Onshore v. Offshore v. Nearshore Software Development:

A Practical Guide to Outsourcing

According to the October 2017 Gartner Market Guide for Agile and DevOps Services, “By 2021, more than 60% of IT organizations will take advantage of agile and DevOps services from external providers, up from 27% in 2017.” There are a few different outsourcing models from which to choose – onshore, offshore and nearshore. Depending on a company’s business and technology needs, in-house expertise and project scope, there are pros and cons to each model. Let’s break down some of the opportunities and obstacles associated with each one so you can be confident in selecting the right “shore” for your needs.

Already think nearshoring is a great option for your project?


Scaling your team with U.S.-based developers is a good option for companies who require contractors to work within the same office location. This is a solid choice when there is a need for specialists to inject hard-to-find expertise into in-house teams, or to supplement the Agile expertise of teams provided by other service providers.


On-site resources accommodate key stakeholders who have a preference for face-to-face communication.
Onshoring allows for in-person meetings when the company culture isn’t experienced in engaging with remote employees.
You are more likely to find developers with rare or in-demand expertise in the U.S. The size and tenure of the U.S. technology industry has created an exceptional depth and breadth of talent.


Local talent with the required skill set can be difficult to find, especially in a “hot” market. This can lead to rising search costs and potential delays in kicking off your project.
The talent scarcity increases the risk of others poaching those you’ve invested in.
Onsite workers need a place to work within your offices, which can increase overhead costs.
Onshore developers command top consulting fees which can impact your budget.


Crossing oceans can be a good outsourcing solution when your projects are straightforward, well-defined and require minimal communication.


Offshoring is efficient for maintenance work on projects that are well-defined and don’t require strategic planning or ongoing communication.
Hourly rates for offshore developers tend to be lower, so delivery costs can be reduced (assuming equal levels of developer productivity).
Offshoring offers a “follow the sun” approach to development. U.S. developers can produce deliverables during normal working hours, while testing and maintenance activities can be completed “off hours.”


Extreme time differences can lead to frustrating lags in communication and approvals which can negatively impact project timelines. Agile software development requires real-time collaboration in order to operate efficiently.
Language barriers and cultural nuances can impact effective communication and collaboration among teams.
Lower hourly fees don’t always translate to cost savings. In some cases, it can take three to four developers to do the work of one highly skilled developer. This can result in unexpected cost overruns.


If you need critical software development done quickly, efficiently and with a high degree of collaboration, transferring development to a nearby country could be more advantageous.


Access to highly experienced developers who possess the same in-demand skills and workflow efficiencies as onshore resources – at a better value.
The geographic proximity significantly reduces or eliminates time zone and travel issues. Time zone alignment also enables real-time, collaborative Agile development.
Certain Latin American countries foster technology communities similar to those found in Silicon Valley. They also boast higher rates of English fluency and cultural affinity.


Nearshore engineers typically have a higher hourly rate than offshore engineers. In many cases this is offset by higher levels of productivity and project velocity.
If your onsite culture isn’t familiar with modern, remote communication technologies, some training may be needed.

Whether you select an onshore, offshore, nearshore (or blended) team, it is essential to locate your business’s processes and functions in regions which will be the most suitable for the company in terms of resources, quality, and costs. Understanding the pros and cons of each model will help your team select a partner with confidence – know you’re getting the right resources, in the right place, with the right level of control. Additional questions? Contact Gorilla Logic to discuss your particular needs.

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