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CTO, Co-Founder
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13 October 2020
8 min to read

Should You Choose Onshore Outsourcing for Software Development?

Ildar Kulmuhametov
CEO and Founder at Yojji | Web and Mobile Development

The rapid development of different digital solutions has made companies look for ways to keep up with the tech innovation so that they could get ahead of their competitors. Failing this, there's a decent chance of being left out and eventually losing clients.

While the importance of adopting modern technologies is clear, it might be quite difficult to pick the right software development strategy. Apart from hiring an in-house team, business owners have a wide array of outsourcing opportunities. As for the latter, things are not getting easier since there are different types of delegating IT-related tasks such as onshore, offshore, and nearshore outsourcing. You may even get lightheaded with all these unknown terms.

To help you make the right choice, we continue explaining the peculiarities of different outsourcing models. In this article, we are going to be talking about onshore outsourcing. You will get acquainted with the definition of this software development cooperation model along with its advantages and disadvantages. Hopefully, the information from this post will be useful when making a decision on what type of outsourcing to choose.

What is Onshore Outsourcing?

article illustrationAs one can tell from the name, onshore IT outsourcing refers to hiring a company or individuals that provide software development services in the same geographical area as a hiring company. Sometimes this sort of outsourcing is called domestic. If, say, your business is located in Atlanta and your service vendor is from Chicago, this will be called “onshore”.

The geographical proximity to your business is the key characteristic in terms of onshore outsourcing. Since the contractor is geographically close, there's no need to worry about cultural and linguistic differences as well as time zone issues. Both a client and a vendor work during the same or almost the same working hours resulting in the speed of project implementation as the occurring challenges can be solved quickly and more effectively. Besides, companies may organize face-to-face meetings with less effort and time.

It goes without saying that the closer the hired team is to your company, the easier it is for you to check up on the progress of the project and all the activities related to it. Keep in mind though that such a model is suitable only if a budget question is off the table. Typically, onshore outsourcing is quite expensive.

Offshore vs Onshore Outsourcing Differences

Now that we introduced the onshore outsourcing definition to you, it is time to dig deeper and present this model in comparison to offshore outsourcing. While onshore software developers are located in the same country as you are, offshore outsourcing services are provided by companies that are registered outside your region (in other countries and/or on other continents). In other words, if you search for contractors locally, it is onshore outsourcing. If you hire a vendor from abroad, it is offshoring. Comparing offshore and onshore outsourcing companies, the core differences lay within the physical location of the teams and their pricing rates. Speaking of the latter, onshore development has higher labor costs and tax rates. On the other hand, while being a cost-effective solution, offshore development may be challenging due to barriers in languages and cultures. As you can see none of the outsourcing models is flawless as each has its own drawbacks. Having said that, we think it will be helpful to learn about the pros and cons of onshore outsourcing in more detail.

The Pros and Cons of Onshore Outsourcing

article illustrationWhen it comes to choosing the type of cooperation with a software development team, there is no one-size-fits-all solution. Every cooperation model has its own strengths and weaknesses. It is important to weigh them in order to make an informed decision.

Here are the main benefits onshore outsourcing can provide you with:

  • Focus on core business competencies

With outsourcing, you and your employees can have an opportunity to aim attention at the core activities of your business while a team of specialists takes care of your IT tasks. There's no need in hiring an in-house IT department or wasting time and money on educating your existing staff. Whatever type of outsourcing you pick, this perk comes within the package of benefits.

  • Little to no time difference

Since both your company and a company you outsource tech work to are located in the same country, there won't be any time zone difference issues. Even if there is a slight difference, you still get more than 80 percent of the working time overlap, which is perfect for convenient and effective collaboration with the outsourced company. Moreover, you can easily schedule an in-person meeting, get on a plane/bus/train, and be there shortly without experiencing jet lag disorder. If you are from the USA and your vendor is from India, doing the same thing will be problematic.

  • The absence of differences in culture

Again, due to the fact that both you and the team of developers you are hiring come from the same country, you share the same cultural background and, more often than not, stick to the same approaches to work. On top of that, you celebrate the same national holidays. It means there won't be any delays in work as if it could have been with offshore companies whose days off don't match yours.

  • Same language

Even though English is spoken as a second language in most countries of the world, it makes sense that communication is always better with a team that consists of native speakers. The chance of being misunderstood is quite low.

  • Better management

Another advantage of onshore outsourcing is a higher level of participation in the development process. As you can collaborate with the team more tightly, you monitor how the project is going and address the issues timely.

So far outsourcing software development to an onshore company seems like a win-win.* Nevertheless, there are a few drawbacks you should be aware of:*

  • High pricing rates

One of the main downsides of opting for onshore development is high labor rates. Compared to offshore software development services, onshore companies will be quite costly. For example, average hourly rates in the USA range between $80 and $ 250 an hour while companies in Eastern Europe can be hired at the price twice or even three times lower.

  • Difficulties with finding the fitting candidate

The limits in choices and a small talent pool may stand in the way too. Sure thing, you will be able to find experienced specialists locally but the search process might take months. With offshore outsourcing, you get access to a wide pool of talent with various skills and knowledge right away.

  • The range of services

No matter how great onshore outsourcing is, it won't be able to outrun offshoring in terms of variety and quantity of services provided. With offshore outsourcing, you can keep more engineers, designers, and developers.

Is It Better to Choose Onshore Outsourcing?

The answer completely depends on your resources, requirements, and needs. Hiring an onshore company may be beneficial in lots of ways we have described above.

What picture is drawn in your head when you imagine onshore outsourcing. No need to wait for hours for your vendor to answer an email. The ability to address any issues right away. Face-to-face meetings where both teams can communicate and brainstorm brilliant ideas. These and other things are really appealing and they contribute to the success of a project. Moreover, if someone asked us, “Which model is better?” a few years ago, we would definitely go with the onshore outsourcing strategy. However, the world has changed and become smaller.

Today, we have an unlimited number of communication channels. Time zone differences are no longer a huge issue. It is easy to schedule a conference call or an online meeting during the time that will be convenient for both sides. As for the language and cultural barriers, most offshore companies are very responsible when it comes to educating their staff. Due to this, their tech specialists are fluent in English and keep up with the western approaches to work culture. With this in mind, it will be safe to say that no offshore outsourcing disadvantage is so bad it cannot be solved. At Yojji, we offer cutting-edge offshore software development services and use the most efficient project management models. Unlike onshore outsourcing companies, we can offer one advantage they don't have - affordable pricing rates. Get in touch with our consultants to learn more.

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NL, Amsterdam

Ildar Kulmuhametov
CEO, Co-Founder

USA, Austin

Yevhen Piotrovskyi
CTO, Co-Founder