Onshore Company and Offshore Company: Difference and What to Consider?
Source: Onshore company vs Offshore company
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 between them 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:
a) 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.
b) No cultural differences
Being in the same continental region, you don’t have to face cultural differences. Compatibility and productivity are high.
c) Quick problem-solving
As there is no time zone difference issue, it is easier to manage the team while monitoring the projects.
d) 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.
e) Easy communication
Communication is easy as you communicate in the same language. This makes it easy for the team to coordinate with one another.
f) 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
a) 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.
b) 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.
c) 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.
d) 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:
a) 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.
b) 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.
c) 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-
d) 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.
e) Focus on your core business
The 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.
Offshoring vs Onshoring: 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 the 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.
2) 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.
Outsourcing: A Strategy for Innovation
Everyone should take inspiration from Jason Goldberg of Fab.com and Jack Ma of Alibaba.
If you find the right team, it doesn’t matter what geographical location it is. You will only know what the right resources are for you.
As per the article by Nearshore Americas and Deloitte Global Outsourcing Survey, outsourcing is the best strategy of innovation.
According to 59% survey responders, outsourcing reduces cost. This is the reason why maximum organizations are taking the help of outsourcing to improve top-line growth by driving innovation into their business.
Points to consider while outsourcing
Collaborate with the offshoring partner once you are confirmed they will strive hard to complete your project on time.
- Avoid IT outsourcing communication gaps and keep everything very clear from the beginning.
- Make sure “Agile development practices’ are followed.
- Carefully evaluate the abilities of the offshore team.
- Predetermine the timeframe of every task within the project.
- Analyze the risk factor while hiring professionals.
Why Offshoring Could Still Be Your Best Bet?
Despite the different benefits of onshoring and outsourcing, outsourcing is still the best bet.
The major reason is the less cost and accessibility to highly skilled professionals. This makes hiring offshore developers the best option for many enterprises.
Many companies prefer Indian outsourcing companies for completing their project. This is more significant especially when you have a large project and less time.
The execution speed relates to the project complexity and abilities of firm handling of the project.
The factors that impact the speed of execution of the project are the availability of the resources of the offshoring company that define the requirements clearly.
The offshore software development firm has better flexibility in stocking up the manpower physical resources ahead of time.
The team has the skill of rolling out the project quickly than onshore companies in most cases.
This may be because the onshore firms bring in talent as the project ramps up.
Today, language and cultural barriers no more make an impact on the service quality as specialization is at its peak.
The experienced team also knows how to mitigate risks.
Do you know there has been a recent decline in the currency value in the countries where offshore agencies are located?
This is another compelling reason for enterprises why offshoring should be considered for their business processes.
The decline of the currency value clearly means that North American and European firms are getting bangs for their bucks in terms of cost-saving.
Consequently, the offshore development team will certainly enjoy a renaissance for a few quarters in the upcoming years.
It is very important that you take a closer look at your business process and the cost associated with it. Only then weigh the potential savings for short and long term consequences.
Why Should You Choose “Your Team In India” as Your Offshore Company?
Your Team In India offers various offshore advantages. They have unparalleled connectivity and accountability as compared to many of its competitors.
Additionally, Your Team In India reduces the communication concerns while ensuring that a major amount of time is spent on development and software.
Even while having time zone differences, the software offshore team manages the work efficiently, delays communication, and strives hard to deliver their best.
The offshore development company delivers:
- Cost-effective software development resources
- Dedicated high performing Agile Teams
- Committed to the decided deadlines
- Quick ramping up and seamless integration
- Specialist in every technology (Java, Python, .NET, React, Flutter, Angular, Php, etc.)
We have a passionate team fully equipped to tackle all the software needs of the company. You get a team of global software experts that work on the dedicated project.
We offer high-quality solutions without any hassle so that you can focus on your business. You will soon realize how Your Team In India can improve the way your company does business.