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Onshore, Offshore, and Nearshore – Guide for IT Leaders

Hire onshore, offshore, and nearshore developers

You probably have heard software developers throw in jargon terms like onshore, offshore, and nearshore. While it’s tempting to equate the terms to shores and beaches, they all are different and have a meaning in the IT field. The “shore” phrase is associated with outsourcing software development to companies abroad. With the availability of affordable and skilled talent markets, most small business owners, venture capitalists, and startups outsource their work to a development company abroad.

Depending on a company’s technology needs, project scope, and in-house expertise, each model has advantages and disadvantages. The following are differences between onshore, offshore, and nearshore outsourcing:

  • Time savings
  • Cost savings
  • Efficient communication
  • Convenience and collaboration
  • Different time zones

Read on to learn more about what each model entails and what its advantages and disadvantages are.

Nearshore Outsourcing

If you need crucial software development accomplished quickly, efficiently, and with a high level of collaboration, nearshoring is the best option. Nearshore outsourcing refers to assigning software development work to another company in a nearby country with similar time zones.

Nearshore outsourcing works similarly to offshore outsourcing. The only difference is you pair your workers with other workers in similar geographical proximity and time zones. This makes communication and collaboration easy. Onshore site visits happen faster and more frequently, and when compared to onshoring, nearshore outsourcing is cost-effective and produces high-quality software. One such delivery approach is the nearshore in Mexico. It is designed to blend with your team’s culture, specific capacity, skills, competencies, and quality requirements. Although nearshore outsourcing has higher hourly rates (usually around $40/hour), it has more benefits than offshore outsourcing. The time zone alignment and geographical closeness reduces travel charges, enables real-time collaboration, and enrich the software development process.

Certain Latin American countries like Mexico foster technology communities similar to those in Silicon Valley. They also have higher English fluency and cultural affinity. However, if your onsite culture isn’t familiar with remote communication technologies, training may be required. Instead of waiting for the right software developer to find you, you can consider other outsourcing options. You can team up a software development team before you waste too much time, money and undergoing the complicated and rigorous recruitment process.

Onshore Outsourcing

Onshore outsourcing is hiring software developers to help your company from within the same country. Teaming your team with your country’s based developers is the best option if you require contractors to work within the same office location.

Unlike other outsourcing models, onshoring is closest to home since you are working with another company located in your home country. You get to work with highly skilled software developers in your own country. It’s also a solid choice when you need software development specialists to inject or supplement expertise into your in-house teams.

Onshore outsourcing has a higher control level than offshore and nearshore outsourcing. It allows more contact between you and your outsourced teams. It also eliminates language barriers and cultural differences as you are working with people from the same country.

However, there is one major problem. The hourly cost! While offshore and nearshore outsourcing costs less, onshore outsourcing has higher price tags. Hourly rates of more than $100 are typical. Additionally, onshore companies lack the necessary talent right away. They can’t afford to keep any unoccupied workers.

Therefore, factor in the amount of time onshoring company will require to hire and train the right talent you need. Unlike other outsourcing models, onsite workers may also require a place to work within your offices. This increases your overhead costs and can delay your software development project and, in the end, affect your delivery.

Offshore Outsourcing

Offshore outsourcing refers to working with countries located far away. Crossing diverse oceans is a superb outsourcing solution when your software development project is well-defined and requires minimal communication.

Offshoring involves working with teams in faraway countries like Poland, China, Ukraine, India, or other European countries. Unlike onshore outsourcing and nearshore outsourcing, the cost of hiring offshore developers is cheaper, with hourly rates of as low as $20. However, it comes with some drawbacks. Working with a remote team in a completely different time zone affects communication. We all know how vital communication is while collaborating on a software development project.

