Onshore Vs. Offshore Software Development

I. What is the onshore outsourcing model? 

The onshore model (or onsite delivery model) means software outsourcing companies or third-party vendors that provide employees to customers with the expertise and other services of such employees. Both the supplier and the customer are in the same country. 

The supplier’s onshore vs. offshore development team directly coordinates and works with the customer’s team to delegate tasks. The supplier’s onsite team is usually located in the customer’s office. But sometimes, the outside group is primarily located in the supplier’s office, and most of their work with the customer is online. 

Advantages of onshore/onsite

Disadvantages of onshore/onsite

Onshore outsourcing can work if your ultimate goal is to add a continuously expanding team with expertise not currently available within the company. An inbound outsourcing partner is also beneficial if you prefer a partner in your time zones and want to work in the same jurisdiction.  Communication is often much easier and more streamlined when your outsourcing partner is geographically close. The chances of visits or staffing on your site are higher than with a local supplier.   This type of development model is perfectly suited for short-term software development projects. Customers choose the onshore team mainly for redesign projects with repetitive work scopes. The other case is when the client has unclear requirements about the project.

Outsourcing costs are mainly related to the local economic environment of the supplier. While local suppliers have certain other advantages, their prices are generally more than double or even more than those of a foreign supplier.  Issues such as cultural or language barriers are less noticeable when choosing an onsite outsourcing company. However, miscommunication is still possible due to corporate culture, technology factors, or business processes with an onshore team.

II. What is the offshore outsourcing model? 

The offshore software development model (or offsite) is a popular distribution model based on the supplier’s website. The model of overseas delivery is also known as outsourcing – the customer orders software development from developers in another country. The client does not have direct interaction with the supplier. However, customers can communicate with team members via message, video call, phone, etc. This software development is suitable for well-structured and planned projects with clear SRS documentation. Offshore software development is quite common these days. 

Advantages of offshoring

Disadvantages of offshoring

Clients often hire an offshore team when there is a potential long-term project or custom software development. The main advantage of offshore outsourcing IT projects is cost savings.  At least indirectly, choosing one or more offshore software companies in some potential markets like Vietnam increases your presence in a new foreign market.  In addition, reputable and experienced software outsourcing service providers like TECHVIFY are always committed to ensuring the output quality of the project with additional benefits such as 24/7 service support, which means the time difference does not bind you.

It would help to consider several barriers before hiring an offshore development provider. It can be not easy to employ an overseas outsourcing team in a country that speaks a different language and whose customs do not suit you.

III. Difference between onshore vs. offshore

The difference between onshore and offshore models is quite clear. Onshore outsourcing, also known as onsite outsourcing, is receiving services from someone outside a company but within the same country. The offshore model is in contrast to overseas outsourcing, which is hiring services from people or companies outside the country. 

IV. What is the onshore & offshore model? 

Do you have ever heard about the onshore-offshore model? This hybrid model combines onsite and offsite to deliver a product or service. Vendors and clients can be anywhere – in the same city or countries half a world away. 

There are two popular types of this hybrid model: one is to transfer offshore personnel to work onsite & another is to work in parallel onshore and offshore in different locations. 

Tasks are assigned and shared between the onsite and offshore software developers. The work allocation will depend on the agreement between the supplier and the customer. In most situations, about 40% to 60% of the tasks are performed and completed by the onshore team, while the offshore team performs the remaining tasks. 

Benefits of hybrid model teams for the IT outsourcing 

The main benefit of the onsite-offshore hybrid model is that it is resource and cost-effective. Save on labor, associated costs, and infrastructure costs because the overseas team is located in a lower-cost country. 

The expertise and resources of the onshore and offshore teams are fully utilized if both teams are in different time zone countries. This means that a smooth task transition can be achieved online so that any unfinished work in the onsite team can be transferred to the offshore team and vice versa. 

Onshore & offshore models are also beneficial for complex projects and will run for high-tech and complex products and services. The client is also relieved of managing a dedicated team as the offshore service provider administratively manages the onshore team. 

Learn more: Top 10 software development companies in Vietnam

V. Onshore vs. offshore or hybrid model- Which is the best? 

It is hard to conclude which is the best because it depends on each client’s company’s specific demands and budget. Generally, people consider the onshore model when developing re-engineering projects with a repetitive scope of work and wanting to reach the full potential of face-to-face collaboration. On the contrary, those well-structured and planned projects could be better if clients chose development teams. And we do not deny that the offshore model brings the best cost-effectiveness.  

However, recently the hybrid model has been trending. Many business owners prefer the onshore-offshore model for its many advantages, including its undeniable cost-effective impact. Hybrid outsourcing is excellent for complex product development and long-term IT projects. Customers can enjoy the benefits of offshore outsourcing while still having an onsite staff to deal with any questions or issues without managing a sizeable onshore team.