Onshore, offshore or nearshore software development? How to choose a provider
October 5th, 2020
If you feel that you have to adapt your company to the market's needs and virtualize it due to the pandemic context, keep reading. If you do not know where to start, keep reading, too. We will tell you the differences, advantages, and disadvantages you need to consider when hiring an onshore, offshore, and nearshore service. Choosing the right software development provider can help you to make the best decisions for your business.
In this article:
- Why should you hire a Software Development provider?
- Outsourcing software development
- What is onshore software development? Advantages and disadvantages
- What is offshore software development? Features and obstacles
- What does nearshore mean?
- Why should you choose a nearshore provider from Argentina?
In recent years, the use of information and communication technology has strongly developed worldwide. The number of companies that have chosen this new way of working has increased since the global COVID-19 pandemic outbreak. However, a few industries are still reluctant to adopt technology in their business.
We are incorporating more devices into activities that go beyond studying or working. Nowadays, many industries, such as the entertainment and the food industry, have migrated to different online platforms.
For example, according to the INDEC's Internet Access Report of 2020 second term, there were 7.4 million fixed Internet accesses, and an average of 30.42 million mobile accesses registered.
In this context, it is understandable that small and medium-sized companies have to adapt to their consumers' needs and the industry's demands, which are becoming more and more competitive in the face of large companies' innovation possibilities.
For this reason, in addition to their traditional physical stores, they were forced to turn to online proposals with websites, web and mobile applications, as well as with software to optimize internal processes that improve their services’ quality and customer service.
The most challenging part of that decision is choosing the right provider that best fits your pocket and, at the same time, has considerable knowledge and experience. All these will help design and develop systems that last over time, which can be continuously updated, bringing success to your company. To be able to choose between an onshore, offshore, or nearshore software development company, we will provide you with some keys.
Incorporating an IT team into a company is rather expensive for two reasons. First, several professionals with different specialties and skills are needed to perform all the tasks. Second, these professionals have to receive regular updates; thus, the company needs to pay for training, workshops, and courses to continue creating competitive and innovative systems. It is no surprise that the global trend is the outsourcing of software development.
Outsourcing is a strategic decision that implies trusting another company. In the software development and application industry, outsourcing means delegating the conceptualization, design, execution, maintenance, and updating of technological systems.
According to the State of Software Development, in 2018, 52.5% of the surveyed companies already claimed to have hired external software projects at some point. The 2020 report shows that 56% have done so with specialized companies of those who have outsourced.
It is essential to highlight that there are onshore, nearshore, and offshore software developers. It is necessary to understand what nearshore outsourcing, onshore, and offshore means, together with their advantages and disadvantages. Knowing this can help a company to make the right decision when hiring.
If you decided to outsource your IT or software development, you have probably heard the terms "onshore," "offshore," and "nearshore." However, you may not be sure about what each one implies. First, we will analyze them, and then we will adequately define the last option.
An onshore company is located in the home country. On the other hand, an offshore company is based in a different country to the one in which it does most of its business. Therefore, the company's location concerning the contracting party is a central element to understand their difference.
An onshore software development company implies that both the provider and the contractor are located in the same city, province, country, or region.
As they are geographically close, they are likely to be close in terms of cultural issues such as language and idiosyncrasy; and organizational matters such as time zone and labor integration facilities. Therefore, the main advantage of this type of hiring is the ease of communication.
Many people claim that there are two possible onshore models: onsite and offsite. The first one implies that the hired team works in the employer's offices, while the other indicates that the developers work outside the facilities.
The disadvantage is that the costs of hiring this type of provider is usually high, and it is known that there are more accessible options in the global market.
An Offshore supplier is located in a country far from the place where the employer is located. Nowadays, this type of hiring has been increasing because it offers qualified labor at a convenient cost when compared to onshore hiring.
This is a highly recommended option when the contractor has a tight budget. Generally speaking, offshore companies are those located in emerging or underdeveloped continents such as Africa or Asia.
The main obstacles are language, culture, national laws, and time zone. Although it is possible to overcome these inconveniences with technology, you must consider that they slow down the projects.
Language and time difference are two challenging aspects to take into account. It is usually difficult to find an ideal time to communicate and understand each other when speaking. To fulfill the clients' expectations is more demanding as it takes more time and dedication.
In addition to these two factors, there are also cultural aspects that hinder understanding. Consequently, the relationship can deteriorate, generate discomfort, and even lead the parties to wish to end the working alliance.
You should also bear in mind the legal aspect. Not knowing the foreign country's legislation can create a complicated problem when developing the product. The project should be supervised by specialists to tackle that issue, whose cost will be included in the budget.
Lately, the "nearshore outsourcing" has become the most popular alternative when hiring because it combines the offshore and the onshore's best characteristics.
"Nearshore outsourcing" implies that the alliance between the contractor and the foreign supplier is made in a country with the same or similar time zone. This way, highly-qualified professionals are hired within a lower budget than in an offshore contract, overcoming another obstacle: communication.
By sharing the time zone, regular contact between the client and the supplier is easier to maintain. In many cases, teams can travel to have meetings without spending a large amount of money.
As the companies are located in nearby regions, they usually share cultural codes and even the same language. This is not a minor detail because, as we have already seen, the lack of understanding breaks off professional relationships and makes the job more troublesome.
Therefore, looking for a nearshore software development company allows finding well-qualified teams at a reasonable price compared to a national provider. In turn, friction and language difficulties are prevented.
We have already mentioned the benefits of nearshore outsourcing in Argentina; however, we will summarize the most important ones in a list.
Firstly, the cost per hour of Argentine developers is low since their currency is depreciated against the dollar.
Secondly, professionals have undergone intensive training, so the quality of their work is outstanding. According to the Global Coursera Skills Index, Argentina ranked first in 2019 in the Technology category. Nowadays, it has dropped some positions due to COVID-19's impact.
Thirdly, language is not a barrier. In general, Argentinian software development companies perform satisfactorily in the Anglo-Saxon market because of their excellent command of the language. They can hold conversations in English, make presentations, produce reports and products without any difficulty.
Fourthly,__ Argentinian companies' working culture is similar to those in American or European companies__.
Fifthly, Argentina's time zone is UTC-3, so teams can quickly adapt their schedules to the employer's needs.
To learn more about this topic, we invite you to read our article: “This is why you should nearshore your software development to Argentina”.
If you have any questions about nearshore hiring or our working methods, you can write to firstname.lastname@example.org. You can also follow us on Twitter and Linkedin to find out about the projects we are working on and all the technology industry news.