Pros and Cons of Pure Onshore, Pure Offshore and Hybrid Model Outsourcing

North American companies contemplating outsourcing some or all of their software development have more options than ever before. They can choose from among onshore outsourcers close to home, offshore services halfway across the globe or a blend of these in unique combinations.

In a few situations, which model to choose may seem straightforward, however, each has its advantages and disadvantages to consider, especially in relation to an enterprise’s capital resources, in-house resources and business priorities.

Onshore

Advantages

Onshore outsourcing may work if your definitive goal is to add a seamless extension of your team with expertise not currently present in-house. An onshore outsource partner is also advantageous if you prefer a partner in your time zone and want to work within the same legal jurisdiction.

Communication is typically a lot easier and more streamlined when your outsourcing partner is geographically close by, and the possibility of visits or personnel assignment on your site is greater with an onshore provider.

Disadvantages

The cost of outsourcing is mainly related to the economic environment in the locale of the provider. Despite certain other advantages of onshore providers, their cost is generally multiples of an offshore provider.

Problems such as cultural or language barriers will be markedly less with an onshore outsourcing firm, but there is still the potential for miscommunication due to corporate cultural factors, differing technologies or business practices with an onshore outsource partner.

Offshore

Advantages

Whereas an onshore outsourcer may have the same difficulties you have acquiring much needed talent, offshore providers pull from an entirely different talent pool and may have a ready pool to tap. Furthermore, their resources are likely to be working under different creative constraints, which can lead to new solutions to fulfilling your development goals.

In contract to pure onshoring, offshoring can be significantly less expensive.

While an onshore provider will share much of your cultural, technological and legal context, offshore providers can offer additional benefits to companies desiring to globalize their products. Choosing one or more offshore outsourcing firms in select markets could, at least indirectly, transport your presence to a new foreign market. This situation would be especially important if your company needs local customer support there, values insights into cultural modifications of the product or requires maintenance of local infrastructure.

Disadvantages

The architecture, design, development, testing and deployment of your project are the essential aspects of your software process, and the degree of control over what you hand an outsourcer is inversely related to their distance from you in space and time. Most companies prefer to keep architecture and design phases close to home. This is something to keep in mind when deciding how much process control to cede to an outsourcer.

It’s possible to run into difficulties if you use an offshore outsourcer in a country whose native language and customs do not align well with yours. Add on top of those potential difficulties the additional inconvenience of vastly different time zones. If such difficulties are present, and especially if the offshore firm will have interactions with your clients or stakeholders, much more effort is required to smooth out rough spots or you may be better off not going with the offshore provider at all.

 

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Hybrid Model

A hybrid model will have technical teams overseas, but an onshore office in your area that you will primarily communicate with. It gives you the access the global delivery and skills of an offshore model, but with the local presence and communication access of an onshore model.

Advantages

Years ago, outsourcing was relegated mainly to mundane tasks and chosen solely on a cost basis. Fortunately, many hybrid outsourcers are beyond competing solely on cost and now offer quality and innovation as benefits. North America no longer has a corner on the market for the most skilled and innovative software developers, and the global talent pool can be quite deep.

Many organizations prefer to keep architecture and design phases close to home, which is why a hybrid model can be so effective. These core functions are kept in geographic proximity to the client where team members are available for face to face meetings or phone calls in the same time zones, and only the development or testing delivery is done offshore.

Having a local office also offers legal protections by having an office or headquarters in your jurisdiction.

With a hybrid model, organizations get the cost efficiency of offshoring, but with the convenience and seamlessness of onshoring.

Disadvantages

While a hybrid model gives you additional convenience and local access to personnel, it often can’t compete on cost with a purely offshore model. If your primary concern is getting the lowest price possible, then a pure offshore may be a better option.

Conclusion

Typically, pure onshore or offshore outsourcing rarely supply an ideal match for every enterprise’s software development efforts except in cases where the project’s duration and scope are significantly limited. That is why most companies seeking an outsource partner like a hybrid approach like Optimus’, which includes onshore presence with offshore delivery resources.

These companies have found that by working with a hybrid model and using a reliable, trusted outsourcing partner like Optimus, they are obtaining better quality, more timely production and the ability to scale operations up or down at a reduced cost.

If you have any questions about the right outsourcing model for your company, you can contact us here.