Difference Between Nearshore and Offshore — What is Best for Your Business?

1 1

According to the 2019 statistics, over 43% of US companies were outsourcing IT, and these numbers are only expected to rise in the following years. 

Businesses across the globe find outsourcing a more cost-effective and efficient way to manage different operations so they can solely focus on the company’s growth. While outsourcing might be simple, if you’re considering launching a product that has a digital basis, you’ll probably come across terms like nearshore software development and offshore software development.

Let’s face it; software development is complex. It involves a range of services such as building applications, integration of software, and data analysis. Companies tend to have trouble fulfilling their needs in human resources, which is why they opt for outsourcing.

Here’s everything you need to know about the two types of software outsourcing and which type will be best for your business.

What Is Nearshore Outsourcing?

Let’s begin with the basics and understand what nearshore outsourcing is. This is when a company delegates certain software development tasks to an extended team that’s in a nearby country. They’re typically in a similar time zone and geographical proximity. Nearshore outsourcing facilitates travel and communication, which is why onsite visits occur fast and frequently. Nearshore outsourcing especially focuses on integrating with your team’s culture, skills, quality requirements, and competencies. For countries such as the US and Canada, Mexico or Latin America are the best options for outsourcing.

A team visiting a nearshore software development company

Benefits of Nearshore Outsourcing:

1.    Constant Communication

As mentioned above, the geographic similarities remove all hurdles from the communication process. Whether you need to get in touch with the vendor to keep a check on the process or have an onsite visit to learn more about the companies values and working system, distance is not a barrier. You can visit them whenever you want. 

2.    Similar Culture

Another benefit of nearshore outsourcing is that cultural difference is not something that you’ll have to worry about. Outsourcing deals often tend to fail due to the deficiency of culture compatibility that’s between both partners. Nearshore outsourcing erases this problem as both countries have similar work ethics and cultures, making collaboration a breeze.

Drawbacks of Nearshore Outsourcing

1.    Expensive Option 

Although nearshoring is cheaper as compared to conducting the software development in-house, this option can still be costlier than offshoring. This is why it’s important for potential clients to keep this in mind at the budget phase.

2.    Fewer Options 

Next, you need to remember that there may not be a wide option of service providers or engineers that are experienced enough in neighboring countries. Things can get challenging if you’re looking for a specific tech stack and domain. 

What is Offshore Outsourcing?

Offshore outsourcing is when you work with a company that’s located in a different part of the world. This means outsourcing work to countries like Europe, China, or India.

professional software development services

Benefits of Offshore Outsourcing:

1.    Cost-Efficiency

One of the major reasons why some companies tend to choose offshore outsourcing is due to the price. When you delegate to a nearshore partner, the price might be slightly higher, and companies save money to invest in other business aspects. 

Disadvantages of Offshore Outsourcing

1.    Cultural Difference

When you work with a team that’s located on another continent or on the other side of the globe, communication gaps are normal. What’s more important to remember is that both countries have totally different values, work ethics, and cultures which can affect the quality of work. Sometimes what may seem positive for them might not be acceptable to you. This is why if you do decide to work with an offshore partner, it’s important to get to know the team in great depth and set some working rules to ensure maximum productivity. 

2.    Time Zones

You already know that for high-quality software, communication is key. Being more than 12 hours apart can significantly affect work progress. You can expect longer waiting times and even miscommunication due to the language barrier, which may in turn be heavy on your pocket. 

professional software development services

Let’s Sum it Up…

In short, the main differences between offshore and nearshore outsourcing is the:

  • Cost 
  • Time Difference
  • Collaboration
  • Communication
  • Time Zones

Which Option is Best for Your Business?

While both options have their pros and cons, most companies in the US prefer nearshore as compared to offshore. However, it’s important to take time to understand your business goals and priorities. Is price a determining factor? Or something that offers flawless communication? Based on your company’s needs and budget, you can choose an option that offers higher productivity and the best results.

Choose the Right Software Outsourcing Type for Company

If you’re looking for nearshore software development service, Vates is the company for you!

We’re a leading nearshore software development and testing outsourcing company that’s recognized for its reliability and professionalism. We offer dedicated software teams, IT staff augmentation services, custom software solutions, software development experts, software-testing services, and so much more. 

What are you waiting for?  Schedule a 30-minute meeting with us to learn more about what we do and how we can help you!

Recent Blogs