Onshore vs Offshore Software Development: Which Suits My Project?

Author: James Software DevelopmentNovember 10, 2022

Offshore software development follows an outsourcing model where companies work with third-party providers to build software, who are not located within the same country. These offshore companies usually house a pool of talents other than software developers, with some offering marketing, administrative, and customer support services.

In this article, we’ll focus on offshore software development and how it differs from working with developers based in the country you operate in. Read on to learn about the benefits of both approaches and figure out which one suits your next project best.

Outsourcing Your Software Development

Software developers not only build your software. Good ones have the skills it takes to take care of your software project, so you can focus on operating your business. Software development projects involve a complex process and a huge amount of risk that it requires to be managed by individuals with experience.

Offshore and onshore software development are both outsourcing models that provide benefits in many aspects. Resource efficiency is often the reason why companies choose to outsource software development. In general, because this approach allows more flexibility and huge savings in project costs, it mitigates the risks involved developing new software.

Take this scenario for example: a rising startup composed of only 3 members – the founder, a UI/UX designer, and a marketer. With a limited budget, hiring full-time onshore software developers could break the bank – think taxes, benefits, and paying for full-time work without a clear roadmap.

Hiring also takes time and this could mean the startup eating away at their budget while nothing is being developed just yet. In this case, outsourcing development to a team with the skills and experience in your industry could speed up the process and could even save the company a significant amount in labour costs.

First, we’ll get into more detail of the benefits of offshore software development below.

The Benefits of Offshore Development

Cost Efficient

The main advantage of getting an offshore team for software development is the huge amount of money that it can save you. Standard industry wages vary widely around the world, hence you can easily find freelancers who can develop software at a fraction of the going rate in your area. Nowadays, it’s usually easy to find a rate that’s fairly low for you and high for them, which is a win-win situation for both parties.

Ability to Scale Resources

The rapidly expanding gig economy provides a competent alternative to building your own team because it allows you to hire people for just as long as you need them. There’s no need to sign lengthy contracts, pay taxes, or to agree to a retainer, and if it’s not working out with one person then you can find a replacement.

This allows businesses to do more with their current resources, as offshore software development creates flexibility for many aspects in the business. Offshore outsourcing allows you to tap into the global talent pool where it’s almost impossible to have a shortage of skills. One thing this will require from you though, is to be clear with what you need and what resources you have available.

The Right Partner Can Deliver

Software developers offer a range of services and it can be a challenge to sort through them to find the best fit. However, the right partner can guide you throughout the whole process, from organising your requirements to delivering a satisfactory output. There may be a vast amount of options within onshore development agencies, but going for offshore development allows you to cast a wide net and find the right partner that can deliver.

Virtual meeting with remote offshore software developer

Virtual meeting with remote offshore software developer

Potential Cons of Offshore Development

Like any concept, choosing to outsource your software development isn’t perfect for all situations. Consider the following downsides to engaging with an offshore team and decide whether it’s the right approach for your next project.

Problems Finding the Right Partner

While offshore development gives you access to a global pool of talent, it can still be difficult to find the right partner for your software project. You may encounter under qualified candidates, or potential partners who don’t have quite the skill set you’re looking for. It’s important to not hurry at this stage, as you risk wasting resources by compromising on your requirements.

Time Zone Differences

Expect delays in communication and delivery when you engage with a software developer in a different time zone. From our experience, this can be remedied by establishing a process to make sure all parties are on the same page regarding deadlines. Overcommunication is even encouraged in this case, as the time difference can cause misunderstandings along the way.

Language and Communication

Language barriers and differences in communication styles are problems that can cause a domino effect if not resolved. At minimum, ensure the project managers’ proficiency in your language, both in written and oral.

Security Concerns

Scammers are rampant online and news of companies losing money to these individuals are not new in the industry. It’s difficult to recall money lost offshore. However, with careful research and guided inquiry, you can avoid the mistake of partnering up with frauds. We cover 15 critical questions that you should ask a potential partner in the last part of this article.

IP Safeguards

It may be concerning to outsource the development of your software project knowing that by working with a third-party, your partner can rob your idea any time. While ideas can’t be completely replicated, having no safeguards to your IP can weaken your advantages in the market. Hence, this is a valid and important concern in software development that should be kept in mind before anything.

Difference in Standards Between Countries

The level of technological advancement and standards can differ from country to country. While you may prefer to use certain tools and programming languages to achieve exactly what you want, these things might not be familiar or popular among skilled individuals in an offshore team.

Lack of Market Experience

It can be difficult to find talents who have experience in the market you operate in, especially if you belong to a niche industry. Even if a software developer is equipped with the right skills, a good understanding of your business landscape and pain points will be essential to solving your problems right.

Benefits of Onshore Development

Onshore development can also prove to be beneficial in some aspects, particularly in the area of communication and security.

Direct Communication (On-Demand)

Working with someone in the same area makes communication a lot easier. You can skip the hassle of figuring out a suitable time to discuss, and you can reach your point people faster should emergencies arise.

