Outsourcing Software Development Guide 101: Nearshore vs Offshore

Several companies opt for outsourcing to make a unique product that will stand out from the crowd. Very often outsourcing sounds like a reasonable option. But the first breadcrumb of a problem arises when you have presented a choice – nearshore vs offshore. 

 

Outsourcing for software development is a lot common, but you want a flexible option with quality results. 

 

Nearshore and offshore outsourcing, both, have their pros and cons. Outsourcing in the IT industry is all about choosing a region that offers the best rates with a fast turnaround time. Eastern European countries (like Poland, Ukraine, etc), Southeast Asia (like Bangladesh, Pakistan, etc), and Mexico are the prime candidates. 

 

In this article, we will discuss the major pros and cons of outsourcing and how to choose the best one for the required situation. 

Why Outsourcing Software Development is a Win-Win?

Outsourcing is crucial for a lot of projects. To minimize the burden on their developers, companies outsource either nearshore (neighboring countries) or offshore (distanced countries). 

 

But is the need for outsourcing software development baggage or a need? With time a number of benefits surfaced. 

  1. Cost-Effective Option 

Whether you choose offshore or nearshore outsourcing, both are cost-effective decisions. Not only do you get to have access to the large talent pool but also you pay less to the outsourced developer as compared to the local one in most cases.

 

Hiring, training, resources, etc upscale the overall cost of the business too. But outsourcing allows you to bypass the excessive expense. The developers you hire are already trained so you save the cost of training.  

 

  1. Talent Inquisition 

The independence to choose the best developer for your project brings benefits. 

 

Outsourcing increases the possibility to let you find the best choice with designated skill and experience. Let’s just say, developing countries in the Southeast have a higher skill set as compared to European countries. It’s not that they do not have skilled professionals. But demand-supply is mismatched. 

 

In such a case, outsourcing IT experts is an easier option that brings immense expertise to the table.  

  1. Top Most Quality 

Despite the pool of talent, you need to be selective when outsourcing professionals. You want not only someone with years of experience under their belt. But someone who can also maintain top-notch quality. 

 

When you hire an outsourced software developer after a carefully drafted screening process, you can expect quality results. Getting high-quality from outsourced professionals also saves you time and energy to explain what you want. 

 

Also, you save tons of money on training too. Instead, you can utilize the budget to allocate the right resources that help the developer to complete the project in respective times. 

  1. Project Scalability 

Outsourcing for software development is project-specific. So the scalability of the project is easier. You have the flexibility to scale up or scale down the team as per your requirements. 

 

Once your project is completed you can bid a happy farewell to the outsourced developer or even approach them for future projects when needed. So there’s no need to keep the software development team on the payroll when not needed. 

What is Nearshore OutSourcing? 

When a company is looking for a software development team from a neighboring country, this is called nearshore outsourcing. The outsourced software developers are responsible to complete the tasks. 

 

Communication with the nearshore outsourced software development team is easier due to minimal time zone difference. 

 

For instance, a company operated in the US can choose software developers either from Canada or Mexico. Both are neighboring countries to the US. But if your company is located in the UK, for instance, you may headhunt in Ireland for the same reason and so on. 

 

Pros 

  • Shorter Distance 

No one can disagree that nearshore outsourcing saves you long-distance traveling. Maximum, you have to fly for 2-3 hours. The shorter your business trip is, the less expensive it will be. The chances to improve productivity will increase. 

  • Easy Audit

If you want better control over intellectual property, nearshore outsourcing is the right option. The vendor will also be subject to the same data law protection as you. So, drawing contracts is easier and enables confidentiality for the project and after its completion as well. 

  • Single Time Zone

Nearshore outsourcing means that the company and vendor both are available within close geographical proximity. So it’s easy to schedule meetings, no miscommunication, resolving problems quickly, maintaining your budget, and so on. 

  • Negligible Cultural Gap  

With minimal time zone difference, the work culture of the neighboring locality will not be far off the hook either. Nearshore outsourcing allows you to choose a software development team with a similar culture. 

 

It helps in interacting with the team, even online, and makes the deliveries efficient. 

Cons 

  • Cost 

Although nearshore outsourcing is a cost-effective approach for obvious reasons there’s one downside to it too. The billing will increase. You have to pay the extra for quality work or according to the vendor’s capabilities 

  • Limited vendors 

Nearshoring also gives only a limited number of options to choose from. Even if the pool of talent is out there, in the neighboring countries, so are better opportunities for them, when you start the screening process, only a few candidates make it to the list. So, it’s a tough time finding the appropriate software developer. 

