Nearshore vs Offshore Outsourcing Development: Differences and Benefits

Outsourcing software development in IT is thriving in the software development market. The reason is outsourcing project development is preferable, less hectic, and cost-effective.

According to a study by Statista, in 2019, the global outsourcing revenue of information technology was 66.5 billion US dollars. This confirms the fact that IT leaders prefer to invest in outsourcing software development.

Global Outsourcing Industry Revenue Statistics

Image Source: Statista

If you are an entrepreneur and looking to outsource your mobile or software development idea, then this blog is for you. In fact, if you have a question, whether to choose between nearshore vs offshore outsourcing, then by reading the blog, you will get a clear idea about it. As we are going to discuss the following points:

  • Advantages and disadvantages of nearshore and offshore
  • What are the differences between nearshore and offshore
  • When to go for offshore or nearshore outsourcing

Let’s get started.

What is Nearshore Outsourcing?

Nearshore outsourcing refers to hiring talents from nearby countries to get your work done. Nearshore outsourcing offers services similar to other types of outsourcing, it’s just that you hire talent from the nearby country location.

Outsourcing in neighbouring countries opens the doors of finding a talented pool of developers. Let’s take the example of nearshore outsourcing to understand it better.

If you are residing in the USA and looking to outsource your work to nearby countries, then Mexico, Canada, or Argentina might be the best fit for you. Being a leading software development company in Canada, we have excellence in developing a versatile range of custom software solutions. Here is the testimonial from Alex Corstorphine who liked our offered outsourcing services and communications. As he is from the USA, Space-O is his nearshore software development partner.

Alex Corstorphine

Advantages and Disadvantages of Nearshore Outsourcing

Nearshore outsourcing helps you get control of the project in your hands if things aren’t working well, you can easily visit the site and get things fixed.You get a few options of choosing the nearshore outsourcing companies compared to offshore.
Nearshore allows you to find experienced developers and technical specialists, so you don’t have to invest your time to set up and hire talents having similar languages and cultures.Despite the similarity in culture, there might be slight chances of varying languages, work culture, time zone, and national holidays. This can cause challenges in working.
Get your work done faster because hiring from nearby countries escalates the challenges like power cuts, network prohibitions.

Want to Hire Nearshore Software and Mobile App Development Company?

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What is Offshore Outsourcing?

As its name suggests, offshore software development means outsourcing projects to such countries which are far from your location and have different time-zone. The main reason for offshore software development outsourcing is an affordable cost.

As the hourly rate of developers is cheaper, so the overall costing of project development becomes less. The most popular destinations for offshore software development are India, Ukraine, and China. Let’s check the advantages and disadvantages of offshore outsourcing.

Advantages and Disadvantages of Offshore Outsourcing

Offshore outsourcing allows you to save the overall cost of your project development so you can invest in business development.Significant time-zone differences may bring up the coordination problem between two entities, and it may result in unproductive results.
Offshore gives you the opportunity to hire global talent for your web or mobile app development idea around the world.The difference in the work culture may cause some delays to meet the deadlines of the project.
Opting for outsourcing companies allows you to enjoy the tax benefits of different countries. For example, the Philippines offers tax holidays to attract foreign direct investment.Possibility of having less control over the project development at some points because of language barriers, and it becomes hard to explain the expectations of work.

Now, we will check out the differences between offshore and nearshore software development.

What are the Differences Between Nearshore and Offshore Outsourcing?

When you are looking for an answer to choose the right outsourcing type, knowing the crucial difference between offshore and nearshore is essential at a very early stage. Therefore, we have shared differences between nearshore and offshore as below.

