Nearshoring vs Offshoring: Which software development model is the best for your business?

Nearshoring vs offshoring: which is a better outsourcing model - a question as old as time. Some claim that nearshoring is the way to get everything done, while others swear that offshoring is the winning answer. So how can you know what is the right solution for your business needs if both sound great?

A nearshoring team working

In order to make an informed decision and decide which model will be a winner of a nearshoring vs offshoring battle, here is what you need to know.

Nearshore outsourcing

Nearshore is an outsourcing model in which you delegate different tasks such as web development, digital marketing, design or IT staffing services to a company in a similar time zone. It can be your IT partner based in a neighbouring country or simply from the same geographical location.

Offshore outsourcing

Offshore is a business strategy in which you outsource your business activities to an external team or company in a far-off country, hence the name offshore. Since there is a significant geographical distance between you and the team in question, there is also a time zone difference and often a cultural or linguistic difference.

Nearshoring vs Offshoring: Key differences between these outsourcing models

When observed individually, both nearshore and offshore have their advantages, so it is hard to choose one model based on just observing their benefits. In order to make an informed decision, it is necessary to take a look at their differences to find which outsourcing model will benefit you and your business the most.

Proximity and travel accessibility

If you are looking for a team that you can visit often and have more face-to-face interaction, nearshore software development is the clear winner here. Not only is it less expensive to travel, it is also faster and more productive than having to visit a team that is located on the other side of the world. By being able to meet your IT partners from time to time, you can reap the benefits of having regular meetings and getting to know your outsourcing partner a lot better. And of course, the better you know each other, the better your collaboration will be.

Time zone differences

Nearshore outsourcing partners usually share the same time zone with you, or there is only a slight difference in your working hours. This means that you will be able to get in touch with them when you work and there won’t be a delay in communication. When it comes to communication with your offshore partners, you will certainly have to be able to adapt and compromise more in order to have a successful working relationship as you will be often faced with late email replies and after hours meetings.

Security

When deciding on your IT partner, it is important to consider the possible security risks. Nearshore outsourcing offers a higher level of security than offshore due to being in the same geographical region. This usually means that the same or at least similar laws and regulations apply to both of you. So in case something happens, you will be better protected than when working with a partner from the other side of the world. This is also important for easier contract drafting and enforcing confidentiality throughout the project.

Cultural and language barriers

Even though nowadays a vast majority of IT companies have proficient English speakers, it is not always the case, especially when it comes to working with someone from a distant country. By working with a company that works in your region, it is less likely to experience poor communication due to language barriers. The same principle applies to cultural barriers, as you will have more similarities with a nearshore partner than with an offshore one. This will allow you to have better collaboration and communication as you are likely to share the same values which are a prerequisite for better integration, productive interactions and deliverables’ quality.

Cost-effectiveness

For years myths surrounding cost–effectiveness of both approaches have persisted even though they have been debunked many times. You have probably heard that offshore is far cheaper than nearshore. But is it really the case nowadays? It is true that years ago offshore outsourcing has been cheaper than nearshore outsourcing, but it hasn’t been the case any more. The price range of offshore outsourcing is a lot wider so you may be able to find a company that will complete your tasks for a much smaller amount of money but also a company that will cost you more than working even in your own country. With nearshoring, the price range is not as wide, so it is usually not as cheap or as expensive as the offers you may get from the offshore companies.

Nearshoring vs offshoring: office space

Nearshoring vs Offshoring: The final verdict

Both outsourcing models offer benefits depending on your business needs. However, the truth is that nowadays nearshoring is a better option if you are looking for a reliable, knowledgeable and efficient partner that can deliver great results fast. You can have a better working relationship with a company that you can visit and communicate with during your working hours. Similar culture as well as the lack of language barrier is also a huge advantage that offshore outsourcing simply cannot offer. And let’s not forget that the cost-effectiveness of nearshoring is better as you get what you pay for. So when it comes to the duel nearshore vs offshore, there is one clear winner.

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