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    Onshore vs. Offshore Software Development Company: Which one is better?

    By Christian Schraga
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    Updating legacy systems or creating new software applications, whether for internal or customer use, often demands substantial resources. While larger organizations possess in-house IT departments capable of handling software needs, many smaller businesses lack such capabilities. Simply hiring IT professionals with the necessary skills can surpass the budget of smaller to mid-sized companies.

    The primary reason why most businesses opt for outsourcing their software development is the scarcity of resources. By entrusting software development to a third-party vendor, smaller companies sidestep the need to employ additional staff for an in-house development team. This approach allows them to channel their time, energy, and resources into business growth.

    When it comes to outsourcing, you typically have two choices: onshore development services or offshore development services. This article will detail the pros and cons of each option, helping you determine the best fit for your business needs.

    Onshore Development

    Onshore development is when you outsource mobile, web, or custom software development to a business or individual located in the same country as your business. For many years this seemed to be the only option for outsourcing software development.

    Advantages of Onshore development

    A lot of companies tend to choose local companies to develop their software. There are several advantages such as:

    • Ability To Collaborate In Person: In-person meetings are much easier if you outsource development to a local company. Even if the company is in a different state, in-person meetings will be much less challenging than when the company is overseas. In-person meetings make it easy to build relationships with the company you’re working with and communicate your wants and needs. This even applies to virtual meetings because time zone differences are less of a challenge.
    • Clear Communication: Speaking the same language and understanding the same culture will significantly contribute to the project’s success. Effective communication is vital to ensuring that both your company and your developer share a mutual understanding of the business problem. It plays a pivotal role in guaranteeing that the project aligns with all your requirements.
    • Fewer Iterations To Achieve Quality Application: Onshore development often requires less iteration to have quality software because communication will be much easier. Questions, inquiries, and information will be responded to immediately due to the same time zone. Design and development teams will work in tandem without any communication barriers to complete the project on time.

    Disadvantages of Onshore development

    • Cost: The fact is that developers just cost more in the US and Western Europe. It’s primarily a supply and demand issue. There are relatively few talented developers in these countries compared to the size of the software sector. And the FAANG companies can pay a heck of a lot more than a startup can. 

    Offshore Development

    Outsourcing software development to foreign providers, such as third-party software development services in countries like India, China, Ukraine, or Vietnam, encompasses mobile, web, or custom software development. This approach has gained increasing popularity over the years.

    Advantages of offshore development

    Offshore development is increasingly popular because this form has many advantages, such as:

    • Lower cost: Companies often turn to overseas development to save costs. Although the cost of offshore software development services has become more expensive over the years, they are often still cheaper than US resources.
    • Access To A Wide Range of Skills: Theoretically, you will have access to a large talent pool when you choose to go overseas. China, India, Ukraine, the Baltic States, Vietnam, and others have many more tech resources than North America and Western Europe do. Kids start learning to code in grade school, and consequently, there are a lot of experienced individuals to choose from.

    Disadvantages of offshore development

    Although offshore development can save you a lot of money, it also has many disadvantages you need to consider.

    • Communication Barriers: Selecting a foreign company based in a non-English speaking country can pose significant communication challenges. Expressing your software development requirements, preferences, and inquiries can be difficult when dealing with individuals unfamiliar with the language. While many foreign companies may have leaders proficient in English, difficulties can arise if it is not their native language, particularly if they are not well-versed in its nuances.
    • Cultural Differences: Cultural differences can be a communication barrier. For example, you might use specific phrases or terms that are commonly accepted in your industry or US businesses that people in other countries are not aware of and maybe misinterpreted. Such cultural differences can lead to misunderstanding and hinder your ability to convey what you need.
    • Difference In Time Zones: When language barriers and cultural distinctions already hinder communication, foreign companies in varying time zones can further complicate matters. Seeking answers or addressing project concerns with your designated point of contact can be challenging. Your working hours may align with their midnight, necessitating you to wait an entire day for responses via email or other communication channels.
    • Inconsistent Quality: Many potential issues can affect the quality of your software development if you perform an offshore service. You have no control or visibility over who develops the software, meaning you rely on the foreign company to hire qualified individuals. If they’re hiring the cheapest software engineers out there, it could hurt the quality of their work.

    Onshore Leadership, Offshore Budget

    Onshore leadership, Offshore budget is a model that is being strongly developed in recent years. This operational model takes advantage of both models above while at the same time overcoming the disadvantages of each.

    The model operates with product managers and client-facing customer service based in North America or Western Europe. This approach ensures smooth operations and maintains software quality for customer satisfaction. Simultaneously, software development teams are established overseas to tap into high-quality human resources while reducing costs.

    CodeStringers is headquartered on the west coast of the United States. We have offices in Portland, Oregon; Santa Cruz, California; and New York City, where our leadership resides and oversees client engagements.

    We take pride in developing our software through our offshore development organization in Ho Chi Minh City, Vietnam. Unlike some firms that claim to have an offshore team composed of contractors, our Vietnam entity is a wholly-owned subsidiary. It employs over 50 full-time professionals, including product managers, user experience and interface designers, software engineers, and quality assurance engineers.

    We maintain our “boutique” approach to allow our US leadership to directly engage with clients and our team in Vietnam. This enables us to deliver world-class software at a fraction of the cost compared to in-house teams.

    Christian Schraga & Vien Nguyen

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    SVP of Product

    About the author...

    Christian Schraga has more than 20 years experience working in various functions within the software industry. He has been the SVP of Product of CodeStringers since January of 2020. Prior to that he was a customer of CodeStringers, having founded Ella Learning, which we are now proud to say is a CodeStringers product. Additionally, Christian spent 10 years in the music industry as the VP of Digital for Columbia Records where he oversaw the development of several successful mobile apps, including the Webby Award winning Bob Dylan Bootlegs app and the blockbuster AC/DC Rocks app. Christian also spent 4 years in data science, working on several predictive and AI applications for the auto, music, and retail industries. He also has 4 years of finance experience having worked for the prestigious GE Corporate Finance Staff. Christian has an MBA from the Wharton School of Business and a BA from UCLA. In his spare time, Christian is an avid language learning enthusiast, who has a reasonable amount of fluency in 6 languages. He is also a fitness fanatic-- having run 10 marathons.

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