Most businesses, including startups and multi-national companies, are showing their interest in finding out how offshore development can benefit their business. Initially, most companies were reluctant to follow this business model, as there were various impediments for small businesses to handle their operations on broader perspectives.

Now things have changed and due to technological advancements, communication challenges have been negated to great extent. Before we go deeper into discussing the pros and cons of offshore and onshore development, let’s take a look into what these terms actually mean.

What is an Offshore Development Model?

In simple words, offshore development suggests a process where various development needs like mobile, web or custom software developments demands outsourcing to teams in other countries including Ukraine, India, and the Philippines.

Cost-saving is the main factor why companies outsource jobs. Another reason for offshore development is to minimize the workload by dispersing it to other offshore companies.

The term offshore model is not new, as it has been followed by numerous companies for a long time. However, in this era of technology, a boom in the demand of such companies is occurring. In fact, it is now easier to manage offshore operations from across the globe.

Apart from web and software development, the offshore model is capable of being utilized in other fields including data services, cold-calling, customer care and other KPO or BPO operations. As stated earlier, the reason for opting the offshore model is to get a job done at fairly low cost. This is because professionals working in India and the other countries mentioned will charge you much less than those available in the UK, US or any other developed country.

In addition to cost, a good offshore partner will save you precious time and minimize the hassle associated with managing HR or other similar operations. Hence, the key to finding a perfect offshore partner is to look for experienced, technically sound and capable individuals. Such a company of individuals should have proper infrastructure and technological equipment to complete the task within the given time span.

What is an Onshore Development Model?

The onshore development is the opposite of the offshore model. In this process, the company assigns web or software development projects to local and native individuals or companies. For instance, if a project of website development is to be completed, it is handed over to a local company or agency for that purpose.

The benefits of using this model are numerous as there will be no communication gap between the parties and face to face meetings can be arranged to discuss the most essential parts associated with the project. Moreover, there will be no time difference as it is seen in most of the offshore models.

Onshore vs Offshore Development Model

The most significant difference between the offshore and onshore models is the overall cost of completing a project. The difference is huge as the person living in the US and UK will charge according to the cost of living in these countries. Since in developing countries people can manage to survive with lower per capita income, the cost of the similar project will be at its minimum level.

The advancement in the IT industry at the global level has given a perception that we are a family. It is quite easy to manage business around the world. Professionals can now work from their homes and at the same time stay in touch with the outside world.

This basic idea laid the foundation for the development of offshore models. With the surge in demand for IT services, many onshore companies have switched to a cheap and cost effective way to provide their services. This interaction between the onshore and offshore models is usually termed as outsourcing.

Nevertheless, both these models exhibit their own pros and cons. The following part of this article will shed some light on the advantages and disadvantages of both these development models.

Advantages of Onshore Development

The onshore model is the traditional way of doing things. Most companies consider working with an onshore model as a more viable option than outsourcing. The following are the pros of this development model:

• It is possible to directly hire an onshore team. This allows management to choose the best team by interviewing each member.
• Onshore team members may get training by the company to enhance their professional abilities and improve their working capacity.
• The best advantage associated with engaging an onshore team is that they are familiar with the system and both the parties feel comfortable while working with each other.
• Easy to manage and you can up daily updates about the project.

Disadvantages of Onshore Development

• The most noticeable drawback of onshore development is the extra burden on the business, which minimizes the overall performance. The company bears the extra costs of managing more employees. The expenses needed for the development of a suitable infrastructure for managing a bigger team also increases the actual cost associated with a project.
• The deadline for completing the projects within given time is also there to make things worse. It happens to build extra burden or pressure over the team to finalize the projects.

Advantages of Offshore Development

The trend for working with an offshore model is gaining popularity with each passing day. It is obvious, as a wide range of advantages is available for those utilizing offshore expertise.

• The first advantage of the offshore model is cost-effectiveness. It allows you to finalize various projects at reasonable and cheaper rates. This, in the end, manages to maximize profits.
• The offshore model makes it easy to organize numerous projects simultaneously. Moreover, it minimizes the burden associated with carrying a large number of employees.
• Reliable in the sense that they train to handle multiple tasks.

Disadvantages of Offshore Development

• The absence of infrastructural and technical aspects is the major drawback of offshore development.
• Lack of communication can still cause serious trouble in few cases.
• Sometimes, it is difficult to rely on the abilities of an offshore team. Moreover, it can cost you more in terms of unsatisfactory work provided by the offshore company

What is a better option?

Finding an expert software developer is not an easy task. The cost for an onshore team is much higher than you may expect. Also, hiring the wrong offshore team is a risky move. Therefore, choosing an onshore or offshore model is a critical decision for your business.

Various enterprises have successfully outsourced major projects to offshore teams. Companies like WIPRO and similar other enterprises have gained success by opting for the offshore model. Conversely, during a CIO summit conducted recently, almost 75% of the leading IT firms have shared their plans to bring back critical programs and applications to the US.

They advocate this move through various factors including poor communication, bad code, security risks and the extra time consumed while managing offshore teams. In this situation, what criteria should you use to come to a wise decision? To assist you in this regard, we recommend the following:

• Fill the gaps after prioritizing the best available IT resources
• Avoid IT resource gaps from communication to expertise by identifying them at the initial stage
• Make sure to follow “Agile development practices”
• Evaluation of your team’s abilities and strengths is also essential
• Predetermine the timeframe for each project
• Analyze the risk factor while hiring an offshore team

The onshore model ensures quick turnaround, immunity from the delay caused by time zone and better communication. The offshore model, on the other hand, offers the advantages of minimum cost. Unfortunately, its drawbacks include poor code, higher risk and lack of control.

To sum up, what matters in the end is experience, skills, communication, and dedication. Before reaching a final decision, do your homework regarding what kind of team can prove to be a perfect option for your project.