Outsourcing IT - Difference Between Nearshore, Offshore, Onshore

Post by 
Marek Pietrzak
Published 
I

f your business involves software development, web development, application development … basically everything connected with IT development and your company is growing, you probably have heard about the idea of outsourcing software development. If not, outsourcing is engaging third-party vendors on a contract basis to deliver specific services. There are 3 types of outsourcing: nearshoring, offshoring and onshoring. 

No matter if you are a small startup or a big company, outsourcing IT services may be a perfect solution for you. In this article, we will try to bring you closer to the answer with “shore” is the best for you.

When should you think about outsourcing?

There are numbers of reasons why outsourcing can be beneficial for your company. 

  1. Budget limitations - one of the main reasons why companies consider outsourcing is much lower costs
  2. Need to extend your software development capabilities - thanks to outsourcing services you can easily extend your IT team and increase the development power of your company
  3. Need to speed up the development process - by outsourcing software development you may extend your local IT team faster and hire highly-skilled engineers
  4. Recruitment problems  - companies which are providing outsourcing services have access to big talent pools
  5. Your office capacity - by choosing to outsource IT services you don’t need to think about renting or buying a bigger office

What is onshoring?

Onshore is an outsourcing option, which involves transferring your software development to the other city in your home country. Usually, it means transferring to non-metropolitan areas. 

Pros of onshoring :
  • Your software development team is close to your headquarters
  • You are speaking the same language (not necessarily English)
Cons of onshoring:
  • High costs. Onshoring can not compete with nearshoring or offshoring in that area

In other words, onshore software development is effortless but expensive...

What is offshoring?

Simply put, offshore software development means building a fully remote IT team in the country which is far away from your headquarters. For European companies, India, China or the Philippines are common choices. Poland and Ukraine are some popular countries in which companies and startups from the USA and Canada are willing to establish IT teams.

Pros of offshoring :
  • The cheapest way of outsourcing
  • A big talent pool of IT engineers
  • High level of English skills - in Europen countries (e.g. Poland)
Cons of offshoring:
  • Low level of English - in Asian countries
  • Different culture - in Asian countries
  • Long-distance from your company

What is nearshoring?

Nearshore software development fills in the gap between onshore and offshore. Nearshoring is essentially creating a software development team, close to your headquarters, but at much lower costs. In contrast to offshore centres, nearshore centres are located in countries with similar time zones or ones with minimal differences. To give an example, for a company based in Stockholm, nearshore services might be provided in Serbia, Ukraine or Poland.  

Pros of nearshoring :
  • Significantly lower costs, compared to onshoring
  • Same time zone & Similar culture
  • Highly qualified software engineers 
  • Excellent level of English skills
  • 2-4h away from your headquarters
Cons of nearshoring:
  • Higher costs compared to offshoring

Why Poland is a good choice for outsourcing IT?

Poland might be considered as a good place to choose for your nearshore services. Here are some reasons why Poland is a good place for nearshoring:

  1. Labour and operating costs in Poland are significantly lower than in Western Europe
  2. The same time zone & similar culture -> Warsaw reachable from most European airports in less than 2.5 hours
  3. Good availability of highly qualified software engineers (1st place in the ranking of IT developers in Europe, HakerRank 2016)
  4. An excellent talent pool supported by top-quality universities (14,000 IT graduates annually)
  5. High level of English skills (11th place in the global ranking, EF English Proficiency Index 2019)
  6. Poland is in the European Union & Schengen Area

Summary

Summarizing, outsourcing software development might be a good solution for your startup or company if you want to grow your business faster and at the same time save money and time. Of course, outsourced IT services have some disadvantages, but the worldwide growing popularity of such solutions proves its many advantages. Nearshoring seems to be a win-win solution. Your development team is located close to your headquarters and because of high English skills and same culture communication is not a problem. At the same time it is much cheaper than hiring IT professionals in your country. 

So, what do you think nearshore, offshore or onshore is the best for your company?

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