Software development outsourcing is often described as being onshore, offshore, or nearshore. You’ve heard these terms before, but what do they really mean?
Simple. It’s all about the distance from the hiring company. For example: If the hiring company is located in Western Europe, it would be considered nearshore to hire a developer team in Eastern Europe. A team in Asia, Latin America or the US would be considered offshore. Alternatively, when the hiring company is located in the US (for example) and it outsources software development to a provider that’s also US-based, this would be considered onshore.
Onshore Software Development
Outsourcing to a software development provider in your own country.
Nearshore Software Development
Outsourcing to firms two to four time zones away, perhaps located in countries bordering your own or just a short distance away.
Offshore Software Development
Outsourcing to regions that are overseas or more than four time zones away.
Accordingly, if a Vietnam-based company outsources software development to Vietnamese provider like Adamo Digital, the provider would be considered onshore. Providers in Singapore, Australia, New Zealand, Japan, or South Korea would be nearshore. Offshore providers would be located in countries such as the United States, Canada, Europe, etc.
When compared to US labor costs, offshore and nearshore providers typically provide hourly rates that can make them more cost efficient. Eliminating costs associated with domestic employee overhead (benefits, taxes, paid time off, company perks, training and retention, etc.) further reduces rates, and the hiring company gains the flexibility of a developer team that can shrink or expand as needs change.