 

Offshore Outsourcing 

A company hunting for a software development team from a country far-away is called offshore outsourcing. 

 

The hourly rate will differ a lot from nearshore outsourcing due to the lower costs. However, when you choose offshore outsourcing, the time difference is a major factor! 

 

For instance, if a company based in the US chooses an offshoring software development team in Pakistan, the hourly rate will be comparatively lower as compared to the local US-based developer. So the companies who want quality results at a lower cost, usually choose offshore outsourcing. Even if they work with the outsourced team for a long duration the cost still would not be that high. 

 

Pros 

  • Cost Saving 

The biggest benefit of offshore outsourcing is that you find an expert software developer from Russia, Ukraine, China, Pakistan, etc for half-hourly wages as compared to the nearshore or local hiring. 

This way you get a sustainable budget and do not have to worry about falling short of cash. 

  • Global Talent 

You can find the right choice in the least expected places! Due to offshore outsourcing, the cheaper countries had invested in training and professional courses. The individuals have the expertise and knowledge to complete the project. The self-learning process works in the vendor’s favor and yours as well. 

  • Job Rotation 

The time zone difference can work in your favor. How? You can give the work in advance to the developer. Professionals can work in shifts overlapping work hours. So the fast turnaround time is a high probability too. 

 

Cons

  • Time Zone Gap

The time zone difference for the US is at least 10-14 hours. Time zone differences are not easy to overcome, some struggle a lot during working hours. So when the developer and the company are unable to match the project progress as scheduled, it affects the working frequency. 

  • Cultural Hurdles 

Cultural barriers can affect the remote teams of software developers. Offshore countries have diversified professionals. So they bring a variety of cultures to the company. Only a small percentage of the offshore professionals are properly trained (due to past experiences) to deal with a western client.

So this may also create a communication gap between the developer and the client. 

  • Compromised Quality 

Given the communication gap, time zone difference, and cultural barriers, quality can become questionable. Even with a careful screening process, the developer may not be able to meet the quality standards of the project in the long run. 

Also, one team of software developers may not but suitable for a different project, or if you continue to work with the quality issues will arise. 

  • Longer Business Trips  

Would you like to travel for more than 15 hours? The greater the time difference means the longer the distance. The long traveling can easily tire you and so the business trips will be a lot less frequent. 

 

Nearshore vs Offshore: Comparison Chart 

 

Factors  Nearshore Outsourcing  Offshore Outsourcing 
Traveling  Max 2-3 hours of flights  Longer than 10-hour flights 
Collaboration  Easy to manage due to same time zone Tasks assigned in advance (time-efficiency)
Cultural empathy  Easily possible / almost similar  Slow but highly adaptable due to diverse cultures 
Project security  WTO, WIPO, PCT, etc agreement  Different agreements are applicable 
Cost  $25-$50/hr  $50-$150/hr 
Reliable for 
  • Easy collaboration 
  • Work quality 
  • Real-time collaboration 
  • Frequent business trips 
  • Maximum cost-efficiency 
  • Less frequent business trip 
  • Straightforward project 
  • More talented developers 
  • Work-hour differences
  • Regular IT tasks 
  • A project that requires 24/7 support 

 

Offshore Outsourcing Takes Precedence Over Nearshore Outsourcing 

Companies like Nike, Coca-Cola, Pepsi, Levis, etc are known to have their manufacturing plants in offshore countries for the very same reason that a software developer is hired by western clients.

 

  • Offshoring outsourcing is critical to business success. The hourly labor rate makes a huge difference (as discussed above) as it is significantly lower as compared to the USA. Cost savings is a real deal for every company. 
  • The low population density is a major contributor. Since Asian countries are densely populated, they have a diverse pool of talented people ready for a stakeout. The skilled individuals are gaining major expertise already working as freelancers as a side business. 
  • The good word of mouth of such freelancing professionals is creating a base for future companies who are likely to invest in an offshore team of experts.  

 

Therefore offshoring takes precedence over the nearshore idea based on past and recent experiences. 

 

Hiring South-east Asian Countries for Offshore Software Development 

These days developers have options to choose their clients carefully. In the past decade, western countries were considered the standard for technological innovation. But the Southeast Asian countries like Pakistan, the Philippines, India, Bangladesh, etc, caught up. 

 

The region’s low economic development had somehow worked in the favor of the IT talent. Southeast Asian countries swiftly expand into the gaps.

 

Therefore offshore sourcing is the better option. 

 

Companies like esketchers have an immense team of expert developers and IT experts on hand to assist the new projects coming their way. It all works in your favor!

 

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