software development - featured image

Nearshore, Offshore, and Onshore Software Development: What Are the Differences?

In the last decade, there has been a rapid increase in the demand for software development outsourcing. If you know anything about the IT industry, you understand the different outsourcing approaches. These include nearshore, onshore, and offshore software development. While these terms may suggest something to do with beaches and oceans, this means something entirely different in the tech world. Which approach is best for your company?

Should You Hire a Remote Team for Your Project?

With the steady increase in demand for software development, finding talented developers can be a challenge. Companies are finding it difficult to hire developers who live near them. Therefore, many businesses hire remote teams of developers. This helps them stay ahead of the competition and bridge their skills gap.

Software development outsourcing enables businesses to enjoy internal productivity and project efficiency. It also allows them to achieve enhanced workload flexibility while obtaining the best quality software product. However, before outsourcing development for your company, you should decide which method best suits your business needs. You will need to choose among three software outsourcing approaches: nearshore, onshore and offshore.


What Is Onshore Software Development?

Onshore software development is a service that enables a company to hire developers in their geographical region. It can help your business focus on its core capabilities. Local outsourcing ensures that your work runs in a connected way. It also ensures that remote workers maintain your company’s values. Additionally, this approach enables you to avoid the challenges associated with offshore outsourcing, including language barriers and cultural differences.

Benefits of Onshore Development

Onshore software development, also called local outsourcing, has several benefits. These include:

  • It allows you and your team to work in the same or aligned time zones.
  • An onshore team is accessible.
  • Companies do not need to worry about cultural differences or language barriers.
  • Easier communication enables you to conduct a meeting or training when necessary.

Onshore software development offers great benefits to your business. However, it may still not be the most suitable approach for your business. For instance, if you want to outsource in order to reduce your software development budget you may need another approach. Onshore software development will cost you more than other approaches to a project.

What Is Nearshore Software Development?

Nearshore outsourcing helps close the gap between offshore and nearshore outsourcing. In short, it involves businesses hiring from a team of developers within their area. This includes companies located close to their locations, such as a neighboring country.

For instance, a company in the US can hire a talented team of engineers from Mexico. If a business opts for nearshore outsourcing, they will have a wide pool of talent to choose from. Additionally, they will enjoy a significant reduction of labor costs. Nearshore software development offers a perfect balance between the benefits that come with onshore and offshore outsourcing.

This approach to software development enables businesses to scale by providing immediate access to engineers in similar time zones. In most cases, nearshore companies also have cultural similarities. They likely share a similar language. This provides a good platform for a productive working partnership.

Moreover, nearshore companies are accessible. This is important when handling projects that need close monitoring. In-person communication is not necessarily a must in nearshore software development. But proximity that allows for face-to-face meetings when necessary keeps travel costs low, which means developers can travel to and from meetings.

Like onshore outsourcing, the nearshore approach is ideal for large and medium-sized businesses. This includes all companies that need immediate access to developers. It is also suitable for projects that need heightened security. Additionally, it is ideal for projects that involve sensitive information. This approach also offers cultural compatibility, which enables developers to understand the underlying values of their projects. Thus, it helps businesses mitigate the risk of miscommunication.

Benefits of Nearshore Outsourcing

  • Insignificant cultural differences
  • More affordable labor than onshore outsourcing
  • Accessible, allowing for a more effective working engagement
  • Reduced time zone differences


What Is Offshore Software Development?

Offshore software development is another approach to outsourcing. This practice involves businesses outsourcing some of their functions to a third-party company in a different geographical region. For instance, a business in California can outsource to an offshore team in Vietnam.

Most businesses began outsourcing to take advantage of lower costs. However, according to the latest trends, companies are now focusing more on quality. Offshore software development offers access to a larger talent pool of developers. This is a benefit that won’t be available if you opt for onshore and nearshore companies.

Thus, businesses are able to grow, since the skills of their in-house team will no longer restrict them. This approach is ideal for projects that need specialist expertise. This includes expertise that is hard to find, even for companies with limited budgets. Thus, offshore software development can ensure a successful business by providing access to developers who, in turn, have access to quality technology.

Benefits of Offshore Outsourcing

  • Access to a dedicated team of IT experts who can handle a wide variety of services
  • The ability to hire a skilled team of developers at lower costs
  • Access to a larger pool of talent

Finally, the right offshore company offers you the opportunity to work with experienced developers. These include software experts who will meet strict deadlines while also delivering quality products.

Nonetheless, while offshore software development offers several benefits compared to other approaches, there are some risks involved. When planning to outsource your work to an offshore company, you need to have these concerns in mind:

  • You could lose control over your critical activity.
  • Offshore software development comes with a significant time zone difference. This could become a bottleneck.
  • Visiting an offshore production team may not be easy.
  • It involves a different working culture, which could affect productivity.

How Should You Choose Among the Different Approaches to Software Development?

Choosing among these three approaches to software development will require you to create a thorough specification. The specification should highlight all the individual tasks. This will help you determine the ideal approach that will suit your business needs.

Once you outline individual tasks, the next step is to evaluate the current skills at the outsourcing company you are considering. This helps you as well as them to understand the skills they already have. It will also help them identify the talent they need to hire, possibly from a third party. The size talent pool you will need in order to find the right workers will depend on the level of skills your project requires.

How Complex Is Your Project?

While choosing the right outsourcing option for your software development project, you also need to consider the project’s complexity. This helps you understand whether the distance between your company and theirs will affect your project’s success.

Moreover, a business should also consider the type of workflow ideal for the project. For instance, if the software product requires compliance with strict regulations, you will need a robust workflow that focuses on adherence to guidelines. On the other hand, if your project needs more creative input, it is advisable to choose an approach that favors two-way communication.

Here are factors to consider when choosing software development outsourcing for your company:

  • The size of the talent pool you need for effective hiring
  • The complexity of the project
  • Specific skills that need outsourcing
  • The type of workflow that suits your project
  • The effect of geographical distance on the project’s success
  • The reputations of the shortlisted countries in software development


In conclusion, software development outsourcing offers great benefits. These benefits apply to almost all companies and startups around the globe. In the digital era, the world has become more connected than ever before. This makes it easy for businesses to reap huge benefits by working with a devoted team of experts who have great potential.

Moreover, many companies have also enhanced their competitive edge by choosing to outsource some of their functions. Whether you decide to pick an onshore, nearshore, or offshore approach to software development, you can rest assured that there are many talented software developers available to hire.


About the Author

This article was contributed by Thanh Pham (Bruce), CEO of Saigon Technologies in Vietnam. Reach him by email at [email protected] or visit the Saigon Technologies website at