Three Forms of Outsourcing: Local, Nearshore and Offshore

You have certainly looked into IT outsourcing and are aware of the benefits it may provide to companies. Naturally, you might now consider entrusting your software development project to a company providing such services. Choosing the best outsourcing company can be difficult, though, as there are so many different kinds available.

The market currently provides a wide variety of outsourcing choices as well as several software development models. These choices for IT outsourcing include working with local, nearshore, and offshore teams. Before making a decision, it is important to conduct a thorough study, which takes time

Why do people outsource software development?

Focusing on the primary causes of outsourcing can assist you in selecting the right outsourcing company. So why do people initially outsource software development? 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:

1. To reduce costs – Outsourcing can be a cost-efficient way to save money, as you are no longer paying for the overhead associated with in-house staff and infrastructure.

2. To gain access to new technology and expertise – Software development usually requires knowledge of specific programming languages and technologies, which might not always be available in-house. By working with a dedicated software development team, you can access the latest technology and technical expertise.

3. To focus on core business objectives – Outsourcing software tasks allows your internal staff to focus on what they do best -propelling your company’s core business objectives forward.

Now that we have discussed why people outsource software development, let’s take a look at the three main forms of outsourcing. The most logical classification of outsourcing companies is based on location. Why is that so? You will find out a little bit later in this article. For now we would like to clarify the three main types of outsourcing:

Local 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).

Local Outsourcing (Onshoring)

When speaking of local outsourcing, we can also name it onshoring. When you outsource development to a company in your own country, this is called onshoring.

In an ideal world, local outsourcing would be the best solution. By hiring someone local, you’ll be able to meet with the manager or team in person and learn about their operation. Moreover, you’ll be able to quickly communicate and solve any issue that may arise.

If necessary, you might also keep an eye on the services directly on site. However, once you’ve narrowed down the costs of local outsourcing providers, disillusionment frequently sets in. The only disadvantage of local outsourcing is the cost – it will certainly be more expensive than offshoring or nearshoring software development.

This is considered by many organisations to be one of the most sensible options for outsourcing, which has led to the sector’s recent growth.

Offshore outsourcing: outsourcing to Asia

Offshore outsourcing has traditionally been the most popular option for software development. It refers to a situation when you hire a dedicated team of developers located in some other country, such as India or Bangladesh. Companies offering offshore services tend to offer very competitive prices and are willing to work with clients on tight budgets. This makes offshore outsourcing an attractive choice to many organisations.

The potential advantages of offshore software development include access to a large talent pool, lower costs, and faster delivery times. However, it can be difficult to manage an offshore team when there are language barriers, cultural differences, and time zone challenges. You also need to keep in mind that the quality of work produced can vary greatly from company to company.

Additionally, coordinating long-distance projects isn’t as complex as it used to be. This is mostly due to collaboration tools like Monday, as well as video conferencing systems like Zoom and Microsoft Teams.

Note that it can be difficult for companies that utilise offshore outsourcing to handle time zone differences when meetings are necessary, or if there is a need for a quick turnaround.

Nearshore Outsourcing: Working with Companies in Eastern Europe

Nearshore outsourcing is a term used to describe the process of hiring a dedicated team from a nearby country. Nearshore software development is the practice of engaging with a partner in an adjacent region to develop software products and services. It’s similar to offshore outsourcing, however, it has certain advantages over its alternative.

Nearshoring often provides more reasonable time zone differences, which makes communication between remote teams easier. If the vendor, who is providing services, is located in the same region, it becomes much simpler to handle any dispute that might come up during the development process.

Another benefit of nearshoring is enhanced cultural compatibility and better comprehension of local regulations. Last but not least, this type of outsourcing allows clients to receive services for competitive prices, as the cost of labour in Eastern Europe is relatively low compared to Western Europe.

In general, nearshoring is a great choice for projects where communication with developers and quick responses are essential. It’s also a suitable option for those who don’t want to risk quality but have limited budgets. However, keep in mind that it might be difficult to find experienced developers in the region, as there is a smaller pool of talent compared to other areas.

The Better Outsourcing Alternative

What’s the best option for outsourcing: onshore, nearshore, or offshore? As your choice should be driven solely by your business needs, this is the wrong question to ask. Instead, you should ask: What suits my business’ scope of work?

When deciding which outsourcing option makes sense for your project, consider the advantages and disadvantages of each type and make sure you choose the one that best suits your needs. With careful consideration, you’ll be able to find the perfect partner for your software development project.

Conclusion

No matter which option you choose, outsourcing will help you reduce costs and speed up timelines while giving you access to a talented pool of developers located in different parts of the world. It’s an increasingly popular way to get quality work completed quickly and efficiently. Outsourcing has advanced significantly in the last five years. As more businesses have entered the market, the environment has become more advanced, reliable, and competitive.

However, while outsourcing can save you money and time in the short term, it’s important to remember that long-term partnerships will bring more value by building a trusted relationship with your vendor. So make sure you choose a reliable partner who is up for the challenge of delivering quality results. By working with the proper offshore development company, you may have access to developers who offer value to your organisation without breaking the bank.

If you want to learn more about how offshoring can work for your business, feel free to reach out to us by filling out the contact form. One of our senior executives will get back to you within 24 hours. 

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