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. 

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. 

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.