What's the Difference Between Offshoring and Nearshoring?
Tags: softwaredevelopment, softwaredevelopmentcompany, saasproductdevelopment, softwaredevelopmentteam
Published: 2023-08-17 10:21:21

Is your team unable to handle a massive IT workload? If yes, then it is the time to increase your resources. However, hiring people to increase the number of members of your in-house team can be time-consuming as well as expensive. In such a scenario, IT outsourcing can be considered as the smart decision to manage IT projects while offering customer satisfaction. A recent study has found that over 72% of companies prefer to outsource software developers from various reputed companies.

If you are a software development company and seeking IT outsourcing, then it will be worth your investment and decision. Outsourcing software developers means you will have competent and talented people in your team to deal with the project complexities. Moreover,  it is simple to part ways once the project is accomplished and delivered to the client. That means, you will be free from those messy layoffs and perpetual overheads. Software companies can have two options for outsourcing software development i.e. Nearshoring and Offshoring.

Now, the question is how these two options differ from each other and how to choose the one that suits best to your business objectives and workload. In this blog, you will get to know about the nearshoring vs offshoring, how they work, and how they can benefit your business. So, let's explore-


## **Offshoring:**
Offshoring is a practice when companies hire software developers from overseas companies, which may not even follow the same time zone or culture to deal with their business processes. Commonly, companies choose offshore options to hire a talented team for SaaS product development, customer support, back-office support, and a lot more.

## **Nearshoring:**
Nearshoring is a practice that involves delegating some or all of your business operations to the BPO (Business Process Outsourcing) provider in a nearby country. In nearshoring, the country may share the same time zone, language skills, culture, etc. For instance, Western European businesses may outsource software development from nearby countries in Eastern Europe such as Ukraine or Poland. While a North American [software development company](https://www.taazaa.com/) can outsource the resources from nearby countries such as Brazil, Columbia, or Mexico.
 

## **Difference Between Offshoring and Nearshoring**

### **Larger Global Talent Pool:**
Offshoring offers a larger global talent pool to choose the best candidate for your team. When you need to hire a team for a specialized department like software development or data science, offshoring can provide numerous options instead of a limited hiring search.

### **Flexibility and Scalability:**
Delegating project tasks to offshore software developers can provide great flexibility to the managers to accomplish the entire [SaaS product development](https://www.taazaa.com/saas-product-development-process/) project quickly. As the project demands can vary due to customization and the latest trends, companies can also downsize or upgrade their outsourcing capabilities with enhanced flexibility without affecting their core functions.

### **Cost Savvy:**
One of the major advantages of offshoring is the cost savings. With so many project outsourcing solutions available to choose from, offshoring is often considered as the most cost-savvy option. As per the research, US  businesses save around 40-60 % on operational costs by offshoring their projects.

### **Cultural Compatibility:**
Nearby countries have similar cultures as compared to the countries that are in geographically distinct locations. Thus, nearshoring options can be the best for the software development team that wants to avoid the cultural nuances and differences in their target market. It promotes effective and seamless communication between the two countries.

### **Ease of Communication:**
One of the significant benefits of choosing to nearshore is the ease of communication between the nearshore project teams. There can be trouble understanding the project requirements while communicating with the outsourcing team due to linguistic differences, as it can cause misunderstandings in the projects.

### **Alignment with the Time Zone:**
Many companies prefer the nearshoring option to ensure time zone alignment. Having a similar time zone allows easier communication and collaboration within the team, especially when it comes to time-sensitive projects. It makes it possible to accomplish projects in the shortest time possible. 

## **To Wrap Up**
While nearshoring vs offshoring may sound similar, but as mentioned above, both have their own benefits and challenges. If you are still confused about choosing the best practice for your business, then 3 key factors may help you choose the right shore to manage your business operations. These factors are domain knowledge, cost-effectiveness, and adaptability. It will make it easier to find the right practices that fit the best to your business model and project requirements.