A few decades ago, cost-cutting was the primary reason why IT firms sought outsourcing as the most viable option. Outsourcing meant that the development teams could work from another country, relieving the burden of overheads and additional resources. As enterprises grew, so did their need to expand their workforce. Finding the right talent meant that they could reach out to far-off shores and still meet their production deadlines with high-quality products and services.

Offshore Outsourcing

Outsourcing resources evolved into three different working models in more recent times – nearshore, offshore, and onshore. Each of these working models is chosen for optimum results. However, the offshore model will have a more significant impact on the bottom line. Finding and putting together a software development team in a different part of the world can be challenging. Nevertheless, it is the most cost-effective model. As long as the difference in time zones, language, and culture don’t matter, and only high-performing developers do, the offshore model can work well. Projects that require no onsite visit or client interaction can outsource their development needs to a team offshore and successfully manage with emails and virtual meetings.

Nearshore Outsourcing

The choice depends on specific business needs. Enterprises in need of software engineering services close to home but not necessarily within the same country need nearshore services. The simple reason is that the team will be available within the same time zones. Moreover, they are also within reach and can be brought in for consultations or brainstorming, without the addition of long-distance travel costs. The nearshore delivery approach allows enterprises to integrate with teams of similar competencies and cultures.

Onshore Outsourcing

Then, there is the third option of onshore outsourcing. Businesses no longer need to have in-house developers or testers. Software engineering services are available to develop, test, deploy, and help enterprises implement a high-quality product and still stay within their budget. The disadvantage is that it may cost more than the offshore and nearshore outsourcing models. Another point of concern is that it is more limiting geographically. The highly skilled software engineer you need for the project may not be available within the country when you need them. Searching for talent worldwide increases the talent pool exponentially.

Knowing the different outsourcing models is one thing. Making the right choice is quite another. There are a few factors to consider when it is decision-making time.

How to Choose the Outsourcing Model?

Typically, enterprises outsourcing development projects will rely on the cost vs. benefits analysis. For instance:

Cost-based choice

If you are focused on keeping your costs down but still want the best development team, your choice is clear. You opt for offshore outsourcing. You must ensure that the project plan is clear and the expectations are well-communicated if you want to avoid miscommunication leading to project delays that will cost you much more in the end.


If you have a project that requires a unique skill set and needs close collaboration with the in-house team, you opt for nearshore or onshore outsourcing. Teams working in different time zones will need to stretch beyond regular working hours to collaborate. Enterprises would find the extended teams more easily accessible locally or in the same time zone. Onshore outsourcing also allows developers to work in your office and ensure availability and easier communication without adding to your headcount.


The nearshore outsourcing model falls between onshore and offshore with several of the same benefits and offers an agile software development team. If you fall in between outsourcing to an offshore facility and having access to onshore teams, a nearshore would be an ideal choice. It keeps the dedicated development team near enough to ensure you work similar hours, and they can be brought in for a briefing or training in a shorter time and at considerably low costs.

Over and above these factors, enterprises must also evaluate several parameters when looking at outsourcing services.

Know your requirement

Before outsourcing a project, you must know the required technology stack. It is easier to identify the talent when you know what skillset is needed.

Expertise of the software engineering services provider

You would need to outsource your requirement to companies with experience in the technology and the bandwidth to develop and deliver based on your timelines and quality expectations.

Price of outsourcing

Cost is always a determinant when outsourcing a project. Offshore teams can be the least expensive. However, it also depends on the type of project and its duration. Sometimes, it may be better to go with an onshore model despite higher costs. Choosing the best way to outsource development will depend on your business needs.

To Conclude

With the rise in remote development teams and advanced technology, enterprises can use team augmentation for their IT resources on-demand. Doing away with in-house resources and overheads has become the norm. You still have access to the best talents that can be considered an extended team. The bottom line is that outsourcing software development has proven highly profitable for enterprises worldwide, even more so because of how digitally connected we are.