Onshore vs Offshore Company: Difference and What to Consider?

 

One of the biggest challenges faced by every company is to scale while being efficient and productive at the same time.

Are you an entrepreneur who is planning to launch a new app, enhance your business or have a software project that needs to be completed but lacks efficient staff?

Many business owners find it difficult to build an in-house team that has knowledge of a diverse range of technology stacks.

The salary demand for an experienced professional is too high and the competition for top talent is fierce.

Besides being expensive, hiring new developers can be time-consuming and companies may not even have the recruiting resources to find qualified candidates.

In that scenario, organizations look for cost-effective alternations that offer flexibility and convenient solutions as per their requirements.

Offshoring and Onshoring are two options companies are considering in today’s world. But before moving further, it is better you understand the difference of onshore vs offshore so that choosing one becomes easier.

What is an Onshore Company?

Onshore company is an entity built in the home country with the sole purpose of completing a project with specific jurisdiction.

You choose to avail of services from a company located in your country. In this case, you may have to spend more in terms of labor cost but the benefit is you have to coordinate with the local employees.

This means you don’t have to deal with any language barrier or cultural difference.

As per McKinsey & co. and the Sourcing Journal, a step-change in onshoring will accelerate the market in the upcoming years.

The factors that will drive growth are advancement in automation and sustainability concerns.

Onshoring makes more economic sense with advanced technology as automation helps in enhancing productivity.

Advantages it offers:

1. Same time zone

You and your outsourcing partner, none of you have to work overtime or in shifts to synchronize the development process. The time zone remains the same.

2. No cultural differences

Being in the same continental region, you don’t have to face cultural differences. Compatibility and productivity are high.

3. Quick problem-solving

As there is no time zone difference issue, it is easier to manage the team while monitoring the projects.

4. Proximity

The biggest advantage is they are very close to your business. This allows for less expensive and more face to face meetings.

It further makes it easier for you to manage the team while monitoring the projects you have outsourced them.

5. Easy communication

Communication is easy as you communicate in the same language. This makes it easy for the team to coordinate with one another.

6. Rules & Regulations

Having an onshore company by your side means both you and your onshore team is governed by the same regulations.

It becomes easy to find if the onshore team is not complying with the country’s regulation and you can immediately raise an alarm.

Now let’s move offshore.

Defining an Offshore Company

Offshoring is simply defined as outsourcing your project or set of tasks to a team of developers that are outside your country, located at a different geographical location.

Stats to Consider

1. More than 44% of the chief intelligent officers want to take advantage of outsourcing

The outsourcing statistic from 2018 clearly depicts that the complete IT sector wants to consider outsourcing.

In fact, 51% of technology executives say that they outsource applications and also software maintenance and 40% outsource data centers.

2. Cost-saving is the major motivation of IT outsourcing

Freeing up resources in order to focus on your core business and cost-saving are the reasons for IT outsourcing.

45% of organizations claim that their projects are meant to save money. 46% says outsourcing gives them access to the skilled workers that are not available in-house.

3. 24% of small business outsourcing to enhance efficiency

For startups and small business owners, efficiency is a priority. They don’t have access to the necessary resources and the major reason behind this is budget restrictions.

The US outsourcing stats depict that any startup firm outsources its project in order to increase available expertise and seek the help of experienced professionals.

4. India tops in global outsourcing

According to ATKearney, India tops the list of global IT outsourcing. This clearly means many countries consider India as their IT destination.

For years together, India has managed to maintain its position as the top IT leader in the industry.

Offering a diverse range of skilled English speaking developers that no other country provides at this rate, Indian developers have a good reputation in the market.

As per the outsourcing statistic 2017, India tops the list with an index of 7.07 which is further followed by China having 6.31.

Benefits of outsourcing:

1. No long term contract required

You can simply sign a contract for a particular project and get it done within the given timeline. However, if you require long-term assistance, you can have a discussion with the company.

2. No need to provide equipment and software to the offshore team

The company at a different geographical location is well-equipped having updated knowledge regarding the software and technology stack.

3. It saves you the cost

it saves cost as well as the hassle of hiring in-house professionals. This otherwise turns out to be a very expensive affair.

Reduces the costs by taking advantage of the availability of a labor market that is very cheap whilst maintaining high-quality standards.

4. Specialized professionals

You can take advantage of trained and certified professionals. This clearly means that you hire developers that have the expertise to develop your project in the best manner possible.

5. Focus on your core business

Outsourcing peripheral project, as well as service, gives you a lot of time to improve your core business that may not be otherwise working that smoothly.

Onshoring vs Offshoring: The Difference

1. Communication

Verbal communication is very important. But there are certain limitations related to language, accent, and dialect differences.

Unclear communication causes confusion. The clear and detailed instructions, the better it is.

Onshore:

• When you are onshore in your project, it is easy to communicate. As the time zone is the same, meetings can be held at a time that is decided mutually by both teams.

Offshoring:

• With the help of efficient collaborative tools like Skype, JIRA, Basecamp, and Slack communication takes place.

Detailed documentation helps in understanding the requirements and expectations of the company in specific. Better understanding results in less confusion, saving a lot of time for the team members.

Business Hours

• When you are working with an offshore team, the time difference plays a significant role.
• This can either be positive or negative and everything completely depends on the work that is involved at that particular time.
• For certain businesses, it is important to stay active 24 hours. This is only possible when you hire software developers from an outsourcing company.
• As they are in different parts of the world, they work in multiple shifts.
• This way, your in-house team is working on the project for fixed hours and when they sleep the offshore programmers work. This further ensures that the project is being developed throughout the day.
• But the outsourcing team of developers has to be very careful about this.
• Too much ‘back and forth’ tends to extend the timeline of the team members or the complete project.
• There should always be a good amount of respect for the in-house and outsourcing team.

Onshoring

• Many organizations today still prefer onshoring as they feel it makes more sense to them. The time is standard and language has no barrier.
• They gel up with the team in the least possible time. And most importantly the culture is respected and holidays are the same.
• The aforementioned points have clearly depicted that outsourcing is the best option to consider.

Read more: Onshore vs Offshore, which one to choose?