This means contracting a local company (or at least one in the same country) for your work. Onshoring is not as common in software development but happens sometimes. For example, government agencies and defense companies have strict regulations regarding who they can contract. These laws often forbid them from working with foreign entities.
However, there are further benefits to this approach. Firstly, the geographical and/or cultural proximity. It is much easier to communicate with someone who understands your language and social norms. You also don’t have a large time zone gap and can schedule calls easier.
Secondly, it can be easier to meet regulations. Of course, experienced outsourcing providers with domain knowledge can reliably follow the requirements (e.g. Aristek regularly works on HIPAA-compliant software for US customers) but keeping everything within one country makes it simpler.
The cost savings are less of a factor here. The difference in service prices largely comes from different costs of living, so outsourcing within the same country doesn’t benefit from it.