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Onshore vs. Offshore Software Development

Jun 28, 2017 9:05:00 AM

shutterstock_581496568.jpgThe Internet is a powerful tool for commerce, enabling organizations and individuals around the world to do business with each other. We are now able to engage in cross-border trading in goods and services in ways that were cumbersome or impossible just a few years ago.

That’s the good news. Here’s the not-so-good news: In some cases, even with help from the Internet, conducting international business leaves quite a bit to be desired.


What is Offshoring?

Many U.S. businesses have begun engaging in offshoring—outsourcing work to foreign entities whose labor costs are a fraction of those of domestic workers. There are educated, knowledgeable, English-speaking workers in places such as eastern Europe, India, Central America, and the Philippines who are able and willing to take on tasks such as handling customer and technical support calls, transaction processing, and software development.

The major selling point for these offshore resources is the low labor cost compared with domestic resources. In many cases, this works out just fine. In the case of software development, however, there are some potential pitfalls that must be considered.


Downsides of Offshoring

Here are some reasons to think twice before offshoring your software development projects:

  • Time differences: Dealing with an overseas provider means there may be little or no overlap between your working hours and theirs. This means there will often be a delay in getting a response from them, which can be longer during national holidays in their country.
  • Language barriers: Just because they speak English doesn’t mean there’s no language barrier. Foreign cultures often have different communication styles, negotiation rules, and taboos of which you may be ignorant, and you may inadvertently offend someone with a remark that would go unnoticed here.
  • Regulatory considerations: Although the Internet makes it easy to do business with overseas entities, it also makes it easy to get in regulatory hot water. Information, data, designs, and other intellectual property emailed across borders can technically be considered “exports” and are subject to various restrictions.
  • Communication: Aside from potential language barriers and time zone differences, the simple act of communicating can be much more difficult with overseas partners. Phone connections and quality vary widely from country to country, as do Internet connection speeds. Even if you can reach someone by phone or Skype, some countries have strict rules regarding when workers can work outside of normal business hours, which can mean a lot of after-hours calls for you.
  • Problem resolution: Overseas business relationships work well, until they don’t. If you have a dispute with your overseas partner, what recourse do you have? Not every country has the same legal protections that we do, and navigating a foreign court system can be bewildering, expensive, and ultimately fruitless.


Watch Out for “Back-Door” Offshoring

Even if you decide to engage with a domestic software shop, you may not escape the potential issues of offshoring. Why? Because some domestic shops subcontract some or all of their work to offshore resources, so you end up with many of the disadvantages of offshoring with none of the advantages (i.e., lower cost). When choosing a software development partner, be sure to ask who is actually going to do the work, and where they are located.

At AndPlus, we don’t subcontract our work to anyone else, foreign or domestic. All of our expert team members are located right here (when we aren’t out visiting with clients). We’re always reachable by phone or any other communication channel you choose. The personal service and customer care we provide simply are not consistently available with offshore resources.

Offshoring may cost less initially, but that savings can disappear when you factor in the potential headaches of dealing with an offshore partner. The peace of mind you get with an onshore partner is well worth the cost.

Brian Geary

Written by Brian Geary

Brian is a true believer in the Agile process. He often assists the development process by performing the product owner role. In addition to his technical background, he is an experienced account manager with a background in design and marketing.

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