Onshore and Offshore Outsourcing: Pros & Cons and Which Approach is for You?

When it comes to outsourcing, businesses generally choose either of the two approaches: onshore and offshore. These two approaches may look similar at first but, in reality, are fundamentally different.

In the blog post below, we will discuss the pros & cons of onshore and offshore outsourcing. The ultimate goal here is to help you decide which method is more suitable for you and your business.

What is software outsourcing

Outsourcing is the act of hiring an external company to handle internal tasks. Most companies don’t have enough resources to run their operations in-house. As a result, outsourcing is the inevitable method for businesses to thrive in today’s competitive landscape.

When a company outsources their tasks to another company in the same country, that’s onshore outsourcing. On contrary, if this given third-party company locates in another country, then it’s offshore outsourcing.

What is Onshoring?

Pros & Cons of Onshore Outsourcing

One of the most noticeable benefits of this approach is the feel of having a real team working for you. It is easier to collaborate and exchange new ideas and suggestions through in-person meetings. The outsourced employees will feel more involved with your business and will be more committed to the ultimate goals.

There will not be any cultural or language barriers since the outsourced unit is in the same country as you. Easier communication is the key to better understanding and smoother execution. The time zone difference will either be zero or quite subtle. Additionally, better market knowledge is another upside of using the onshore outsourcing approach.

Cost reduction is the main reason why businesses choose to outsource, but this is not the case with the onshore approach. Your outsourced employees will require the market-rate salaries, and of course, there will be not much saving doing so.

Another disadvantage with this approach is the limited talent pool in a specific country. For example, the tech talents shortage in Australia is severe and only going to get worse. You have to pay top money to hire a local developer not because he’s the most suitable but because he’s available.

What Is Offshoring?

Pros & Cons of Offshore Outsourcing

Cost reduction is the most obvious reason why businesses outsource to another country. The cost of outsourcing is tied to the economic environment of the providers. As a result, Eastern Europe, India or Vietnam, where the living costs are significantly lower, are the go-to places for business in the U.S, Australia or Western Europe.

Another benefit that the offshore outsourcing method brings to the table is a large pool of talents. The lack of new skilled workers is a problem in many developed countries but in developing countries? Not yet. You can choose the most suitable experts for your business without having too many difficulties.

When you hire an offshore outsourced unit, you are choosing the safe and fast way to execute your project. They will deliver the services you asked from them without asking many questions.

Undoubtedly, offshore outsourcing has its downside. Cultural, language and time zone barriers are the first things both parties need to overcome to cooperate smoothly. Another thing that you need to concern about when choosing this approach is that you will not get many ideas or contributions from your offshore employees. Their highest priority is getting the job done on time and you might lose some expert opinions on how to make your product/strategy better.

What is the difference between Onshore and Offshore?  

Onshore and Offshore Outsourcing – Which is for you?

Now that you can weigh the differences, benefits, and drawbacks of the two outsourcing approaches, you can decide which one is more suitable for you. Do you need a long-term remote team that is available for in-office meetings, more involved strategically? Or do you want remote employees that simply do the job at an attractive price?

Each company has unique goals and different methods to achieve them. Outsourcing, onshore or offshore, it’s just a matter of preference. The important thing is finding a trusted partner to handle your tasks effectively. At DevScout, we provide you with the most suitable and effective development solutions to turn your ideas into reality. Ready to scale up your business? Contact us through our contact form or send your inquiries to [email protected]!.