One of the many steps in determining which software development company to partner with is deciding between an onshore or offshore company. They both have advantages and disadvantages, and choosing the right one will greatly influence the delivery and quality of your project.

Here’s a quick description of each:

  1. Onshore: in the same country as you, often local to your city
  2. Offshore: outside of your country and usually separated by several time zones

Let’s look at each of these in a little more detail.

ONSHORE SOFTWARE DEVELOPMENT COMPANY

When working with an onshore company the entirety of a project is completed by resources in the same country as you.

Onshore companies are known for higher quality, higher cost, and more hands-on customer service. It’s most common for large companies with a rapid growth rate to work with an onshore software development company. These larger companies typically have a design/development budget >$150K.

An onshore company doesn’t necessarily mean it’s located in the same city as you, but it would definitely serve as a big advantage. If you can find the right team in your city, it’s a no brainer!

PROS

Meet face to face

Although there is so much technology to help us collaborate, there is nothing more effective than meeting in person. You can sit at the same table with the software development company and drill into the details of the project.

onshore software meeting

Shooting ideas back and forth, sketching on a whiteboard, and making revisions can all be done seamlessly. There’s no need for the long, dreadful email thread to get one small detail approved.

You might need to take a short flight to meet face to face, but it’s better than not meeting at all. If you can drive to your meetings, you just made things a whole lot better!

Communication

With an onshore software development company you’re guaranteed timely and clear communication. Since everyone is working during the same business hours, you can expect a quick turnaround on your emails and slack messages. Completing tasks is more efficient.

An onshore software development company also has their team all under the same roof. So not only can they communicate effectively with you, but there are no barriers between the design and development teams. They can work side-by-side to iterate in a timely manner and ensure that the project is executed successfully. This correlates to a higher quality end solution.

CONS

Cost

An onshore software development company will certainly be more expensive, it’s a “pay for what you get” scenario. In this case, you’re paying more for a high quality product. You can expect onshore rates to be approximately three times more expensive than offshore resources.

onshore software cost

If you are looking for the cheapest option, then this option may not be for you. However, we don’t recommend making your decision based strictly on cost. The cheapest options usually offer the poorest resources.

OFFSHORE SOFTWARE DEVELOPMENT COMPANY

In contrast to onshore software companies, when working with an offshore software development company your project will be completed by resources outside your country.

Although there are great offshore resources out there, they are very tough to find due to the abundance of bad resources. This type of company is best suited for small to medium sized businesses with tight budgets (~$30K). An offshore software development company will require you to have a very defined project with detailed requirements and a dedicated project manager.

It’s common for companies to use an offshore software development company to create an MVP to prove their concept, then look for funding.

PROS

More affordable

Partnering with an offshore company is usually the cheapest option. It’s usually 10-20% of an estimated onshore cost. The most popular regions for offshore projects are China, India, and Pakistan because of their low costs.

There are certain regions that specialize in certain aspects of technology and you can definitely find qualified software engineers in those developing countries. To think that only the US has qualified talent is a mistake.

Turnaround time

Due to the larger workforce that offshore companies usually have, they can turn around small projects fairly easily. This is mostly due to the fact that offshore companies can keep their employees “on the bench” until the next project is assigned. This is enabled by lower wages and the larger volume of work that these companies receive.

onshore software client meeting

If you’re on a tight timeline and need your project to be completed as soon as possible, then an offshore software development company might be your best bet.

CONS

Communication barriers

When you’re in a different time zone, communication becomes exponentially more difficult. It could take a day to get a response to your question. If it requires any follow up, you can expect it to take an additional day. It’s not efficient and it can get frustrating at times.

Different time zones also mean you’re dealing with people from another country. The language barrier is challenging to overcome and communicating your project details becomes a whole lot harder. Keeping each other up to date can become a difficult and time consuming task.

No face to face

If you choose to work with an offshore company you can expect to get zero face to face time. You will rely on conference calls and virtual meetings to discuss your project objectives and initiatives. Those calls will not be as effective as sitting face to face. There is only so much you can do behind a computer screen and the language barrier will threaten the level of understanding.

onshore software client call

Cultural differences

Cultural differences can heavily influence the design of a software development project. Each culture has a unique interpretation for solutions to a problem. The offshore company may create a solution to the problem that doesn’t apply to your target audience.  

As a result, you need to have defined user stories and establish very strict requirements and acceptance criteria. Once you get the product built, it is a good idea to use a technical consultant onshore to verify the quality and viability of the code.

When making the decision between onshore and offshore, it’s important to weigh out the pros and cons of each. Compare them to your budget and timeline and be aware of the sacrifices you may need to make. Remember that the time, scope, and cost of a project are all interconnected. You can’t make adjustments to one without influencing the others, unless you sacrifice quality.

If you would like a more in-depth explanation and want to learn about other factors to consider when choosing a software development company, check out our Ultimate Guide to Hiring A Software Development Company.

Thanks for reading!

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