Comparison Between Offshore and Onshore Software Development Models

Choosing to outsource within the country typically means working with individuals who speak the same language, eliminating possible language barriers that may occur when offshore development. A startup organization primarily works with limited resources and talent pool – with people often taking up multiple roles. Yet they’d like to speed up their time-to-market, take advice from experts to get the best out of their infrastructure and project plans and avoid technological gaps. Knowledge, experience, superior talent, and a skill-cost balance are primary reasons startups look at outsourcing software development. Outsourcing helps them be aligned to the market requirements, be agile, have a lean structure, and have easy scalability. Unless the technology itself is at the core of their unique proposition, most startups would prefer outsourcing software development and usually do so.

Onshore development will cost extra, which is the software development model’s major drawback. The cost of hiring a local team to develop your software will generally be significantly greater. Tasks are assigned and shared between the onsite and offshore software developers.

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Administrative hassles still remain — Many of the same admin hassles that come with onboarding consultants will still be with you whether you hire local or foreign talent. You still have to set them up as vendors, give them access to your data, and onboard them into your teams. Less Red Tape — Because offshored staffers are consultants, you can circumvent complicated regulations that come with international hiring. Contract workers you no longer want or need can be released or replaced within two weeks to a month. You pay for what you need, when you need it, for a fully flexible team experience. Potential consulting clients are simply “fishing where the fish are.” Many “low cost of living” nations are now realizing their tech sector can now be a growth-engine-for-hire for companies across the globe.

QA and testing processes are designed to help catch errors and potential problems before progressing to the finalization of the product. Each project has specific requirements for each customer, meaning projects can vary in costs. However, while larger and more complex projects will naturally cost more, costs can also vary significantly based on individual team members. Face-to-face interaction is considered the most effective form of communication in software development, according to Principles Behind the Agile Manifesto.


Some countries are worse about this than others, but often clients have good experiences in European countries like Ukraine or other offshore countries that have similar languages and cultures to theirs. Outsourcing is a go-to strategy for a majority of companies, and as an employment trend, it’s going nowhere but up. As demand for talent outstrippes supply, it’s only logical that companies would seek out low-cost IT talent in low-cost of living countries. Emergency Response teams in Europe, LATAM, and the United States are operating at full capacity and are doing everything they can to save and support our Ukrainian employees and their families. They continuously assist colleagues with evacuation, border crossing, and relocation to safer places.

onshore and offshore software development model

Or for those projects that require any special skills or extra knowledge/experience – offshoring can significantly expand the pool of talent. You’ll find far more resources ready to work offshore, a key issue in any discussion regarding offshore vs. onshore software development. Lower costs — There’s no question, offshoring companies have the advantage when it comes to providing services at lower costs. In fact, higher costs of living countries like the United States, Canada, and much of Western Europe can see an enormous benefit from offshoring their IT development.

Which Model is Best for Your Business? Onshore vs. Nearshore vs. Offshore

This option allows you to utilize time well as you focus on core business strategies, such as focusing on optimal product delivery. It is hard to conclude which is the best because it depends on each client’s company’s specific demands and budget. Generally, people consider the onshore model when developing re-engineering projects with a repetitive scope of work and wanting to reach the full potential of face-to-face collaboration.

onshore and offshore software development model

Now that you know how to manage the relationship with your offshore partner, let’s look at some possible locations you can establish one. You’ll find some common challenges companies face when offshoring listed below. It’s easier to offshore these services since they exist on the cloud and allow you to scale flexibly as your organization grows. In this regard, offshoring is the most cost-effective option out of the three.

Onshore Software Development Model

Offshore consultancies provide the opposite cost-benefit balance as onshore ones. While onshore firms are the most expensive, those offshore — typically located in the Asian subcontinent — are the cheapest, usually charging clients between $25 to $45 per hour. Offshore software development means that a software development team is entirely based outside the US, and usually in the Eastern Hemisphere. Onshore software development means an entire development team, from its lowest-rank coders to its project lead, is based in the United States.

onshore and offshore software development model

The cost of living varies widely around the world, and so do laws about minimum wages. That means that you can easily find freelancers who can develop software at a fraction of the going rate in your local area. Better still, it’s usually easy to find a rate that’s low for you and high for them, meaning that everybody wins. Ultimately, the best approach to take depends upon the onshore software development way that your company is set up and whether you have the budgets available to play it safe or whether you need to keep costs to a minimum. But before we delve into the ins and outs and the pros and cons of both offshore and onshore software, let’s take a closer look at what those terms actually mean. Reach out to the software experts at Orases today to schedule a consultation.


The talent pool in offshore locations has been developing for many years, resulting in a high volume of skilled professionals. The availability of highly-skilled software developers and engineers further increases quality and agility. Let’s take a look at onshore, offshore, and nearshore software development, and the pros and cons of each. We have vast experience crafting healthcare software development solutions, including UI/UX Design, Application Development, Legacy Healthcare Systems, and Team Augmentation.

  • The right project management methodology also makes explaining the project approach to clients and stakeholders a simpler task.
  • In the onshore or domestic development model, the team is located in your region.
  • A nearshore company offers competitive rates, deep industry knowledge, and dependable timelines, all while working in similar time zones.
  • If your company is considering going offshore, ask yourself what budget it has allotted for software development.
  • Onshore outsourcing has several benefits, given the people share the same culture and time zone.

As you’ve already got the grasp of onshore companies, let’s now see what the main differences are between offshore and onshore services. In other words, while you work with local contractors with onshore consultancies, you work with teams or individual freelance workers outside your region when you turn to offshore companies. There are many moving parts when deciding between the onshore and offshore software development models. However, by asking prospective customers the right questions, we can assist them in narrowing down their options. CCompany, a renowned software consultancy firm, recognized the immense potential of the Hybrid Model in effectively meeting their clients’ diverse needs.


With the onshore software development model, the software developers are in the same country as the client or within a 0 to 3 hours time difference between offices. Compare this to the offshore model in which developers are located in a different country and average a 4 to 6 hours time difference between offices. Onsite and offshore model is a mixed type of cooperation within software development projects.