What is the Difference Between Nearshore, Offshore, and Onshore Outsourcing? (VIDEO)
- Nearshore refers to outsourcing to countries located in close proximity with similar time zones. A nearshore location for the United States would be Mexico.
- Offshore refers to outsourcing to far-away countries with considerable time zone differences. An offshore location for the United States would be India.
- Onshore refers to outsourcing to service providers located in the same country.
The following are some of the differences between onshore, offshore, and nearshore outsourcing.
- Cost Savings
- Time Savings
- Convenience & Collaboration
- Efficient Communication
- Different Time Zones
What Is Nearshore Outsourcing?
Nearshore outsourcing refers to delegating software development tasks to an extended team in a nearby country, usually in similar time zones. By definition, nearshore outsourcing works just like offshore except that your business pairs with workers in similar time zones and geographic proximity. This makes communication much more of a breeze. Onsite visits can happen faster and more frequently. Plus, compared to onshore outsourcing, nearshore still offers some cost savings and quality software results. Nearshore in Mexico is a delivery approach designed to integrate with your team’s specific capacity, culture, competencies, skills, and quality requirements.
However, in the end nearshore cannot compete with the hourly rates of offshore companies (nearshore rates usually tend to be somewhere around $40/hour), but the convenience of being in the same or a similar time zone and having shorter travel times for onsite visits not only decreases costs but also stress for you and your company as well as enrich the development process.
Rather of waiting for the right developer to pop out of nowhere, there are other options to consider to put together a software development team before wasting too much time, money, and nerves on the recruiting process. Of course, I’m talking about outsourced software development, but you’ve got more than one option when it comes to different types of outsourcing, and each one has its benefits and drawbacks depending on what you need.
What is Onshore Outsourcing?
Onshore outsourcing is when you hire services to assist your company from within the same country.
Onshore outsourcing is the closest outsourcing to home because you are working with a company that is located in your home country. The advantage of onshore outsourcing is that you’re working with a highly skilled software engineer in your own country, but this option comes with a high price tag (hourly rates of far more than $100 are common). Onshore companies often don't have the right talent available right away simply because they can’t afford to maintain any unoccupied workers.
So when you hire an onshore company, you need to take into account the time the company requires to hire and train the talent you need.
What is Offshore Outsourcing?
Offshore outsourcing is all about working with companies located in a completely different part of the world.
Offshoring usually refers to working with teams in far-away countries such as India, China, Ukraine or other European countries. While the cost of working with offshore companies or offshore developers cannot be beaten (the hourly rate is often as low as $20), there are some drawbacks that one should consider.
Working with a team that is on the other side of the globe in a completely different time zone makes communication a lot more difficult, and we all know that communication is key for high-quality, cost and time-efficient software. Being twelve hours apart simply complicates any type of communication.
Also, longer waiting times and miscommunication because of language barriers and cultural differences can easily end up raising the costs again, and this doesn’t include the stress you had to go through in the business process. But ultimately, if the lowest hourly rate is your priority, offshore outsourcing is most likely your best option.
What are the benefits of outsourcing software development?
The benefits of outsourcing software development vary greatly by the type of outsourcing you utilize.
- If the lowest hourly rate is your priority, then it cannot be argued that offshore outsourcing offers the best deals for labor cost per hour; however, keep in mind that the price may end up rising again if it comes to miscommunication, high travel costs, and production delays.
- If you want an American team, you’ve only got one option and that is onshore outsourcing. The drawbacks are a higher price and that the right developers aren’t always available when you need them.
Nearoffers a mix of onshore and offshore benefits. It decreases your cost while still providing you with some of the perks of onshore outsourcing such as regular communication during business hours. In price, the usual hourly rate may be higher than the offshore rate, but you will save money again through more efficient communication and lower travel costs. development shore
If you are looking to add experienced developers to your team, you've probably already noticed the lack of software developers here in the U.S. It’s not that the U.S. doesn’t have any highly skilled developers. We just don’t have enough. Rest assured that you are not the only one who is struggling with this challenge. Venture capitalist Marc Andreessen recently told the New Yorker, “Our companies are dying for talent. They’re like lying on the beach gasping because they can’t get enough talented people in for these jobs.”
Offshore vs Nearshore, what is the best option then?
Just like when you’re looking for the right developer, before you hire a software development company, determine your priorities first.
What are you looking for? The best developers? The best price? The least hassle? More security? Or a mix of everything?
Whether the company you choose can meet your expectations depends to some degree on their location. So, the question is, should you choose an onshore, offshore outsourcing or nearshore company?
Once again, whether offshore or onshore, or nearshore outsourcing is more beneficial for your company really depends on your priorities, but there is one option that I haven’t gone into depth on yet that is usually discussed as part of nearshoring. I’m talking about Mexico.
Outsourcing to Mexico is a unique way of outsourcing because it includes more benefits than any other nearshore or offshore company can offer.
We call it NearshorePlus. Nearshore programming having a development team in Mexico gives your company additional benefits, such as shorter travel time and more cultural alignment between you and your software extended team plus the protection of your Intellectual Property through USMCA Agreement.
We here at iTexico would love to help with Nearshore Software Development in Mexico.
We work to smooth out the process of working with nearshore software development and our services can help in multiple facets. We can enhance your software development, from web apps, to AI, cloud systems and more. Get in contact with us to see how nearshore outsourcing can help you today!
Hand-Picked Related Reads For You
“An Atlas of Offshore Outsourcing.” By David E. Gumpert. Bloomberg Business.
“The Programmer’s Price: Want to hire a coding superstar? Call the agent.” By Lizzie Widdicombe. New Yorker.