problems.
As a globally operating software house and an outsourcing company, we truly recommend the the opportunities that come with the business model. When working with Scalo, we can ensure the benefits of direct management while maintaining the flexibility of a remote team. Our dedicated teams take a truly agile approach. We can offer you the best of both worlds in the debate over onshoring vs. offshoring software development.