The software outsourcing industry has grown so much over the last few years that it has reached a market share of 85.6 billion U.S. dollars in 2018 alone. That impressive number comes to show an undeniable reality of the US IT talent market - software developers are in short supply and the only way companies can fill those roles in their staff is by hiring external talent.

But that’s not the only reason why offshore software outsourcing is growing with each passing year. Businesses know that software development outsourcing can bring several benefits to the table, including an improved project efficiency, a boost in internal productivity, more flexibility for in-house teams, and an end-product of higher quality.

Reaping these benefits depends on your ability to find the right partner. The path to do so? Start by understanding the three main outsourcing models and what they can offer you. By learning about onshore, nearshore and offshore software development outsourcing you’ll be on your way to find the perfect fit for your project. Let’s learn more about these models!

Onshore software development pros and cons

We refer to onshore software development to the practice of outsourcing part or the whole project to an external company that resides in your country. For instance, you might be living in Los Angeles and look for developers in San Francisco that might suit your needs.

This model acknowledges the lack of local talent and tries to solve that issue by looking at the closest location possible. There are some scenarios where onshore outsourcing proves to be more beneficial, including:

• A project that requires deep knowledge tied to your specific city or region
• Last-minute changes or adjustments
• Small projects that need to be completed as quickly as possible

The pros you can find while using onshore software development are mainly three. The first one is that you won’t have any significant language or cultural barriers, as the outsourcing partner will share mostly the same background as your staff.

Additionally, and as long as you hire an onshore company that’s close to your company (in the same city or state, or in neighboring cities or states), you can also get the other two pros. One is the proximity, that allows for face-to-face meetings as often as they are needed. The other is that onshore outsourcing to nearby cities or states doesn’t pose a problem for scheduling calls and meetings, as both companies share the same time zone.

That doesn’t mean onshore software development doesn’t have its cons. Among the most notorious ones, onshore development can be somewhat costly. It can also be hard to find the necessary talent for a project, especially for companies in the US that are experiencing the same talent shortage as you. Finally, highly specific roles might not be available in a location close to you, forcing you to look elsewhere.

Nearshore software development pros and cons

We talk about nearshore software development when you outsource your development project to a country that’s geographically close to yours. For US companies, this means outsourcing the software development to companies located in Mexico, Colombia or even Argentina, countries that have compatible working hours with the States.

The basis for this model is to fill the gaps that not even onshore software development can address while trying to keep some of the onshore model’s benefits. Thus, nearshore software development is great for certain scenarios like:

• Projects of all kinds that need specific and hard-to-find talent
• Large projects that call for an expansion of your in-house team
• Development for complex solutions that need fast reaction times

Nearshore development has several benefits when compared with other models. For example, it offers a larger talent pool where finding specific roles is easier. Nearshore companies also don’t usually have issues with language or cultural differences, as their proximity to your home country makes them more prepared to work with you. Finally, they are close enough to allow for face-to-face meetings without ramping up the costs you’d have when working with an onshore partner.

Many businesses feel that hiring a nearshore development partner is the best option since it offers most of the benefits of onshore companies. There is, however, a con that many cite against nearshore companies - they aren’t as cheap as their offshore counterparts.

Offshore software development pros and cons

Working with offshore development companies might be the most widely known form of outsourcing. It basically implies that you hire offshore development teams in a region that’s far away from your country. Typically, these countries include India, China, and Ukraine, all of which are located in very different time zones than the US.

The offshore model today is based on the need for cheap talent that’s readily available. That turns offshore developers into an affordable alternative for the following scenarios:

• Projects where quantity is more important than quality
• Projects with budget constraints
• Projects with roles so specific that none of the other options can fill them

As we said above, the main benefit of working with offshore software development outsourcing is its cost. Given the huge number of offshore developers available, it’s easy to find members to expand your in-house staff with a very competitive price. Additionally, offshore development services almost always have the necessary talent for any project.

These benefits come with a price, though. Some of the offshore companies are focused on quantity at the expense of quality, making the final project suffer. Additionally, there are numerous language barriers that might lead to miscommunication which, in turn, generates errors and an increase in costs. Finally, since most of these companies are located in the other side of the world, the working hours are extremely different from those of the US, making it really hard to meet with the offshore developers.

Which one should you pick?

Though the potential scenarios and the pros and cons described for each model above should give you some guidance when it comes to picking one, there’re some extra suggestions. For instance, one of the first things you should do before reaching out to an outsourcing partner is outline the whole project as detailed as possible.

This outline should have all of the specifications needed for its creation while also having all the individual tasks you need to be completed. This will let you identify the level of expertise you’ll need to get the project done. That, in turn, will let you determine which gaps you have in your current in-house team that you need to fill with the help of an outsourcing partner.

Finally, there are some questions you might ask yourself to better understand your needs and the needs of the project:

• How specific are the roles you’re lacking? How hard is to find them?
• Will you need to meet with the external team on a frequent basis?
• What type of workflow will the project need?
• How complex is the project?

By contemplating all of these things, you’ll be in a better position to find out which outsourcing model will be best for your project’s success.

Conclusion

Gone are the days where businesses outsourced their development based solely on costs and budget restraints. There are other options to do so now that don’t necessarily mean a cheaper option but that do offer competitive benefits nonetheless: hard-to-find talent, readily available teams with enough expertise, experienced developers that can boost your internal work, and more.

The decision as to what outsourcing model will work best is ultimately up to you. There are some scenarios, though, that will call for a specific option. Learning to identify when a certain type of outsourcing model will come in handy is another thing you have to understand if you want your project to be a success.

Finally, and as the outsourcing industry keeps growing, you’ll have to compete with other companies pushing for the same talent in different areas. Knowing that you can count on onshore, nearshore and offshore outsourcing companies can be key to stay ahead of the game.