Nearshore vs Offshore vs Onshore: What’s Your Best Option?
If you are looking to add experienced developers to your team, you've probably already noticed the lack of talent 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.”
- 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.
- Nearshore offers 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.
The following are some of the benefits of onshore, offshore, and nearshore outsourcing.
What is Nearshore Outsourcing?
Nearshore Outsourcing works just like offshoring except that your business pairs with workers in similar time zones, which makes communication much more of a breeze. Even onsite visits can happen faster and more frequently. Plus, compared to onshore outsourcing, nearshore still offers some cost savings. 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.
Rather of waiting for the right developer to pop out of nowhere, there are other options to consider before wasting too much time, money, and nerves on the recruiting process. Of course, I’m talking about outsourcing, but you’ve got more than one option when it comes to outsourcing, and each one has its benefits and drawbacks depending on what you need.
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 American team in your own country, but this option comes with a high price tag (hourly rates of far more than $100 are common). Onshore teams simply cannot compete with the prices of offshore and nearshore companies.
Another drawback of onshore outsourcing besides its price is that 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.
Offshoring usually refers to working with teams in far-away countries such as India, China, or Ukraine. 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 work. 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 process. But ultimately, if the lowest hourly rate is your priority, offshore outsourcing is most likely your best option.
What is the best option then?
Just like when you’re looking for the right developer, before you hire an outsourcing services 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, or nearshore company?
Once again, whether onshore, offshore, or nearshore outsourcing is more beneficial for your company really depends on your priorities, but there is one option that I haven’t discussed 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.
Nearshoring is the outsourcing of business processes, especially information technology or software development, to companies in a nearby country, often sharing a border with the target country.
Both parties expect to benefit from one or more of the following dimensions of geographic proximity, time zone, cultural, social, linguistic, economic, political, or historical linkages.
We call it Nearshore+. 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 NAFTA (North American Free Trade Agreement).
We here at iTexico would love to help with Nearshore Software Development in Mexico.
“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.
Sonja Luther, Ph.D., is a Former member of The Marketing Team at iTexico – a software services company that offers fast, convenient, and cost-effective Nearshore + Multidisciplinary Software Development Teams with HQ in Austin and Delivery Centers in Mexico.
This article was originally written by Sonja Luther and edited by Oscar Salas and the iTexico Marketing Team to keep it fresh and relevant.
Written by Oscar Salas
Oscar Salas is a B2B Digital Marketing Specialist with 5 years of experience, who has helped organizations to grow and expand through strategic brand development and marketing programs. Analytical thinker, cat lover, he enjoys to play the piano and listening to Led Zeppelin He's currently leading the iTexico Demand Gen strategies.