​​Offshore Outsourcing vs. Nearshore Outsourcing: what is better?

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​​Offshore Outsourcing vs. Nearshore Outsourcing: what is better?

Introduction

While outsourcing your software development projects is the best way to enjoy significantly low cost for high quality labour, you might be plagued with two options and the confusion to choose which. The two most common options are Offshore Outsourcing and Nearshore Outsourcing. So if you are debating as to what kind of outsourcing to look for, you need to understand the pros and cons of both. This blog will help you gain a better understanding of the two most popular modes of outsourcing, and enable you to make a better choice.

Offshore Outsourcing

If you are running a business in the United Kingdom, the USA or other Western European countries, you might face tech talent shortage. And even if talent is available, you may have to pay the ‘top dollar’ to hire them. So the best thing to do would be to  go for a cheaper option, especially if you are a startup. The best way to make it among the bigwigs would be to hire from other countries. These countries might be half-way across the world, but you are likely to find top talent with exceptional skills at reasonable rates. 

In most cases, the major downsides include:

  • A huge time zone difference that could be 8 hours or more
  • Cultural differences 
  • Language problems 
  • Communication hitches

Understanding what the downsides are would help in working around them. For example, if there are cultural differences and there are different holidays and all, it would be best if these are talked about before the project begins. The teams can work at different timings to meet the deadline and be present for the meetings. This way, the project’s agile methodologies can go as planned so everything goes smoothly. And it is always good to have open communication lines between the team members and the team in your native country and everyone stays on the same page. 

India is a popular outsourcing country and has been the favourite destination for companies for over two decades. The talent scarcity in your country can easily be met when you outsource your project to top outsourcing partners. When the outsourcing partner is experienced, they will not have to search for developers, engineers and other talents to do their work, they will already have their own teams ready to deploy and work. It is possible to get a team that has already worked on projects similar to yours. This would help you from falling into common pitfalls that might affect novice companies when they outsource their work for the first time. 

So the advantages outweigh the disadvantages:

  • Access to a highly talented team of professionals; a global pool of skills readily available
  • Project-ready pros
  • Skills available at different rates, and this can get cheaper as you move to Tier2 and Tier 3 cities
  • No more talent scarcity
  • Low operational costs (you don’t have to set up the infrastructure, it will all be done by the outsourcing partner)
  • No employee benefits because you are not hiring any employees
  • A great time-saver in the end

Nearshore Outsourcing

In Nearshore outsourcing, you are not moving too far from your country when you assign project development tasks. The outsourced team would be located on the same timezone as yours as the team will be in a neighbouring country. The country is usually located within 5-6 hours of travel time so you can always visit them, have meetings and then come back the same day. There isn’t a huge time difference between the two countries, for example a business collaboration between a UK startup and a country from Eastern Europe can be termed nearshoring. Hence, the advantages can be as follows:

  • Lesser risk of physical meetings and you don’t have to waste time or money travelling halfway across the country
  • Lesser risk of cultural or language differences
  • Gives you tighter control of information
  • Some of the Eastern European countries are regulated with data privacy regulations (examples are Poland and Romania)
  • There wouldn’t be any communication gaps because both parties would know and speak English language with almost the same level of competence

So what could go wrong with nearshore advertising as it sounds so nice and easy? Well, obviously, it doesn’t meet with what you initially wanted – lower development costs. The charges of Eastern European countries are comparatively higher than that of other countries in Asia. 

Which one to go for – offshore or nearshore?

Irrespective of whether you are going for offshoring or nearshoring,  your company has to make the best of its core capabilities, and focus on other aspects of business while the software development part will be looked after by experts. You don’t have to worry about hiring or retaining an in-house team or go through the hassles involved with the hiring process. In both cases, it is the software development partner who will hire and train the team to fit your project requirements. 

If cost is not a major concern, and you prefer to have the team closer to the home country, then nearshoring would be the best option. That way you will not have to travel too far if your project entails too much travel, and you will always have a culturally similar partner to your in-house team. The vetting process will be much faster. 

If you are worried about the cost and need a more economical team for your project, then offshore outsourcing is the best option. That way, you might not be able to visit them quite often, but it is possible to get a team well-versed in what they do, and experience in working with all kinds of projects. The teams will be updated on the latest techniques and trends and there will be a variety of pricing models to choose from. There are a lot of options to choose from depending on these pricing models, and if you are looking to scale your project soon, then it would be a great idea. With experience, they will be able to supplement the present skills in your in-house team, and will be a huge advantage when you are updating and scaling the features in your app. If you don’t mind the distance, then this would be a better option. With experience, the teams in countries like India have learned to adjust to the cultural and time differences, and willingly work according to western time zones, so that’s another great advantage. 

Conclusion

Outsourcing tech services can be a very intimidating and daunting task, especially if you haven’t done it before. And then you will be torn between choosing which one to go for accelerating your business process. Actually, there isn’t an outsourcing model that you can say is perfect. As you read above, each one has their pros and cons, and so you have to consider all those when you choose the suitable outsourcing model. 

Interesting Links:

What are onshore and offshore in software development?

Comparing Onshore, Offshore and Nearshore Outsourcing

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