When you hear the terms onshore and offshore, the first thing that may come to mind is the bright blue ocean. But if you work in the software development field, you know the terms onshore and offshore outsourcing has very different and precise meanings. The difference between the two terms means all the difference to venture capitalists, small business owners, and markets seeking skilled or affordable talent.

That means to attract funding as a small business owner, you know you have to set up your nearshore, onshore, and offshore teams to overcome any local software engineer needs. Building nearshore teams in Europe, Seattle, New York, and other major software industry locales means you need to know because each one affects your business in different ways. Read on to discover more about essential questions you want to be answered so you can determine the expectations the team will deliver.

The Differences Between Onshore and Offshore Outsourcing

There are five significant differences between the software terms onshore, offshore, and nearshore outsourcing. The five categories containing those differences are in your

• Time zone location of businesses
• Communication methods and efficiency rates
• Time savings
• Cost budgeting and savings
• Team collaboration and convenience

Nearshore development for outsourcing purposes means your business can provide secure communication. These teams will work close to each other, making geography more time zone friendly and allowing your onsite visits to happen as often as needed. Onshore outsourcing means your business is hiring from within the same country, if not the same local area.

You can find more qualified and skilled software engineers by working within the borders of your country vs. just your city or area. The tradeoff is you’re going to pay a higher hourly rate for software engineer help most of the time. Offshore outsourcing means you’re finding your software engineers through a global search.

That means your software engineer team is coming to you from different parts of the world sometimes at a much lower hourly rate than you’d have to pay for someone from your area.

The Five Categories for Onshore Development

Many companies default to onshore software development because it’s easy to find the software engineers you need when you’re hiring and outsourcing them so close to your company’s headquarter location. Most of the time, for purposes of the five categories, you’re following the below criteria.

1. Time Zone Location of Businesses

You’re working with companies in your business’s home country, so that means you can easily hire a skilled team that is available to you based on your business’s dominant time zone.

2. Communication Methods and Efficiency Rates

It goes without saying your software development team won’t have any communication gaps between team members. The ease of communication while testing and developing software is an efficiency rate advantage.

3. Time Savings

The company enhances their working capacity in time savings because all team members speak the same language, understand the team’s software development objectives while maintaining a comfortable work schedule. The work schedule often saves time and money due in part because of the effective communication used between team members.

4. Cost Budgeting and Savings

Going along with the time savings, if your company doesn’t have to pay for more extended hours, then there’s a cost-saving that cannot be overvalued. Management also finds it that much easier to keep abreast of the software project updates.

5. Team Collaboration and Convenience

There’s a lot to be said for having a software engineering team that can work together collaboratively in the same locale for convenience’s sake. The result is the enhanced team collaboration provides an optimal working capacity for the project.

The Five Categories for Offshore Development

If you ever wanted to work remotely, hiring your software engineering development team from abroad, you’ll be able to participate in the experience to see if it can fit your company’s needs. Virtual projects in software development companies are sometimes the best way to go, but they also meet the below five categories.

1. Time Zone Location of Businesses

Many companies choose their offshore software development teams from India, Poland, and Ukraine. That’s because these countries are considered the go-to locations when your working a project that’s partnering with the United States. If you choose these countries for your offshore development team, you have to be mindful of their time zones and how it will play into your project objective and deadlines.

2. Communication Methods and Efficiency Rates

If you want to maximize your offshore software development efficiency rate, many companies go to Poland as their communication skills are sometimes more advanced in speaking and reading English, which plays into your project’s efficiency rate.

3. Time Savings

There’s no getting around the deficits in meeting the criteria of time savings for your offshore project. That’s because there are significant time zone differences in-between New York City and Poland or Los Angeles and Ukraine. You can have two separate teams with one being based in the U.S. or Europe and one in India or another locale of your choosing, but you must determine a way to compensate for the team’s time differences.

4. Cost Budgeting and Savings

You get a bigger bang for your buck with some hourly rates as low as $20/hour for software engineering development teams. Your company can save much in terms of its overall personnel and project team member costs.

5. Team Collaboration and Convenience

Cultural and language issues can affect team collaboration efficiency rates. Sometimes it’s difficult for transparent and objective business processes to be ironed out for project parameters. This means that your project can end up being more time-consuming and inconvenient the longer it takes to complete.

What’s the Right Software Development Strategy for Your Company?

Every software engineering development process whether it be nearshore, onshore or offshore has benefits and deficits. The good news is every deficit has an answer that can add to another criterion. Your company’s final onshore and offshore software development project doesn’t depend on which category you pursue in hiring your software engineering team members. In the end, it depends on how well you manage the project with open and effective communication that provides an optimal working capacity for the project.