Nearshore vs Onshore Software Development: Which is Better?

When a business is deciding between nearshore vs onshore outsourcing, it will need to factor in variables such as cost savings, time savings, collaboration and convenience, effective and efficient communication, and of course, time zones. Unfortunately, there is no one size fits all outsourcing solution. Each business has different needs and priorities, and each outsourcing option has benefits and drawbacks. A thorough understanding of what a business needs and what each outsourcing option provides (nearshore vs onshore) is essential to making the best decision. 

What is Nearshore Outsourcing and What is Onshore Outsourcing?

  1. Nearshore outsourcing occurs when one business contracts with a software engineer or team of engineers in another country in the same or similar time zone. Businesses usually partner with a company that provides software engineers for outsourcing.
  2. Onshore outsourcing follows a similar structure to nearshore outsourcing except that software engineering work is hired out to an outside engineer or team of engineers in the same country as the business. 


Nearshore vs Onshore Outsourcing

  1. When it comes to onshore vs nearshore, the upfront costs of onshore are generally more significant than those with nearshore outsourcing. Whether a business chooses nearshore or onshore, use a vetted company like Encora to ensure quality results.
  2. Time savings is another important consideration. While onshore outsourcing might lead leadership to think that their new team is going to be in the same time zone, it is possible that a business could use an onshore company two time zones away from them and work with a nearshore company in the same time zone. For nearshore vs onshore, the time savings a business will recoup is essential to factor into its decision.
  3. Being geographically close to outsourced partners makes collaboration and meeting in person much more accessible. In-person meetings are generally necessary to foster a good outsourcing relationship, whichever method is chosen. And again, this is one of those issues that may or may not be solved by choosing nearshore vs onshore. For example, a business in southern California will be geographically closer to a nearshore team in northern Mexico than it would be to an onshore partner in North Carolina. And in this case, the nearshore team would be in the same time zone. Another example would be using nearshore resources in Costa Rica, a central technological hub in Latin America (LatAm). Costa Rica is on Central Standard Time for part of the year, and Mountain Standard Time for the rest of the year, since they don’t use Daylight Savings. That puts them in the same time zone (or very close to it) for much of North America.
  4. A business’s ability to communicate effectively with its outsourcing partners is also essential. Many nearshore teams are fluent in English, so there may be little to no lost convenience in collaboration if a business chooses nearshore outsourcing. Time zones also play into this factor; if there’s a three-hour time difference, that might not be much of a hassle. But, if a business is working on a tight deadline, that three-hour time difference might complicate the quick communication needed.

  5. Each potential outsourcing partner needs to be individually considered, with their time zone factored in, since neither option guarantees the same time zone, but either could potentially provide it.

Nearshore vs Onshore Outsourcing vs Offshore Outsourcing

When choosing between onshore vs nearshore vs offshore outsourcing, the correct answer is within each business’s individual needs and experience with outsourcing. Depending on its requirements, each option may be the most appropriate choice. 

The most significant practical difference between these three options is the location of the outsourced teams. With onshore, the teams are in the same country. Nearshore means that the new team is in a country close to the business; if they choose offshore, the outsourced team could be located further away.

How a business uses outsourcing will likely evolve as it matures in its ability to utilize and leverage the different aspects and qualities of the outsourcing models. For example, a business new to outsourcing is more likely to choose a nearshore option, whereas more mature companies tend towards using a mixture of nearshore and offshore. With experience, a business learns how to work effectively with offshore teams, using techniques like “follow the sun” or asynchronous work, which allows them to capture cost savings from lower-cost resources. 

How to Choose Between Nearshore and Onshore Outsourcing

Choosing between nearshore and onshore is a multi-faceted decision. It’s a good idea to look at this decision as part of a business’s outsourcing journey rather than a single-time decision. Any decision will provide information about what works (and doesn’t) for a business. A business’s limitations and capabilities must be considered since they point to areas where more support is needed. Other good markers to look for are industry experience and excellent references. For quality, experienced nearshore software engineers, look no further than Encora. Experts in their field and fluent in English, Encora’s nearshore software engineers, have the skills a business needs to succeed. 



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