Onshore, nearshore or offshore – which approach is the best for your app development?
Both web and mobile app development can be expensive. It is not surprising that people are looking for proactive ways to reduce these costs. There are actually a few different ways to reduce your cost of development and the most popular one is outsourcing (partnering). In this blog post, we expand more about this very popular way to develop software and highlight each of the three types of outsourcing – onshoring, nearshoring and offshoring.
| What is onshoring?
Let’s start with the basics - the standard outsourcing approach is called onshoring and it’s very simple – you outsource your software development to an agency or partner firm that is located in your own country. For example – if you live in the United States say New York City, then you would outsource your project to any company located within the United States like Austin Texas.
| There are several advantages to this approach:
- Language – you speak in the same language as your partners, so the probability of misunderstanding is very low;
- Time zoney – you have the option to choose a company in the same time zone (or the time difference will be only a few hours) so you won’t need to wake up for calls in the middle of the night;
- Distance – it should be relatively easy for you to organize a face to face meeting with your developers at their offices or in a major city;
- Culture fit – there should be limited surprises by the cultural behaviour of your team (holidays, regional happenings, etc.) as you are located within the same country and share similar day to day life experiences;
- Tax – you don’t need to stress with the tax policy of other countries, as you work together under the rules of the same law;
- Economical patriotism – if it is important for you to support your national economy, then the best choice is definitely to onshore your partnership.
| The onshoring approach (like everything in life) may have some disadvantages:
- Cost – it might not be the best decision from a budgetary perspective – depending on which country you live in, the costs of development can be very high. Knowing this, there may be opportunities to save money by considering nearshoring and offshoring. Onshoring may not be the most budget-friendly solution;
- Limited access to talent – being geographically limited by onshoring, depending on your local development market, there is a chance that the talent pool has limited skills or availability to develop your project. This could lead to a short or long delay in starting your project;
Although there are more advantages than disadvantages, onshoring is not the most popular way to outsource mobile or web app development - mostly due to the higher cost.
| What is nearshoring?
Nearshoring is a middle stage between onshoring and offshoring. It means outsourcing software development to the companies located on the same continent, usually in the nearby countries. Example? Your company is located in Germany, but you outsource your development to Poland.
| Advantages of nearshoring
- Lower costs – typically you can find a country on your continent where mobile or web app development will be much cheaper making the nearshoring approach more cost-effective than onshoring;
- Time zone – although you don’t work in the same country as your partner, there is still a high chance that you will work in the same or similar time zone. This means lowering communication problems, speeding project revisions and reducing the necessity to have calls during odd hours;
| Disadvantages of nearshoring
- Overall costs – there is a chance that you will pay more than outsourcing software development to the company located on another, much cheaper continent;
- Mediocre level of control – you always have the option to visit the company and discuss all the topics with the team face two face. That said, it will not be an as short and cheap trip as in the case of onshoring (also now, COVID can make this complicated);
- Languages – in most cases you will not speak in the same language as your development team. Due to the close location of your countries, there is a high chance that you or someone from your company can speak both languages;
- Taxes – in this case you are forced to cooperate with other countries tax laws;
- Limited access to talent – especially in the cases of bigger or highly complicated projects, resources of one country may not have the technical talent required;
| What is offshoring?
The last (but not least) approach to outsourcing web or mobile development is called offshoring. In general – it’s the outsourcing of software development to distant countries. For example, you live in the US, but your development team works for you in Poland.
| Advantages of offshoring
- Possibly the lowest costs – there are few countries in the world where mobile and web app development might be super cheap (the quality you get for these low prices is a different topic) and there is a high probability that those countries are located on other continents. This approach can be considered the most budget-friendly and in many cases low cost can overcome many of the disadvantages;
- Access to all the talent on the planet – when you decide to offshore your web or mobile app development, you are not limited geographically anymore. This means that you can find amazing talent far away from your company and still pay less than in your local market.
| Disadvantages of offshoring
- Less control – in general, it’s harder and more expensive (especially now, in the post-covid world) to fly to another continent and meet with the development team. This type of outsourcing can add lag to communication and challenge the project needs for you and your team.
- Language, time zone, culture fit – usually in the case of offshoring, you cooperate with companies outside your time zone (they work when you sleep), abide by different cultural traditions (adapting to local rules for example public holidays) and speaking a different language. Don’t forget – English is a global language so there is a high chance that your new team in Poland will know this language on an excellent level (thanks to high-quality education);
- Languages – in this case you are forced to cooperate with other countries tax laws;
Based on the above assessment, each of the three types of software development outsourcing has its own advantages and disadvantages. Depending on your project, one of these outsourcing methods may be a good fit for you. If the project cost is your biggest concern, then for sure you should consider nearshoring or offshoring. If working in the same timezone is the most important factor then onshoring or nearshoring is the best choice.
You can also consider creating a blended model. For example, you can work with two teams in different time zones. While a team in Poland is doing the development, a team from another time zone can do the testing phase while they are sleeping. Also, you could augment your internal team with an offshore team working overnight speeding the development progress exponentially.
The biggest key to making an interaction with any of these models successful is a clear and transparent process. Organizing your goals and identifying your main concerns is the first step to take before making a decision. Especially in the case of a bigger project, you can easily mix any of these approaches and outsource different parts to different countries with a good plan.
If you are looking to talk through your project with a reliable partner to outsource your web or mobile app - why not drop us an e-mail?-Best of luck!
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