Naprok > Blog > Let’s Look Closer at a Location: Onshore, Nearshore and Offshore Outsourcing

Let’s Look Closer at a Location: Onshore, Nearshore and Offshore Outsourcing

Inna Levchenko

When you decide to outsource the development processes of your app, you, presumably, look for a company that isn’t merely remote employees but a reliable partner. That’s why you search through testimonials and portfolio, refer to the team recommended by your friends, estimate the cost and effort you need to build the software, and take note of a location. Can’t be denied that the last item influences all subsequent development processes. Cultural affinity, mentality, cost efficiency, overlapping of working hours - it's all about the distance between the product owner and the development team. 

onshore, nearshore, offshore outsourcing

There are three pillars of outsourcing by location - onshore, nearshore, and offshore. Before attempting to figure out whether this is a universal solution for every kind of business (Spoiler: No.), it would be more helpful to be aware of all particularities these practices include. Once this is done, you’ll rest assured you make the right decision that satisfies your prior requirements. Let’s work this location’s issue out, like gentlemen.


Onshore outsourcing is the type of services from the development team outside but within the country, your business is based in. The key reason to outsource locally is proximity. The location is convenient for face-to-face meetings to go over with the team about emerging issues in case the project drifts off the heading. The time is close to yours or even the same due to a small distance. Thereby working hours overlap, shouldn't be too difficult to set up a call at the so as no one has to wake up too early, or go sleeping too late. A language issue won’t arise as well - the same country involves the same language using. The biggest obstacle you, probably, meet with is a local dialect. 

onshore outsourcing pros and cons

Actually, it would be a great practice unless there was a latent total project cost defect. Among these outsourcing methods, the onshore is the most expensive one so the average engineer in the US earns more than the employee, proficient in the same tech stack, in Poland or Ukraine. Considering you need the skillful guys, the cost overall might be higher than hiring an in-house team. This, surely,  has raised concerns about whether the onshoring is worthy in case of cost optimization. 


We’ve moved on to the nearshore. In a nutshell, it’s outsourcing from a neighboring country. In this, the time-zone difference between service and product companies isn’t more than a few hours. Next to onshore outsourcing, hiring a remote team abroad enables the financing more efficiently. Since pay rates vary depending on the country and the number of qualified coders is wider, there’s a “win-win” solution in case you want to choose the middle ground. 

nearshore outsourcing pros and cons

Back to the language, culture, and general cost points, here all is relative. The possibility of extra costs or cultural differences is possible anyway. As well as the good language understanding can’t be a guarantee of project success.  This means that you should know the peculiarities of a certain cultural mindset even if the vendor is located in the country at the border with yours. After all, most of these factors rely on the development company’s policy and pricing, rather than the cultural dimension. Nevertheless, the location impact has to be taken into account likewise. 


Following, but the final practice of outsourcing is offshoring. As the name of this method suggests, it implies contracting between the client and the development company located on different continents, or merely in countries, far from each other. In doing so, the time zones, the culture, and the languages have a significant dissimilarity. Although this practice has a big distinction in such points, this one is commonly used due to the enormous pool of programming skills. Besides, the world's competitiveness contributes to flexible pricing according to the economic level of the country and developers’ professionality. Noteworthy examples of offshore collaboration are outsourcing from the US to India, or from the UK to Israel. 


offshore outsourcing pros and cons

More times than not, the offshoring is going in full swing so the aspects, mentioned above, are insignificant. Thanks to current globalization the outsourcing companies have open-minded managers, who are willing to give and take.

Either way, to stave off the concerns you have working with a remote team, you should keep in mind the key element of every working relationship - communication. Starting on the first conversation with the vendor till the solo meetings with developers, taking the tricky moments all around you’ll make a profit with the aid of tight cooperation only.

Does the location hold meaning?

The difference between outsourcing providers isn’t so huge as it seems in fact. Choosing the vendor, it’s simple to find the team speaking English fluently, or the developers who are ready to shift business hours. The only things which can’t be changed are the time overlapping and the salary average according to certain countries (humanity is powerless against the laws of physics and economics so far).

global outsourcing industry revenue from Statista


Global outsourcing industry revenue from 2010 to 2017, by region (in billion U.S. dollars)



Based on the report about Global outsourcing industry revenue from Statistica, it can be observed that outsourcing companies earned ~80 billion U.S. dollars year over year in recent times. Besides, Stack Overflow's Annual Report for 2018 shows the geography of 50 million people involved in software development. It follows that the outsourcing services matter, and the location - don’t.

 StackOverflow community for 2018 by geography

 StackOverflow community for 2018 by geography

[Source: ]

Anxiety and hesitation will have existed by the time you won’t start cooperating with new team members. In truth, it’ll exist regardless of the country your employees from. To put it in the other way, the global market allows for the best-out-the-world geeks even if the culture isn’t far from yours, they get used to resting for 5 minutes every hour and prefer to listen to Eminem or Beyonce. Considering neither taste of music, nor their habits impact on the quality of cod for most cases.

While on the subject of time zones, there are the working hours overlapping varies from the type of development process. In case of project management from the client directly, it’ll be better to use either onshoring or nearshoring. Unless the desire to be involved in the last detail, the time zones difference will make no sense. 


time difference for outsourcing

Still, loads of outsourcing vendors are predisposed to change the operational hours to a couple of hours back or forward, so there’s no reason to avoid considering all options before you won’t communicate with the certain company representative one to one. Focus on the value your product will bring and remember you should look for partners passionate and engaging aside from professional skills. 

How do you determine which route to go?

TL;DR Sort out your priorities.

For better or worse, the choice of the right software company isn’t depending on the location. Either onshoring team or offshoring one might lead the software product to both collapse or success. The only relevant factors you have to watch out for are the ones that have a high priority to achieving the goals you’re aimed at. Mind you, the core idea of IT outsourcing is a cutdown in spending costs for the companies whose business enterprise is far cry from software development. Communication takes time at the first set-out whether the team you’re going to collaborate with. So, weigh up the pros and cons, and go ahead toward a bright future.