Face-to-Face Collaboration

Despite the rising popularity of remote work, face-to-face meetings for brainstorming, planning, and even project sign-offs still provide a stronger sense of clarity for all parties involved. Meetings done in person also puts you at less security risks, apart from ensuring no stone is unturned in the communication thread.

Protection with Local Laws

The last thing you want is to realise that nothing is safeguarding your project from complications upon the end of a contract. When you choose to work with an onshore developer, you can rest assured you are in agreement with the same laws and that your rights are protected in case of any issues.

Onshore software developer meeting in person

Onshore software developer meeting in person

Devwiz: The Best of Both Worlds

Devwiz takes a hybrid approach to software development, wherein we combine the best of onshore and offshore engagement.

Having onshore project managers allows transparent and timely communication between our agency and our clients. Being in the same areas as our clients, our specialists also understand the market forces that drive businesses and ensure that industry standards are met for each project we undertake.

We are also able to offer competitive project packages to our clients by working with offshore talents. We have established processes and built a network offshore, so our clients can expect quality work and a quick turnover.

Lastly, we are a registered Australian Pty Ltd Company ready with agreements and structures that can protect our clients should IP and security concerns arise. We have clients across Australia, Singapore, and the UK whom we have built strong relationships with from serving them the best way we can.

15 Critical Questions You Should Ask When Choosing the Right Software Development Company

In this section, we list down questions intended to help you cut through the fluff from an insider’s perspective. By asking the right questions, companies and decision-makers can gain the relevant information needed to partner up with the right software development agency.

1. Does the agency specialise in the right size of projects for you?

Every software development agency is equipped in different ways. While an agency specialising in enterprise level projects can support you with various skills, it may not have the understanding of the pain points and business landscape that startups operate in.

2. Does the agency have the relevant qualifications to take on your project?

Similarly, a software development agency can have a good understanding of your business and have similar passions, yet lack the right skills to complete your project. Take a look at the team of specialists available to work on your project and determine if they are the right talents to work with you in bringing your software idea to life.

3. How long has the development agency been around?

It might not be the best indicator, but an agency’s performance can be deduced by the number of years they’ve been around. Look for a minimum of 5 years’ experience. For bigger projects, you’ll want to consider only the agencies that have been operating for 10 years or more.

4. Does the agency have appropriate client case studies, testimonials and reviews?

Case studies, testimonials, and other social proof are good indicators of a software development agency that has successfully implemented new technologies for businesses.

5. Is the company happy for you to speak to client references?

You want to ensure you do your share of the work by doing a background check on a software development agency you’re considering partnering up with. Getting client references is one of the best ways to get an understanding of an agency's work ethic, processes, and output quality.

6. Does the agency have relevant industry experience?

To ensure that an agency can create solutions with you, examine if their industry experience is relevant to yours and if they have built similar technology in the past.

7. Does the agency have and build long standing relationships?

If an agency has maintained good relationships with their previous clients and has even partnered with them multiple times, it shows that they value customer satisfaction and have developed a process that works for everyone involved in a project.

8. Do they have maintenance and support packages?

More often than not, you will need assistance in running maintenance on your new software to ensure that it runs as intended with minimal errors. Therefore, it’s worth considering if an agency offers maintenance and support packages that are suitable for your project.

9. What are the key success deliverables?

Identify key success deliverables for your projects such as IP, source code, and define your launch to production phases. It is important that you are clear about the output you require, and it should be imperative for a software development agency to be able to answer any questions on these.

10. Do they have tried and tested procedures that you can review?

A good system is the backbone of any software development project. Having procedures in place helps teams be on top of every matter and leave no stone unturned.

11. Do they have transparent pricing?

Examining proposals for hidden costs is highly critical. Some agencies charge extra for maintenance, document management and so on. Ideally, you’ll want your software development partner to quote fixed costs for each phase of the development.

12. Does the agency create an actionable plan that you can review before work starts?

Being able to supply an actionable plan before starting any development is a good sign that an agency has procedures in place. In this plan, you should be able to review any project prerequisite and the expected deliverables for every development phase.

13. Are the payments linked to deliverables?

Be wary of agencies that require upfront payment for deliverables that haven’t been started or completed. Ideally, an agency should only send you an invoice when a development phase, such as UI/UX design, has been ticked off as agreed. Make sure each payment is linked to deliverables and be ready to do your part in reviewing that each output is satisfactory.

14. Does the company have an agreement you can review in advance?

Written contracts protect you should conflicts within the project arise, and are therefore essential to have before starting any development. Experienced software developers should have a partner agreement ready upon request and it should precisely outline project terms and the development process they practice.

15. Finally and most importantly: do you feel synergy with the company and its staff?

Lastly, you need to be sure that you and your potential software development partner have that spark. Can you work well together? Will you be able to form a collaborative team to build a strong solution that provides the business value you need? Be sure that you’re aligned in your vision for all aspects of the project, including the process and the end result.