CostIf you are in the Asian region, then outsourcing projects to countries like India and the Philippines can help you to save costs. Developers of the Asian region charge less money compared to the developers of the USA and Europe.On the other hand, if you are from North America or Europe, then outsourcing to Asian countries will help you to save money. Asian regions tend to charge less money compared to the USA and Europe.
CommunicationIn nearshore, there are a few chances of communication gaps because developers have similar time-zone, language and share a similar level of work culture.In offshore, the process of communication becomes very tough, and it becomes difficult to cope up.
Time-zoneThe team is looking for a company that has similar working hours in the same time zone, so it becomes easy to hold a face-to-face meeting.Due to differences in the time zones, it creates inconveniences in delivering the expected work and results in a lack of control.
TravellingIn nearshore outsourcing, it is easy to travel to the near country to take regular in-person visits or training sessions.Choosing the offshore development company might not give you the flexibility of visiting onsite frequently because the travelling costs might be higher.
SecurityIn nearshore outsourcing, you get more security control of your project. Because your country and neighbouring countries have quite similar data protection laws that make it easier to develop contracts and enforce the confidentiality of the project.Generally, the possibility of the security concern could be lacking because compared to nearshore outsourcing you won’t get similar data protection laws in the offshore.
CultureIn nearshore outsourcing, there is a small time-zone difference of only two or three hours and because of that, you won’t face any work culture difference or any other barrier for coordination.As you select a country far from yours, you might face the difference in culture and working standards. This might need you to put extra effort into managing the development.
FlexibilityOrganizing the work in nearshoring is easy compared to offshore. If you want to arrange a meeting then it becomes easier to overlap the office hours.Working with an offshore outsourcing development company requires you to pre-plan all the things to meet the deadline, and if you miss it, the result will reflect in the production.
Skilled Labour at Affordable RateYou might face a lack of quality of talents that is moderate compared to offshore because of broad boundaries and different work cultures.Offshores offers you the opportunity to hire and work with a global talent pool of experts and there is also the higher possibility that you even get a skilled person as per your expectations.

Now, as you learned about the differences between offshore vs nearshore outsourcing, it’s time to understand how to choose the best outsourcing approach to develop your project idea into reality. To do so, here are the tips that will help you to make the right decision while opting for any single option.

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Offshore vs Nearshore: Which is Best for You?

    Choose Nearshore in the Following Conditions:

    • When time-zone difference is your concern, choosing nearshore would be the best suitable solution.
    • If communication is a very crucial part of the development and you don’t want to struggle to discuss your project requirements, then choose nearshore.
    • You have limited time to develop a product and launch it in the market.
    • You want to hire an outsourcing company that is not far from your country so you make frequent visits to the site.

    Choose Offshore in the Following Conditions:

    • If you want to develop high-quality software within a limited budget.
    • It is preferable to choose offshore outsourcing when you have the requirements for any project, so you do on-demand hiring.
    • When you want to hire niche-based technical experts, then opting for offshore gives you the opportunity to choose the best.
    • You get an option to choose from a large pool of talent that helps you cover the client’s demands and build the best products with creative insight.
    • You don’t want to take frequent onsite visits, and managing digitally is a suitable option.

Now, let’s move further into the frequently asked question section to clear your other doubts.

FAQ About Nearshore vs Offshore Outsourcing

  1. Which are the best countries for outsourcing project development?

    • India
    • Canada
    • Ukraine
    • Poland
    • Philippines
  2. How to protect an idea when outsourcing software development?

  3. Most of the software development companies sign the NDA agreement with clients. NDA is a confidentiality agreement that is signed between two parties (clients and organizations). It helps to protect all the sensitive information about the project, business strategies, and project ideas.

  4. Can outsourcing be productive and efficient for project development?

  5. Outsourcing the project development offers you the opportunity to hire the best talent pool of developers to executive your idea. Hiring an experienced team for project development increases work productivity and minimizes the chances of errors. Therefore, the time required to launch the product reduces, and you meet your deadlines.

Want to Outsource Your Project Development?

In this blog, you have learned about nearshore and offshore software development and its advantages and disadvantages. You checked the differences between both outsourcing approaches and identified which software development approach is best for your project.

If you are looking to outsource your project development in the North American continent, then you can contact us with your requirements. We have experience in developing 100+ web and mobile projects.

Here are some of the best solutions that we have developed for our clients. Get a glimpse of the following.

  • Roofing Management App – An roofing work management solution to ease the whole process
  • Renovs – Connects customers to the interior designers in the nearby locations
  • UpMaid – An on-demand house cleaning service app to hire home cleaners

Looking for a nearshore software development company? Connect with us.

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Author Bio
Rakesh Patel
Rakesh Patel
Designation: Co-founder and CEO of Space-O Technologies

Rakesh Patel is the Founder and CEO of Space-O Technologies. He has 28 years of IT experience in business strategies, operations & information technology. He has expertise in various aspects of business like project planning, sales, and marketing, and has successfully defined flawless business models for the clients. A techie by mind and a writer at heart, he has authored two books – Enterprise Mobility: Strategy & Solutions and A Guide To Open311.