A Detailed Cost Comparison – Offshore Vs Onshore Teams

Offshore Development

Business leaders are often faced with the dilemma of making a choice between onshore and offshore software developers and which would work in their best interest. There are many aspects to keep in mind when choosing between the two. But first, let’s get some clarity as to what these terms mean. Offshore software development means that the software is being developed outside of a country. Onshore software development, on the other hand, means that the software is developed within a country.

In other words, the manufacturer is based out of your home country itself.

It is a common assumption that the only difference when going for Onshore or offshore developers lies in the cost incurred. Generally, the hourly rate of offshore developers starts at $30 while the onshore developers charge up to $120 for the same. The stark difference on the surface might just be an illusion and make it seem like going offshore is the obvious and right choice, and that there are almost no other points to consider and ponder upon.

Factors that need to be considered while opting for offshore teams are:

  • Language barriers – English may not be the native language of the developer in many cases, which makes communicating slightly more difficult. Ensuring that the message and objectives are clear to both teams can be time-consuming and costly.
  • Different time zones – Due to the difference in time zones between countries, prompt and constant communication goes out of the equation and can affect the project. Formulating a common timeline and communicating accordingly is tedious and time-consuming and adds up to the total number of days given by the developer. This pushes up the total costs incurred.
  • Lack of knowledge about the target audience – An offshore developer might not share or understand your vision the same way and may not be able to grasp the insight of your target customer due to the cultural and economic differences in his/her country. This would not help achieve the desired goals despite the efforts and expenditure.

Communication – There are multiple steps in a project and clear communication is essential for each step to move ahead. In cases where there is miscommunication or lack of communication, it can cause delay and repetition of work which will again cost time and more money.

  • The difference in quality expectations –The quality standards also differ across countries. Cultural differences can cause confusion in relation to quality expectations. People who come from other cultures may have different definitions of quality. This could result in unnecessary back-and-forth communication
  • Preference of programming language – Every country has a preferred language for programming that may or may not be supported in your region. This would require your team to edit and, in cases of changes, the initial developer may need to step in.
  • Replacement of developers – Due to burnout and excessive workload at times, the developers are replaced. The new developer might want to know every detail from scratch and it again adds up to the time lost in communication and understanding and ultimately disrupts the flow of work.

Factors to consider while opting for an Onshore development team:

Onshore software development has a higher upfront cost but also guarantees superior long-term value.

  • Direct Communication – With an onshore vendor, the communication is more transparent and clearer. Setting up personal meetings, visiting the office in person to see the work in progress, and communicating transparently help save time and budget.

Effective collaboration– There are opportunities to collaborate with the vendor and share and receive ideas and feedback which will help in better output. A local vendor also understands your vision and target audience better.

  • Less probability of delay – A lot less time is required to complete the project due to constant and transparent communication. The developer shares and understands your objectives and effectively makes changes as per requirements.

Legal and taxation policies –   Same law and tax policies eliminate the stress of having to deal with international laws which could be tricky to handle at times.

Intellectual property – Most local developers understand and value your IP rights which might not be the case with offshore developers as they do not adhere to your country’s IP and copyright laws.

Support plan – A post-project support plan is offered by most onshore developers. While offshore developers offer it as well, time and language constraints make it a challenging task.

After taking all factors into consideration, one can choose from either of the two options best suited for their budget and project timeline. If the company is equipped to face the challenges posed by choosing offshore vendors. They can opt for it or they can save the upfront amount and enjoy the many benefits of choosing an onshore vendor for their project.

Summary:  The cost difference, time consumption, and operational process of onshore vs offshore developers has been a topic of discussion and analysis for business leaders. While the cost of hiring an onshore development team is higher upfront. There are many details that affect the overall investment and time taken in offshore development options. After considering all factors, one can make the choice easily of choosing between the two. Laws and policies, language and time zone differences, quality checks, and parameters are some common points of concern that you face when you choose offshore developers. It is seen that many businesses opt for offshore developers. It has not turned out to be cost-effective in the long run. Onshore development on the other hand is beneficial to both parties due to transparency, communication, and a better understanding of the customers it is being designed for and justifies the investment cost.


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