Outsourcing of software development tasks becomes ever more popular in developed countries. With fewer students graduating from tech universities and more IT projects emerging day by day, the skill gap is alarming. For innovative tech companies to keep pace with the market trends and staffing needs, they resort to outsourcing either to neighboring countries (nearshore software development) or more remote locations (offshore software development). Each of the models has its pros and cons and suits various business needs. Here we explain the difference between offshore and nearshore outsourcing models, point out their strengths and weaknesses, and give valuable tips on selecting a suitable solution.
What is Nearshore Software Development?
Nearshore software development stands for the outsourcing model implying the delegation of development tasks to companies located nearby. For instance, American companies outsource nearshore to tech companies in Mexico, Argentina, and Uruguay, while the popular nearshore software development locations for West European countries include Eastern European states like Poland, Turkey, Romania, Ukraine, Moldova, and Bulgaria, as well as countries in the MENA region (e.g., Tunisia, Algeria, and the like).
Pros and Cons of Nearshore Software Development
Outsourcing software development tasks to nearshore locations has numerous benefits for businesses, such as:
- Geographic proximity (allowing cheaper and quicker travel)
- Cultural fit (countries close geographically often share many cultural values and characteristics)
- Easier communication (nearshore locations usually share the same language with the client, which makes work-related communication easier).
However, besides these advantages, nearshore outsourcing is also connected with some drawbacks that should be taken into account when making the outsourcing decisions:
- A modest cost-saving potential
Countries located close to developed states usually offer competitive rates as compared to the client’s location only. The cost is generally higher than in major offshore outsourcing locations.
- Quality of task performance
One of the risks connected with any outsourcing, including nearshore one, is the lack of proper expertise in neighboring countries. If the client can’t allocate a required specialist nearshore, then it may be better to search among offshore outsourcing companies.
What is Offshore Software Development?
Offshore development presupposes outsourcing of software development tasks to more remote areas – popular outsourcing locations where the IT labor market is booming, and the coder rates are much lower than in the client’s home country and neighboring regions. The most popular outsourcing locations to date include China, Malaysia, and India, as well as other developing states in the Asia Pacific region (e.g., the Philippines).
Pros and Cons of Offshore Software Development
The most obvious reason for which European and American companies prefer to outsource to programmers in the developing countries is the cost of such work. Offshore companies and freelancers charge times less than local developers do, and such a hiring solution may help save tons of money from the project’s budget. Thus, the major pros associated with this hiring choice include:
- A large choice of developers and outsourcing vendors
- Low pricing
These benefits come at a price, however. Most clients preferring to outsource their software projects to such areas should consider some potential risks (each client comes across at least one of them during work with offshore software development providers of any kind):
- A culture gap
The difference between your in-house manager and the offshore developers in terms of values, communication styles, priorities, etc. may be so dramatic that the project’s success will be undermined.
- Communication differences
Though most of the developing world speaks English, these English skills are far from those of ENL speakers and those who study English at colleges and universities.
- Time zone difference
American and European clients are likely to have minimum 5 hours of time difference with outsourcers from Asia, which means that the in-house and offshore teams will have few overlapping working hours. The difference may result in delays and miscommunication.
- Poor developer skills
While coders from the developing world are eager to take projects at small rates, the quality they render for such a rate is usually corresponding to the tiny salary. There are very few developers who charge little and do good work; more often, you will need to send the work for numerous revisions and keep a close gaze on the entire process to get what you want.
- High privacy and data leakage risks
Outsourcing to a distant company half a world away from your main office is always potentially dangerous as no matter how many NDAs you sign; you’ll never know whether the data leaked and whether your freelancer shared it with someone else. Or you will learn that too late, which is a huge business risk.
Which One to Choose?
Hiring nearshore is cheaper than recruiting developers at home, but more expensive than hiring offshore coders. So, which variant is the best? We recommend considering nearshore recruitment first of all as it guarantees a more comfortable workflow in terms of communication, time difference, and the quality you may expect. In case there are no needed specialists nearby, then you may look for coders in more distant countries – but anyway, it’s much wiser to keep this option as a last resort.
How to Select a Reliable Vendor? Hiring nearshore and offshore may be a tedious task, especially for businesses that don’t have their own recruitment department. We recommend hiring a staffing vendor in the target location to avoid the recruitment and candidate search hassle – such assistance will always come in handy as a way to close a vacancy quickly by hiring the right candidate with low risks.
