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Location-based Types of IT Outsourcing: Local, Nearshore, and Offshore

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If you already know what IT outsourcing is and what its advantages for business are, you must have already thought about entrusting your software development project to a company providing such services.

However, you have to understand that IT outsourcing is a rather wide-ranging concept with several classification options. The geographical factor is one of the criteria to classify IT outsourcing when the performers’ location is taken into account. Based on this criterion, we can single out three main types of outsourcing:

  • Onshore (local) outsourcing — you cooperate with a company that is a resident of your country;
  • Nearshore outsourcing — you entrust your project to a developer located in a neighboring country or near abroad;
  • Offshore outsourcing — you cooperate with a contractor located geographically in more remote parts of the world.

We can well illustrate the difference between nearshore, offshore, and onshore software development outsourcing using this infographic:

Types of IT Outsourcing

Each of these options has its own features that can affect your decision. Let us take a closer look at all of them.

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Onshore outsourcing

This collaboration model has obvious advantages — you work together with a team located in the same country or even the same city. You feel no cultural or language differences, and there are no restrictions like time zone differences. Legal nuances and the possibility of real-time on-site monitoring, if necessary, are among the advantages as well.

However, if you look from a different perspective, this type of outsourcing has several potential disadvantages that may prove important for your business. One of them is the high cost of services, which may become a decisive argument for small companies.

Nearshore outsourcing

This term implies cooperation with foreign development teams but from countries located nearby the customer’s company’s native country. This approach allows saving the budget and, at the same time, avoiding such difficulties as large time zone differences and other inconveniences related to the partners’ geographical location.

Actually, these are all the advantages to mention, as even two neighboring countries can differ very much in terms of cultural features and legal practices. Moreover, developer services cost does not usually differ enough to compensate for remote process administration.

Offshore outsourcing

It is easy to guess that this option is the most profitable in economic terms. Although you will experience increased complexity in terms of project management, you will have a truly vast choice among teams from different countries. We provided the list of the most popular countries for offshore software development in this article on our blog.

IT Industry in Ukraine
[by Diceus.com]

Poland and Ukraine specifically stand out in terms of price-quality ratio. Teams from Eastern Europe have a fluent command of English, the IT services market is well developed in these countries, and local mental and cultural differences with Western countries are minimal. We recommend you to read our article “9 Reasons Why to Outsource Your App Development to Ukraine”, where we address this topic in more detail.

We hope this article will help you come to the right decision and choose the best option for your business. Due to globalization trends and global IT market rapid development, many companies can use the outsourcing model to create strong competitive advantages for their company and business development.

Lvivity Team
Lvivity Team

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