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Offshore vs. Onshore Software Development: Which is Best?

Compare offshore, onshore, and nearshore software development outsourcing. Understand the benefits and challenges of each to choose the best fit for your project.

Offshore vs. Onshore vs. Nearshore Software Development Outsourcing: Which is Best?

Choosing the ideal software development approach for your business.

A world map showing people from different countries.

When you outsource your company’s software development projects, you get access to advanced technical resources for a fraction of the cost it would take to hire full-time employees. Outsourcing can even augment your internal resources. Use the extra help to complete ongoing software projects, launch new ones, and stay on top of everything you need to accomplish.

This is how it’s supposed to work theoretically, at least. If you aren’t careful, outsourcing costs can get out of control. Fast.

Clearly, choosing the right software development outsourcing approach is critical. When looking for an outsourcing partner, you basically have three options to consider: offshore, onshore, and nearshore.

  • Offshore development relies on labor from another, often distant, country.
  • Onshore development relies on teams who work within the same country or region.
  • Nearshore development is the middle ground, using outsourced labor from a nearby neighboring country.

There isn’t one correct choice. Each approach has its advantages and disadvantages. Let’s walk through the pros and cons of each so you can choose the best fit for your next development project.

Offshore Software Development Pros and Cons

The biggest benefit of offshore development is cost. You can access a wide range of technical resources at more affordable rates. 

Challenges include time zone differences, cultural differences in the way teams work, and communication barriers. 

The likelihood of bloated budgets, missed deadlines, and general frustration also increases if you lack technical skills and experience. It’s a lot harder to wrangle offshore devs when you don’t really understand what they’re doing or how they’re supposed to do it. 

Here’s an example from a past Codepoet project: An offshore team coded the first iteration of Rug Doctor’s reservation system. It was full of antiquated code, security issues, and was a nightmare to use. There were constant billing and equipment reservation issues. 

We ended up rewriting the entire system.

There are certainly some solid use cases for offshore development. In the collective opinion of the Codepoet team, offshore outsourcing is most effective if:

  • You’re a technical business owner who understands development
  • You have an in-house IT team who can manage offshore devs
  • Your project is simple and straightforward

Onshore Development Pros and Cons

Onshore development can appear more expensive initially, at least on a per-hour and per-project basis. Some of the biggest benefits of choosing an onshore development partner are:

  • Easier communication thanks to shared time zones, language, and working styles
  • Often requires less oversight and project management
  • Long-term cost savings

Let’s talk about that last one in some more detail. Offshore development might seem more affordable, but it’s not always cheaper in the end. 

Language differences can make communicating with offshore partners incredibly difficult. Explaining complex, nuanced projects to an onshore partner is often much easier. In the end, this can lead to lower overall costs for the onshore development approach.

Codepoet client Intelligent Office (IO) is an example of a successful onshore development partnership. When we first started working together, IO needed a development firm that could implement the vision of their SEO agency. That vision included a main website with 60+ individual microsites. Each microsite fits within the website’s existing .Net framework while serving the needs of each IO location. 

Since that initial project, we’ve built additional custom software like an app members can use to book meeting rooms, custom digital mailbox solutions, and more. This relationship is only possible because we have a deep understanding of IO’s business and customers. 

Plus, time zones were never a problem.  

Nearshore Software Development Pros and Cons

With nearshore development, you outsource projects to a neighboring country. We think of nearshore software development as the middle ground between offshore and onshore outsourcing.

Certain cultural similarities and being within the same general timezone are top benefits of nearshore software development. 

Nearshoring can also give you access to top talent at an affordable rate. In general, the cost is somewhere between onshore and offshore development. Common countries that U.S. companies nearshore outsource to include Mexico, Guatemala, Uruguay, Argentina, and other Latin American countries.

Many of the downsides of nearshore outsourcing are similar to offshoring. If you aren’t fluent in the same languages, communication barriers can pop up. This can snowball into budget issues, missed deadlines, and software that doesn’t function properly. 

Which Development Approach is Best?

I know which approach we prefer here at Codepoet, but only you know your business. “Offshore, onshore, or nearshore?” is a business decision that only you can answer once you weigh the pros and cons of different outsourcing options.

If you want an opinion about which choice makes the most sense for your company’s needs, we’re more than happy to chat. 

Fill out this form and we’ll be in touch to schedule an initial conversation. No cost, no pressure.