If you decided to outsource your IT or software development, you have probably already heard the terms "onshore", "offshore" and "nearshore". However, you may not be entirely clear on what each one entails. First we are going to explain the extremes so that we can later define the last option more precisely.
Although the definition onshore and offshore does not tell us much about this type of contracting, it can be understood from drawing the difference between onshore and offshore, but in any case it must be borne in mind that they are not precise definitions.
If you think about the meaning of offshore, it can be clarified that the location of the contracted company with respect to the contractor is a central element to understand their difference.
What does onshore software development mean: advantages and disadvantages
An onshore software development company means that both the contractor and the provider are located close to each other; in the same region, province, city, or country.
Being geographically close, it is assumed that they will also be close in terms of cultural issues such as language and idiosyncrasy; and organizational, such as the time zone and facilities to integrate into the labor market. With which, the main advantage of this type of hiring is the ease of communication.
In turn, the onshore option has some variations. There is some consensus that there are two possible models: onsite and offsite. The first implies that the contracted team works in the contractor's offices. Offsite implies that the developers work outside the contractor's facilities.
The disadvantage is that the costs to hire this type of provider are usually high and it is known that in the world market there are more accessible options.
What Does Offshore Software Development Mean: Features and Obstacles
An Offshore provider is one that is located in a country far from the place where the contractor resides. In recent times, this type of contracting has been increasing due to the fact that it involves qualified labor at a favorable cost compared to onshore contracting.
This option is usually the most recommended when the contractor has a reduced budget. In general, offshore companies are considered to be those that are located in emerging or underdeveloped countries in regions such as Africa, or Asia.
The main obstacles to this type of hiring are: language, cultural codes, national laws and the time difference. Although with technology it is possible to overcome these inconveniences, it must be taken into account that they are factors that slow down projects.
In relation to language and time difference, what usually happens is that it is difficult to find an ideal time to communicate and the understanding process is usually slow. Achieving the final product that the contractor wants takes time and dedication.
In turn, these differences and the efforts of the parties to understand each other, are added to the cultural issues that also complicate understanding. All this can lead to a wear and tear of the bond that, if not worked properly, can generate discomfort and even lead the parties to want to end the employment relationship.
The legal aspect is also a determining factor when evaluating what type of company to hire since ignoring the legislation of the country where the product that is being developed will work can cause problems. At least it will be necessary for the work to be supervised by specialists and that will add to the cost of the developed system.
What does Nearshore mean?
Nearshore outsourcing (view) is the type of contracting that has been growing the most in recent times and the most popular option because it combines the best of offshore with the best of onshore.
This option implies that the alliance is between a contractor and a foreign supplier but in a country with the same or similar time zone. In this way, quality professionals are hired with a smaller budget than when hiring onshore, avoiding the most complicated obstacle that is communication.
By sharing time zone or similar, the difficulties to find moments of contact are reduced. In many cases, it is even possible for teams to travel to have meetings without spending fortunes.
In nearshore contracting, as the allied companies are located in nearby regions, they generally use common cultural codes and even share the same language. These variants are not minor. As we have already seen, lack of understanding wears down bonds and makes work difficult.