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Onshore, offshore, or nearshore outsourcing – which is right for you?

By Alia Coster
27/08/2020

Onshore, offshore, or nearshore outsourcing – which is right for you?

It’s the age old question: to outsource or not to outsource. And then, if you choose to outsource, where do you outsource to?

Outsourcing projects to external companies offers a lot of benefits to businesses. It adds flexibility to your team, saving you a lengthy hiring process and ongoing staffing costs. And it allows you to bring in expertise and skill sets as and when you need them. 

Outsourcing is especially effective when developing a new product. When there will be a big spike of work at the beginning, but less and less work needed over time. In this instance, you can’t always justify bringing on permanent hires – paying salaries, NI contributions, and pensions – for a dwindling amount of maintenance work. Instead, outsourcing gets the staff you need on a flexible, temporary basis. It’s estimated that outsourcing app development can cut costs by up to 75%.

It all sounds great, right? That’s why IT outsourcing services were up 31% in the past year and are expected to increase day by day into the future.

But choosing whether you want to outsource is only half the battle. From here, you have to decide whether to outsource to a business in your own country (onshore), in a nearby location (nearshore), or in a country halfway around the world (offshore). This decision will always be personal to your business. It depends on the unique requirements of the project at hand, your business, and your finances.

Let’s go through a few of the key considerations to make.

Cost

Generally, outsourcing offshore is the cheapest option. This is because you have the choice of offshoring to any country in the world. And if you specifically wanted to keep costs down, you could opt for a country with a low cost of living that will charge less for staff labour.

Outsourcing nearshore can still offer some cost-saving potential when compared to onshore partnerships. For example, if you’re a UK-based business partnering with a business based nearby in Europe. 

But, as a rule of thumb, we suggest that your decision to outsource shouldn’t come down to costs alone. An issue with making a project’s cost your primary focus is you start to forget about other key factors, such as quality and reliability.

Quality

Which brings us nicely on to quality. Sure, you can outsource your software development to a country halfway across the world for half the price of a UK-based business, but have you done the due diligence needed to ensure they’ll provide a competitive and premium quality of work? Will the end results be up to standard? Or will it cost more long-term by requiring a lot of ongoing maintenance?

When you make decisions purely on cost savings, the quality isn’t always there to match. For example, in some countries, software development is a highly paid role. Because of this, there are a lot of people moving into it as a career. But not all these people will necessarily be skilled, or at least to the level you’d want to work with. With a lot of diversity in skill levels, you want to make sure you’re working with someone who is cost-effective and high quality. It’s about doing your research to strike the perfect balance.

This being said, quality can be difficult to measure. And you have to know how you’re going to measure quality before you start looking around. You want to look at some of the work they’ve done previously. And get someone technical to review it. 

We’ve previously mentioned some tools we like to use to test code and assess the quality of a piece of software when onboarding a new job. We look to build up a general picture of what kind of quality they’ve put in place. Similarly, you can assess quality through referrals from businesses or professionals you already know. But this tends to become more difficult when you’re looking offshore or nearshore. 

There’s a perception that offshore outsourcing offers the lowest quality of work. When, in reality, you can quite easily have very low quality from an onshore provider. It’s simply up to you as a business to ensure the quality is there before you establish a partnership. It can be massively efficient and cost-effective to take a project offshore, so long as you do your research. 

Time difference and language barriers

Time differences and language barriers are something important to consider when outsourcing outside of your own country.

For a productive, efficient working relationship, you ideally want both parties to be working at the same time. It means you can have real-time conversations via Zoom rather than communicating out of sync through email. This might involve shifting your work patterns to ensure good, effective, regular contact. And this will also allow you to share demonstrations and make sure everyone’s on the same page.

On the other hand, it’s all too easy for something to get lost in translation – a simple miscommunication can have devastating effects. It’s another factor to consider when deciding on your outsourcing options.

Whichever outsourcing option you choose, communication is key. First of all you need the digital communication tools to make a distance partnership work. What do you need, or what do they need, so you can have the best remote communication? You might also benefit from a collaborative tool for doing mockups and demonstrations.

Are you ready for offshore outsourcing?

For a fluid, effortless outsourcing process, you need to know and trust the people you’re working with. And you need to put some careful thought into your decision.

This is especially important if you’re planning to build a project and maintain it over the long-term. A one-off job for a conference will have far less at stake than an ongoing collaboration. But if you choose correctly, you could find yourself a business to return to again and again. So it’s always worth putting in the effort during the initial search.

Technically, the only difference between onshore, nearshore, and offshore outsourcing is the time difference and language. Everything else – the quality, costs, reliability, and productivity – are within your control when choosing a business.

It’s also important to mention the need to nurture and manage the professional relationship. This will be an ongoing relationship that will need your time and effort to see the results you want. It’s not a case of outsourcing the work and forgetting about it. Accountability for the final product is still yours. Before making an outsourcing decision, take ownership for your part of the partnership and do the due diligence to make sure you’re making the best possible decision.

Onshore, nearshore, and offshore outsourcing all have their pros and cons. And your choice should be made after considering your own expectations, circumstances, finances, and goals. It’s not a decision to rush into and it’s always better to take the time to find a productive, long-term partner, rather than moving too fast and finding your projects aren’t up to scratch.

At Createk, we offer expert outsourced development to help businesses get their projects off the ground. If you are looking for extra support with your app, want something built from scratch, or want our impartial advice before moving forward with a project, get in touch on 0330 995 0685.

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