The Difference Between Offshore Software Outsourcing and Onshore Outsourcing

Note: the article was updated in December 2020.

Nowadays, many leading businesses and companies opt for software outsourcing services to increase productivity, reduce costs on hiring an in-house team of remote developers, and get effective results. Generally, you can choose between onshore and offshore software outsourcing depending on your project objectives and personal preferences. You might be wondering what is the difference between onshore and offshore software development outsourcing companies. Below, you will find a detailed explanation and benefits of using each type.

What Is Onshore Software Outsourcing?

When we are talking about onshore software outsourcing services, we mean hiring a team of individual software developers located in your country. The main advantage of hiring an onshore team of developers is the geographical proximity to your business. The closer your team is to you, the easier it is to monitor their progress and all project-related activities. The contractor can even visit a team of developers personally from time to time to make the collaboration as effective and productive as possible.

High Pricing That Includes Culture Code and Legal Framework

One of the main benefits of onshore outsourcing is the absence of cultural differences and language barrier as you live and work in the same country. So you won’t have problems with communication and understanding each other. Also, the time zone is the same, and you don’t have to wait long for an answer due to the time difference. It will be much easier to discuss project details and address any occurring issues.

Collaborating with an onshore company means that both of you should comply with your country’s regulations, and it will be easier to determine and resolve issues. However, the main downside of the onshore developers is high labor costs. Yes, you can find highly skilled and accomplished professionals close to you, but due to the talent shortage, it will be much longer and more difficult to search. The hourly rate for the onshore software development services will be approximately $100, and the number can even attain $125 per hour. This price is probably not convenient for all companies and businesses. So, if you are on a budget, consider an offshore option. 

What Is Offshore Software Development?

Offshore software outsourcing means recruiting a team of developers abroad to work remotely. Generally, companies outsourcing their projects, usually collaborate with teams from India, China, and Western European countries such as Ukraine, Poland, Czech Republic, etc. 

The main advantage of an offshore development company is the low labor cost of approximately $20 per hour. This flat hourly rate cannot be beaten by other options. Thus, offshoring developers is the most convenient and affordable choice for many companies and startups who cannot afford to hire an expensive onshore team. 

It’s easy to find offshore professionals with great software development expertise and excellent verbal and written command of English. Generally, all offshore software development companies offer high-quality service and meet all the customer’s requirements. 

Among the main drawbacks of collaboration with teams abroad is the time zone difference, which complicates the communication between developers and contractors. It is always possible to keep in touch via phone, Skype, chats, or emails, but delays cannot be avoided in this case. It will be much more difficult to address eventual issues, discuss all the details, and monitor the process and quality of work. 

Whereas an offshore team speaks English well, there still could arise misunderstandings due to cultural differences, so it might be harder in some cases to understand requirements and instructions. In addition, if some issue with foreign workers occurs, it will be challenging to resolve it as you will be supposed to deal with other county’s regulation and court. 

QA & Software Testing Outsourcing

Traditionally, people are used to discussing software outsourcing in the context of development. However, as IT outsourcing was becoming more popular and widely used across industry-leading companies like Amazon, Apple, Skype, etc., services offered on the market expanded greatly. These days, you can find a relevant professional or a team to cover basically any stage of a software development project, from technical consulting to product design, business analysis, and, of course, software testing.

Quality assurance takes a special place in the range of all offshore software outsourcing services, primarily because of its great benefits for the end product. Having a third-party QA team that tests your application is a sure way to find out all the weaknesses of your product. In the case of testing, the fact that an offshore team doesn’t work for you directly and was not involved in the product development since day one makes the QA process as unbiased as it could possibly be.

QA outsourcing service list

If you ever think of a distant quality assurance company to hire, we would recommend you to look for one that specializes in software testing specifically. The range of services such companies offer does not end with just “testing”. Depending on the type of software under examination, tech stack it is built on, and your long-term plans with this particular product, you will need at least one type of the following procedures:

• Functionality testing;
• UI/UX testing;
• Compatibility check;
• Manual QA;
• Automated QA;
• Security testing;
• Localization check.

All of these can be implemented by nearshore and offshore located teams equally well. However, deciding between these two options, keep in mind that distance at times can be even more beneficial for clearer testing results rather than close control. The users of your software product most likely won’t be limited to a certain location, which means you don’t have to put your QA team anywhere near yourself to find out if your product’s good enough to release it.

Choosing Between Onshore and Offshore Development Outsourcing

Before you hire a team of developers, define clearly your priorities. Then, you can choose whether you want to go for an offshore or onshore team of developers. Each option has its own benefit, so consider all the pros and cons of onshore and offshore development outsourcing carefully. Hire developers that best suit your needs perfectly and create a top-notch quality product together.