TYPES OF OUTSOURCING: Nearshore, offshore or onshore?

The market currently offers a huge range of outsourcing opportunities and various areas of software development. In-depth research is essential before a final decision is made, which takes time. We’ve decided to give you some help with this lengthy effort and do some research for you. Remember that every detail depends on choosing the right type of outsourcing company that is the best variant for your project.

As soon as the company decides to outsource applications, it still exists
several factors need to be considered when creating a successful transition to outsourcing together, creating a quality partnership with the supplier. All steps and skills should include the necessary processes driven by the company’s performance strategy agreed and necessary goals of the company. These must be observed as on the side company on the supplier’s side within the whole project. “The outsourcing process is beginning
strategy, goes through evaluation and implementation and then continues to manage relationships.

Why do people outsource software development?

If you are thinking about choosing the most suitable outsourcing company then it is very important to focus on the main reasons regarding outsourcing. So why do people outsource software development in the first place? Of course, the list can easily be long-winded, but the following are the most probable answers you will get if you ask anyone with outsourcing experience:

  • A highly skilled staff is needed, but the cost of hiring one may be too great,
  • Temporary assistance is needed at the moment,
  • The budget is not sufficient for the maintenance of the office team,
  • Developing a new product or something high tech to streamline the business is needed, but momentarily lack the expertise.

Types of outsourcing

There is a wide range of outsourcing available within categories and models. Each of them has its strengths and weaknesses in terms of management and use. The effectiveness of outsourcing can be broken down by site of performance with respect to production specifications, such as on site or off-site and within the geographical context of the client, onshore (onshore), near-shore (near mainland) and offshore If the transaction is carried out by companies within one state, we speak of domestic outsourcing, otherwise we are talking about foreign, cross-border or international outsourcing.

  • Onshore outsourcing (choosing a company in your own country);
  • Offshore outsourcing (finding a team somewhere in Asia, for example, in India);
  • Nearshore outsourcing (a company in a country that is not far from yours, like in Eastern Europe, if you are located in Western Europe).

Onshore outsourcing

Depending on the client’s country, these countries would be different; As the US is the largest software market, you will usually find that outsourcing in India, Ireland or Eastern Europe would be called ‘offshoring’, among other options; while outsourcing in Canada, Mexico and other countries with similar time zones such as Costa Rica, Chile, Argentina, Uruguay and Brazil would be called “nearshoring”.

A country such as the United States or any other country in Western Europe provides developers with a high hourly rate ($ 100-250, which is the average range), which results in relatively high living costs in these countries. developers ($ 100 – $ 250, which is the average range). If you decide to take a risk and invest in this option, you should keep in mind that high rates cannot always serve as a guarantee of high quality results. As elsewhere, there is a high percentage of probability that something can go wrong.

+ Face to face communications with your and personal meetings with your team team

+ local teams are easily accessible and they speak the same language

+ They live in the same time zone

– More in common with your permanent staff

– Time delays which can slow down your development schedule

– Managers won’t have direct, in-person oversight over the supplemental staff that works remotely

Offshore outsourcing

On the contrary, about offshore outsourcing we can talk when the offshore team is located in a foreign country, most often with a completely different cultural code and language. Intercontinental outsourcing usually offers the lowest prices because the cost of living is much lower in the country where the developers are located. So for the “same” work done, these developers are rewarded with a much lower amount of money than developers in the US or Western Europe. For example, an hourly rate per developer in the United States may be more than $ 150, but in Southeast Asia, a developer of the same caliber would only charge around $ 25 per hour.

With the lower price tag, however, come higher risks as, between the time differences and the language barriers, it’s often difficult to guarantee that work a client has paid for will be done on time or according to the specified plan. While there are certainly high-quality offshore developers who are ready and able to solve any organization’s system issues, you never know what you’re going to get. In the end, the project management responsibilities and efforts required to reduce risk may outweigh the cost savings.

+ It is cost-effective and saves time

+ You can scale your team up

+ A chance to take advantage of someone’s experience.

Complitated communication

Time zone gap

Cultural differences

Nearshore outsourcing

The trade-off between the two models is the offshore outsourcing model. In fact, this model is similar to offshore outsourcing, with the main difference being that the development team is located in a close country that supports the same or similar cultural codes, traditions and values. For example, the German plant in Dortmund cooperates with the Polish development team, and due to their common or similar indicators, they are very unlikely to encounter problems at work.

A special variation of outsourcing services on the high seas provides an even happier compromise: the development team is located abroad, but the supplier is represented in the same country in which the client is located. In this case, all financial and legal transactions take place on land, in accordance with the rules and regulations of the country, which provides the customer with much greater legal protection than if he worked with an office on the other side of the world. Even though the developers themselves are offshore, the client can still enjoy significantly lower prices than those offered by onshore resellers.

The use of offshore entities will not only reduce the tax burden, as in most offshore countries the level of taxes is zero, but it also allows companies to achieve financial stability and market performance. The management of such an international business company (IBC) is simple, no audit or submission of accounting records is required. It is estimated that almost more than 60% of the world’s money is held directly or indirectly in offshore countries. It can be argued that a company trading internationally must take advantage of the tax advantages offered by various offshore countries in order to be competitive on the world market.

+ Same time zones and easier integration

+ Higher-Level of Engagement By Related Culture

+ Quicker Response Time

– Offshore can still be cheaper

Cultural Differences

– Less Communication

How to find the best option ?

Choosing the right model and finding the right provider for software development, outsourcing software testing or outsourcing quality assurance can be a real challenge. For the right decision, it is very careful to focus on your priorities.

When it comes to quality, it will have to go through different ways from the company you have chosen and is going to hire it. The outsourcing industry has improved its competitive efficiency in recent years and has proven to be very reliable in increasing profits for various startups and companies around the world.

If maximizing your budget is your priority, then the option of outsourcing to countries with lower production costs is right for you, which can help reduce your expenses.

Another important thing that must be provided after the correct setting of capabilities and acceptable costs is communication. If your joint communication and coordination capabilities allow internal and outsourcing teams to synergy and perform well despite remote time zones, then offshoring is a great choice for you.

If you feel more comfortable without outsourcing with language barriers or other work habits with the whole team, consider your options when choosing onshore / on the coast. Having good English and the right mindset are a pretty important body that influences building a productive relationship and results.

Whether onshore, nearshore or offsohre, each of these types of outsourcing allows you to be more flexible. It prepares you for the time, money and worries associated with finding and training new internal employees.

Source: Easternpeak.com, syberry.com, qarea.com