Onshore, offshore and nearshore software outsourcing

In a previous article we discussed the options of inhouse versus outsourced software development, weighing in the pros and cons in terms of costs, risks, access to the latest technology, confidentiality and control.

Taking the discussion further we shall talk about outsourcing in terms of location and proximity, analyzing the options for onshore, offshore and nearshore outsourcing providers.
So which “shore” is best suited for your company?

This depends a lot on what you need in terms of costs, technologies, independence of the team, etc., but to get the terms straight first: onshore providers are companies located in the same country with your business, offshores are located on other continents, whereas nearshores work similar to the offshores except that you share similar time zones.
Terms are all relative to your location, but we at R Systems can speak from all three perspectives. Having software development centers in Central and Eastern Europe (Poland, Romania, Moldova) and India, and teams located in the US, we’ve built experience with outsourcing customers from virtually all “shores”.

For companies which need a specific skill and rapid response, even some presence in their offices for some time, it is good to look for a provider based in the same country. Even though costs might be higher, many companies, including many of our customers, prefer to put higher value on location proximity, cultural fit and the provider’s level of expertise in a certain area rather than consider only budget constraints. On more than one occasion our local presence was an advantage for the clients looking for strong relationships in a specific country where they ran their operations. This was the case with customers in Poland, but also Romania where we were chosen by an international company for a short message service center (SMSC) product implementation because the main contract was signed by client’s office in Romania.

If the costs are too high with using an onshore, then a nearshore company may be a better solution, especially when the team is in the same time zone but in a country where prices are lower than in the company’s home country.

Choosing an offshore provider is usually the best option in terms of costs, although the time zone difference and obviously the cultural differences will incur additional costs, so this should be carefully analyzed.
From our offshoring experience as outsourcing partner for US companies, important criteria in selecting an offshore partner have been:
1. the highly skilled software engineers at reasonable costs (for which Central and Eastern Europe is well known)
2. good proven English communication skills
3. long partnerships with major companies (international telecom companies, in our case) with wide presence in the US

Also, since the last 2 years’ events and economy evolution, political criteria should be taken into consideration when deciding about the right “shore” where to outsource, however, asking the correct questions and clearly defining your expectations from the provider will help you make the right choice for your business.

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