Extreme time differences, like eight hours apart, leads to frustrating lags in communication and approvals. This not only impacts your project negatively, but it also affects project timelines. Regular communication is the key ingredient for high-quality, time and cost-efficient software. There are also instances of miscommunication due to language barriers and cultural differences. This can negatively impact effective communication and collaboration among your teams. Additionally, language barriers and cultural differences can increase your overhead costs, excluding the stress you undergo during your business process.

If lower hourly rates are your top priority, offshoring is your best option. However, in some cases, it can take more than two developers to deliver the work of one highly skilled developer. This will have you incur additional unexpected costs.

Benefits of Outsourcing Software Development

Outsourcing software development may be a wise move for your company, and for several reasons. It is a smart option to achieve digital transformation goals while reducing risks and saving costs. The benefits of outsourcing your software development vary greatly depending on the type of outsourcing you use.

If your top priority is the lowest hourly rate, offshore outsourcing packs the best deals for labor costs per hour. However, the price may rise due to cultural diversity, miscommunication, high travel costs, and production delays. To build a good relationship with your extended team, analyzing daily reports and organizing weekly demos are vital.

If you want to work with an American team, onshore outsourcing is the best option. You get to work with high-quality software developers based in the U.S. The major drawbacks of onshore outsourcing are the high hourly rates, and the right software developers aren’t always available immediately. There is also an increased risk of talent poaching due to talent scarcity. Nearshore outsourcing is the in-between option offering a mix of onshore and offshore benefits. It allows you to enjoy lower hourly rates like regular communication and lower travel costs.

If you are after adding experienced software developers to your team, you probably have noticed the lack of developers in the U.S. Not that there are no highly skilled software developers in the U.S, the number is just not enough.You are not the sole one facing this problem. In an interview with the New Yorker, venture capitalist Marc Andreessen said that companies are desperate for talent. It’s like they’re lying on the beach panting because they can’t amass enough talented people for these jobs.

Offshore vs. Nearshore: Which One Should You Choose?

Onshore, offshore, and nearshore programmers working
A row of diverse developers working on PCs.

Just like recruiting the right developer, before hiring a software development company, first determine your priorities. Are you looking for the best developers, the best price, more security, the least hassle, or are you after a mix of everything?

Offshore outsourcing gives you access to a global reserve of skilled workers, saving you considerable amounts of time and money. However, partnering with an onshore company gives you the best of both worlds. Your nearshore team is positioned close enough to help streamline communication and permit onsite visits while providing the efficiency and cost-saving benefits of offshoring.

The location of the company plays a role in determining whether the company you choose meets your expectations. Therefore, should you choose an onshore, offshore, or nearshore company? Whichever you choose depends mainly on your priorities. One popular nearshore strategy is Mexico, but what does it mean?

Nearshore Software Development

Thanks to globalization, most companies have improved their competitive edge by outsourcing. One unique outsourcing strategy is outsourcing to Mexico, or commonly known as Nearshore Plus. It offers more benefits than other nearshore or offshore companies.

With a development team in Mexico, you can enjoy additional perks like shorter travel time for easy collaboration. The cultural alignment between the U.S. and Mexico plays a pivotal role and helps prevent misunderstandings that can lead to undesired results. You also enjoy the protection of your property through the USMCA agreement.

Let ParallelStaff Help You With Onshore, Offshore, and Nearshore Software Development in Mexico

Whether you choose an onshore, offshore, or nearshore software development team, it’s crucial to locate your business’s functions and processes in regions with the most appropriate resources, quality, and costs. Understanding the advantages and disadvantages of each model will help you select a perfect fit, knowing you are getting the right resources and with the right level of control.

ParallelStaff smooths out the process of partnering with nearshore development by connecting you with the most affordable, dedicated, and knowledgeable IT Talent in Latin America. Our services can help you in multiple facets to boost your software development process, from web apps, to cloud systems and more.

Enjoy access to over 50,000 skilled and English-fluent developers with our nearshore outsourcing services. Schedule a call today to see how nearshore outsourcing can help you.

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