Onshore outsourcing vs Offshore outsourcing: When to choose what

Onshore outsourcing vs Offshore outsourcing: When to choose what

Choosing between onshore and offshore outsourcing is always the forte of the companies, depending on their requirements. Both have benefits and drawbacks that help you decide when to choose one or which one to choose from. However, they have many differences apart from the same tail, ‘outsourcing’. 

In offshore outsourcing, you work with a company based abroad, whereas in onshore outsourcing, you work with a local company based in your home country. This article will help you recognise the differences between onshore and offshore outsourcing, ultimately putting you in a position to decide if the two would fit your business needs. 

Reasons why companies outsource

The status of IT outsourcing has seen exponential growth in recent years. The benefits of different outsourcing models, like onshoring, offshoring, or hybrid models, have explained its growth. It also increased the popularity of these models, making companies choose them. Here are the major reasons why companies outsource their software development.

• Cost savings
• Greater attention to core competencies
• Improved service quality
• Greater talent availability
• Streamlining hiring and administrative processes
• Greater adaptability 

How to choose?

The major difference between both types of outsourcing is the geographical boundary. It means onshore software development has geographical boundaries, while the other has no limits or boundaries. Apart from this, they differ in many other ways that benefit you. Here in this section, you will read about some factors that make them different from each other so that you can choose what fits your goals and objectives. 

• Convenience
• Cost-effectiveness
• Time management
• Language or cultural barriers
• Time zone differences
• Level of expertise
• Reputation for being trustworthy and open

1. Convenience

As a matter of convenience, onshoring can be a good choice since you’ll be able to benefit from the local businesses with whom you can collaborate quickly. But when it comes to offshoring, you must learn many new things as you work with a foreign country. Communication then plays a vital role. So what you are looking for is a partner who makes it convenient to work within your country; go for onshoring. Otherwise, reach out to offshoring companies.

2. Cost-effectiveness

If you are concerned about cost savings, you can use both models. It depends on the company’s location, the country’s economic conditions, and many other factors. Some countries offer IT outsourcing services at cheaper rates. So when you decide which to choose, check whether your country has a cheap labour cost. If yes, go for onshoring. Otherwise, if you find offshoring cost-effective, then choose it. This factor is entirely determined by the nature of your country.

3. Time management

Every outsourced project must adhere to a strict development timeline. As a result, it is the responsibility of the outsourcing companies to keep it in mind and complete it within the deadline. Onshore development models provide a higher time value than offshore development models. However, you would be mistaken if you did not consider the benefits of the offshore model, as there are numerous IT companies that offer 24-hour support.

4. Language or cultural barriers

When choosing to outsource work to another country, you are exposed to cultural differences and the availability of a talent pool fluent in several languages. So, if you want to internationalise your business, offshoring is a great way to connect with or collaborate with companies with competent native speakers of the languages you want to add to your business. 

Don’t get caught up in the language barrier issues, which can later lead to communication issues between you and the offshore company you have outsourced the work to. In that case, go for onshoring. 

5. Time zone differences

The difference in the time zone can be an important factor if you choose offshoring. At the same time, you can be relieved about the significant time zone differences when opting for onshoring. Many companies work perfectly fine with the time zone difference. Both parties need to understand how to convey requirements and project status in these situations.

It also depends on the software development company, business hours, operational hours, etc. So if you want standard expertise from another country with manageable time zone differences, you choose offshore. Otherwise, you can get into an onshore business without hesitation. 

6. Level of expertise

You know that the level of expertise of the team you choose to handle your project can play a pivotal role. Because the industry is changing quickly, your IT partners must be well-versed in the technological knowledge your project necessitates. Developers with a similar skill set can be found both onshore and in-house. 

You can, however, find employees with greater expertise by choosing an offshoring model. As well as having the technological infrastructure you lack, offshore software development companies can have access to the latest development tools.

7. Reputation for being trustworthy and open

Whichever outsourcing model you choose, you should be able to choose a company that can offer you trustworthiness and transparency about what they do for your project and their work culture. It will help you have seamless and effective communication on both sides. In onshoring, transparency can be maintained through meet and greets and letting the clients know the status of their projects.

On the other hand, even though eye-to-eye meetings may not be possible, they are made possible through the current and sophisticated work collaboration tools. It can narrow the challenges of maintaining transparency in the offshoring model. 

So choosing between both models has a lot of factors to consider. Some of them are mentioned above for you to decide when you are at the stage of choice. It will help you make better decisions that work for you as well as the company. Both models have their perks and drawbacks. What matters is whether that suits your project requirements and other goals. So clear your confusions on hiring an outsourcing team from the article and go ahead with your decision.

Interesting Links:

What are onshore and offshore in software development?

Comparing Onshore, Offshore and Nearshore Outsourcing

Pictures: Canva

The author: Sascha Thattil works at Software-Developer-India.com which is a part of the YUHIRO Group. YUHIRO is a German-Indian enterprise which provides programmers to IT companies, agencies and IT departments.