Gone are the days when you could run a quick Google search for the best software in your industry and find reasonably-priced, high-quality solutions to fit your specific needs. Today’s cookie-cutter software is generic and lacks the functionality that most growing businesses need in order to be efficient and competitive.
Custom software development is the better option. And while it certainly costs more up front, the long-term benefits far outweigh the size of the initial investment.
The biggest challenge isn’t determining that you need custom software development – it’s determining the type of outsourced partner you want to work with.
This includes onshore, offshore, and nearshore software developers. Do you know which type of developer is right for your next project?
The Benefits of Outsourcing Software Development
Before diving into the three major types of software development partnerships and the pros and cons of each, let’s begin by making a case for outsourcing in the first place.
While you always have the option of hiring a full-time software development team to work internally with your organization, outsourcing yields numerous benefits – including:
Cost-effective. When you develop software internally, you have to pay full-time developers. Not only do you have to cover their salary, but there are also benefits, taxes, and office space. Outsourced labor can cost 60-70 percent less than in-house labor. This dramatically reduces overhead and leads to a more cost effective end product.
Resource maximization. Money isn’t the only thing your company can save by outsourcing. You’ll also save time, creative energy, and dozens of other tangible and intangible resources. This allows you to better utilize what you currently have.
Access to the best. Software developers are everywhere. As the demand for proprietary and custom software has increased over the past decade, so has the supply of professionals. This leads many cost-conscious businesses to unintentionally hire less-than-qualified developers. By outsourcing, you don’t have to go through the painstaking process of finding, luring, and onboarding expensive talent. You simply find a reputable outsourced software development company and gain access to the best talent with the latest technology.
Less risk. There are so many different rules and regulations in today’s marketplace – particularly if you’re in a sector like healthcare, finance, or government. Between data security and privacy, trying to remain legally compliant is a huge undertaking with significant consequences. An outsourced partner reduces your risk by leveraging their experience and knowledge to develop solutions that work.
While any outsourced software development partner can provide these benefits, not all outsourced options are created equal. As previously mentioned, there are three major types (onshore, offshore, and nearshore) – and they each come with their own pros and cons. The more you understand each, the more calculated your decision-making will be.
What is Onshore Software Development?
Onshore software development is commonly referred to as “local outsourcing.” As the name suggests, onshore software development involves procuring the services of a native company or professional. The word “local” can be used to describe both developers in the same city/state, as well as developers within the same country. (In other words, a company located in Texas can hire a software developer in New York and it’s still considered an onshore relationship.
The goal of working with an onshore development service is to get high quality output without having to micromanage the process.
Pros of onshore software development include:
Cultural consistency. The beauty of onshore development is that you get developers who possess many of the same cultural values as your company. (At the very least, they understand your cultural values.) There’s also consistency in terms of speaking the same language. This limits confusion and speeds up efficiency.
Same/similar time zone. While the United States is a bit unique in that there are four distinct time zones in the contiguous states spanning a difference of three hours from east coast to west coast, onshore development still offers the benefit of similar time zones. This makes it easier to communicate and share ideas in an efficient manner.>
Accessibility. While not necessary in the vast majority of cases, onshore development means you technically have the ability to meet with your developers in person. If nothing else, this accessibility is reassuring.
Cons of onshore software development include:
Higher costs. Price is the biggest downside to onshore software development. You’re typically going to pay a much higher premium to get your software developed by a local team. However, the price is still just a fraction of what it costs to hire a full time developer on your team.
Limited options. There are plenty of onshore software development companies and professionals to choose from. However, if you’re looking for onshore only, your options will be limited (when compared to companies that are willing to look beyond their own borders).
What is Offshore Software Development?
Offshore software development involves hiring a partner located in another country. This could be a country nearby, but it also includes foreign nations on the opposite side of the globe. This approach has become a preferred option over the last couple of decades, but it’s not without its challenges.
Pros of Offshore Software Development
Cost-effective. The biggest benefit of offshore development (by far) is the cost savings. In fact, this is the primary reason every company initially goes the offshore route. Depending on the country and the company, you may end up spying just a fraction of what it would cost to locally outsource.
Bigger pool. Another perk of offshore development is that you gain access to a much larger pool of talent. This allows you to search for and find the best possible fit for your project.
Experience. You pay for experience. And if you want an American developer with rich experience, it typically costs a steep premium. But because of the lower underlying cost of offshore developers, you can invest in experience at a fractional price point.
