Offshore vs Nearshore - which Staff Augmentation Model Choose?

Although the digital transformation process is speeding up around the world, the unstable economic situation makes companies search for more affordable solutions. The global trends have especially affected companies in western countries with high employment costs. In such volatile business conditions, companies know that now is the time to choose a more cost-effective strategy.

To make an enterprise resilient to the global forces impacting every industry, business owners are forced to cut costs, often reducing or resigning from their in-house team of specialists. Outsourcing company IT processes to places with more competitive prices is one way of dealing with raising labor and product development expenses without any loss in quality. The market offers several outsourcing options to choose from to suit various businesses.

Nearshore

Nearshore outsourcing is the process of delegating one or more company operations to the partnering company located in a nearby country. It is a convenient outsourcing model which enables efficient communication and shorter travel time. It is the best for long term and complex projects, like custom software development, which require frequent communication and in person meetings.

Offshore

It is a model where an enterprise outsources their processes to a third party company situated in a distant country. This option guarantees access to skilled software developers with high cost-effectiveness. It is the best option for long term partnership with staff augmentation and dedicated team services.

Onshore

Onshore outsourcing means partnering with another company operating within the same country to take over one or more processes. Although it is the least economical option, it assures reduced bureaucracy, geographical proximity and lower risk. Since it is the least cost-efficient outsourcing option, it is best for one-time engagements and projects.

Nearshore outsourcing is a convenient model for companies who lack software developers in their own country and want to retrench. This model offers the possibility of hiring tech talents from neighboring countries. You can choose if you want to outsource the whole process or employ single software developers.

Nearshore outsourcing can be a perfect choice for companies with small and big projects. The benefits of this model include close proximity of a country which allows the business partners to easily travel between the countries. What is more, little to no cultural differences between such countries enable the business associates to understand one another easily without cultural barriers.

A big asset is also close distance between the countries as it influences one of the most significant aspects which is communication. It is an invaluable matter when you have a project which requires regular contact between your company and the third party team. Your working times overlap and the outsourced team is onsite the same time as you are.

When it comes to labor pricing, nearshore software development is the second best option. Usually, the offshore model offers the most favorable pricing, however, the nearshore option will still be more affordable than onshore.

Pros of nearshore outsourcing

• close distance
• work in the same or similar time zone
• cost reducing
• culture familiarity
• possibility to travel between the countries

Cons of nearshore outsourcing

• limited cost reduction in comparison to offshoring
• language difference
• limited control

Offshore outsourcing means delegating IT processes to distant countries. Offshoring offers the lowest rates from all the outsourcing models and therefore is often chosen for long-term projects, which would be costly to carry out in countries with high labor costs.

This model is especially attractive as it offers access to a global talent pool. Specialists in countries like Poland not only are skilled and have hands-on experience in software development but also offer competitive hourly rates. What is more, they usually know English at a communicative level which enables efficient communication and partnership.

An entrepreneur who decides to outsources their services or processes offshore is able to work more efficiently. Due to lower labor costs they can hire higher number of specialists who will work more effectively. Moreover, while the IT processes are outsourced to the external team, the company owner can focus on core competencies in order to develop their business.

Although offshoring has a lot of competitive advantages over other solutions, it also has some drawbacks. One of them might be operating in different time zones. However, it may not be as significant in issue if the project does not require frequent communication. Moreover, you can offer your customers round-the-clock support if you have a team working in different time zone. Worth considering is also the fact of regulatory discrepancies as it may be an important factor in case of complications.

Pros of offshore outsourcing

• cost minimization
• large talent pool
• quality services offered by skilled software developers
• increased efficiency
• work round-the-clock

Cons of offshore outsourcing

• possible culture differences
• working in different time zones
• regulatory differences

Outsourcing a custom software development to a company in the same country, known as onshore outsourcing, is a perfect choice if you need to scale up your in-house team. You can use a staff augmentation model in order to hire one or more developers to support your project or a whole dedicated team of IT specialists to for full software development. This option allows you to scale up or down anytime.

The undeniable advantages of onshore outsourcing are ease and effectiveness of communication. Since the partnering companies are in the same country, or even in the same city, it is easy to meet in person as often as possible. Also lack of language and cultural barriers facilitates the information flow.

Onshore is the most costly outsourcing option as hired specialists earn market salary rates therefore you will not save on employment costs. Therefore, it is not the best option for companies which want to cut down on expenses. Additionally, it only offers a limited number of software developers.

Pros of onshore outsourcing

• no time zone differences
• low risk
• effective communication in the same language and without the time difference
• possibility to scale up or down

Cons of onshore outsourcing

• the least cost savings
• limited number of specialist

In light of global tendencies and changes, it is high time businesses started considering outsourcing. There are many reasons why it might be the reasonable option for your enterprise in the upcoming years.

Cost reduction

This solution can help enterprises of all sizes to reduce the cost of recruitment, on-boarding and employment.

High efficiency

You can boost your efficiency through delegating some of the processes to your outsourcing partner in the other country. This especially applies to offshore outsourcing when you partner with a company operating in a developing country with lower hourly rate. This enables you to hire more specialists for lower or the same amount of money.

Scalability & agility

There are many outsourcing options. Some of the possibilities include scaling up with help of staff augmentation model. It allows you to hire new developers at any stage of your project and for as long as you need them. Operating in the industry that is prone to rapid or unexpected changes, staff augmentation could turn out to be the key factor for your success as it gives you possibility to react quickly and transform your business to adjust it to the situation in the market. In Vratislavia Software we offer you flexible staff augmentation conditions that let you scale up or down any time you need it.

Getting ahead of the competition

Outsourcing processes to your business partner can help you manage your company more effectively. The outsourced team will do the work for you while you can focus on core business process in your enterprise. Thanks to this you will be able to sacrifice more time to tasks which are important for your company to prosper.

Work round-the-clock

The difference between time zones might be a source of some communication delays but it can also be turned into advantage. The outsourced team can provide support for your clients while your in-house team finishes work. This gives you opportunity to offer 24-7 services which your customers will appreciate.

If you are at the stage of software development, with an offshore team your project can be developed constantly. It will speed up the development process and help you launch your product lot faster.

Access to large talent pool

Outsourcing to other countries gives you access to tech talents from around the world. You might find IT specialist with expertise in desired technologies. Outsourcing companies like Vratislavia Software are proud to provide assistance to businesses around the world with finding right specialist when they struggle to find them in their own country.

Contact us for information about outsourcing and staff augmentation options. for your company.