Cons of Offshore Software Development
Cultural differences. The biggest challenge with offshore development is the cultural complexity. Not only is there a language barrier, but there are also different belief systems and business etiquette. You might have very specific expectations for how something should be handled, while your offshore software development partner is accustomed to doing something another way. What’s normal to you won’t always be normal to them (and vice versa).
Major time zone differences. Let’s say you’re an American company and you’re thinking about hiring an outsourced partner in India. Depending on the precise locations, the time difference could be anywhere from 10 to 13 hours! In other words, their business day is winding down just as yours is starting up.
Lack of control over details. While virtual communication tools make it possible to engage an outsourced partner regardless of where they’re located, this time and language differences limit your control over the finer details of your software development project.
Inaccessible. While you can easily hop in the car or buy inexpensive airfare to visit an onshore partner, reaching an offshore partner is a lot more challenging. This lack of accessibility can prove frustrating if you’re someone who likes to have control.
What is Nearshore Software Development?
The third major option is nearshore software development. While technically “offshore,” this model acts a lot more like an onshore option.
Nearshore works like offshore except that your business partners up with a team of developers who operate in a similar time zone and geographic vicinity. This eliminates much of the friction that exists with traditional offshoring.
Pros of Nearshore Software Development
Less costly than onshore. Nearshore offers many of the same benefits of onshore, except it comes at a lower price point. This makes it a cost-effective option for businesses that want a little higher quality than a typical offshore option may yield.
Closer time zone. From a practical vantage point, nearshore developers operate within the same (or similar) time zone. This makes it easier to communicate during the business day without so many delays. This is especially important when you’re coming down to a deadline and there are lots of updates and iterations in a short span of time.
Less significant cultural differences. Any time you outsource to a developer in another country, there will be some cultural differences. However, nearshore developers pride themselves in their ability to understand and embrace the culture of their target clients. Many have adopted very “Americanized” processes and communication styles.
Greater accessibility. Again, location comes into play. Having closer geographical access makes it possible to meet with your team if the need arises. At the very least, this provides a higher degree of accountability, which you can leverage to ensure the job gets done right the first time.
Cons of Nearshore Software Development
More expensive than offshore. Nearshore simply can’t compete with offshore (in terms of pricing). It’s going to be more expensive (and sometimes the premium is significant). For teams on tight budgets, this might not be a realistic option.
Some cultural differences. While the time zone may be the same, working with a nearshore software developer still isn’t the same as working with a local company that lives and breaths American business culture. (And even if the developer speaks English, it’s typically as a second language.)
Limited options. When compared to offshore, there are only a limited number of nearshore partners. If you have a very specific niche project, this potentially limits the options you have to choose from.
Choosing the Right Outsourcing Strategy
Outsourcing software development is a no-brainer. Unless you already have a highly skilled and well-trained team of developers on staff, there’s no reason to do it yourself. The question is which of the three models – onshore, offshore, or nearshore – do you go with?
While there’s a case to be made for all three models, people are turning to the onshore option in droves. And it typically comes down to quality.
Businesses understand that onshore software developers deliver higher quality, better accessibility, faster communication, and more efficient workflows. Yes, the price is higher upfront, but it’s a cost-effective investment that generates a superior ROI.
The key to any kind of outsourcing – onshore or otherwise – is to partner with the right development team. Here are some characteristics we recommend looking for:
Reputation. You can find out a lot about a software development company online. Do your research and look for partners that have a track record for living up to their promises.
Experience. There’s more to being a good software developer than just being experienced; however, it certainly helps to have a few years of practice under your belt. (Hint: Don’t just inquire about a company’s experience. Ask about the experience of the individual developers on the team. This will tell you more about who will be developing your software.)
Specialty. Though the core tenets of software development are pretty similar across the board, it’s always a good idea to work with professionals who have some specialized experience in your industry or niche. This gives them the necessary context to develop very useful/practical solutions that add value.
Connection. What’s your rapport like with the onshore software development team? Do you feel like this is a group that you’ll get along with? A strong connection will make the process more enjoyable for everyone involved.
Try Onshore Software Development With Dev.co
If you want the cheapest piece of software possible, then you should run a search for offshore or nearshore software developers. But if you want a quality piece of software that generates robust ROI for years to come, onshore is what you need to focus in on.
At Dev.co, we’re a team of experienced software developers who essentially serve as an extension of your team. We’re based out of the United States and we’re here to help you on your next custom software development project.
Please contact us today to learn more about our process!
Ryan is the VP of Operations for DEV.co. He brings over a decade of experience in managing custom website and software development projects for clients small and large, managing internal and external teams on meeting and exceeding client expectations–delivering projects on-time and within budget requirements. Ryan is based in El Paso, Texas.