by Logo Business Blog – Future Processing
Farshoring vs. Offshoring vs. Nearshoring – 3 visions of IT Outsourcing_
main page

Software development outsourcing has been big news for quite some time now. Browsing the internet you can easily find out when to do it, how to do it and whether you should do it all.

As more information becomes available, many brands are still learning of the multitude of benefits that outsourcing development can bring – and, according to the report by the Global Sourcing Association, we can expect to see a significant increase in 2020.

Software development is a complex and highly competitive field and finding the right developer for your project can be difficult. When embarking on a software development project, there are many factors to take into consideration – not least, the country that your developer will be based in. These days, looking for IT specialists for your business is considered a somewhat antiquated idea – as well as an expensive one. It’s for this reason that outsourcing is fast becoming the norm for forward-thinking businesses looking to get ahead with their tech.     

What is outsourcing?

Put simply, outsourcing is the process of engaging a third party to take care of your software development requirements. By doing this, you commission and pay for specific projects, rather than hiring your own team on a full or part-time basis. Outsourcing can take a number of different shapes and, this is what we’re going to talk about in this article.  

  • Farshoring

One of the types of outsourcing – and the one that you’re probably familiar with – is farshoring, also known as offshoring. This involves sourcing your software development requirements to a far-flung country such as India or China. The benefits of doing this revolve very much around cost – materials and labour are much cheaper in countries such as these; leaving you with more budget free for other projects.  Although there may be cost savings, this process is not without its issues. Some of these are: 

Language barriers – Farshoring often involves dealing with developers whose first language will not be the same as yours. This however, does not mean that you will be unable to communicate effectively but you need to take that into consideration.

Time zone issues – By its very nature, farshoring means that when you’re in the office at 9 am looking for an update; your developer may be asleep.  Many businesses who choose farshoring often find themselves working unsocial hours just so that they can remain in contact with their development team. 

Customs issues – Speak to any business who has used farshoring and they’ll almost certainly have a list of frustrations including customs problems, country taxation issues and more. When doing business with another country, there are likely to be many rules and regulations that you’re not aware of – which can lead to delays and added expense. 

  • Onshoring

The polar opposite of farshoring is onshoring. Here, the process is a lot more straightforward. Essentially, onshoring is the act of sourcing a supplier within the same country as your main business. For example, a business in London may source a software developer in Liverpool to complete a project. By choosing a developer outside of the capital, prices will often be lower. As well as cost savings, there will be no issues with language barriers, time zones or other cultural differences, making communication much easier. Although the cost savings are usually not as significant as with farshoring; in terms of convenience, this is a popular solution. 

  • Nearshoring

This last – and increasingly popular – method of outsourcing attempts to reap all of the benefits whilst minimising the issues. Nearshoring, like farshoring, involves sourcing software development from a different country. The difference here is that nearshoring targets countries which are only a short distance away. This means that businesses are able to take advantage of lower costs without the hassle of time zone and language problems. For example, a business in Germany may source a software developer in Poland. In this instance, the two countries are only a short distance away and there are fewer language and culture barrier issues. The benefits of nearshoring are: 

Skills – Countries such as Poland have a phenomenal talent base of software development staff. Nearshoring opens access to experts in their fields who aren’t new to modern technologies and most probably have experience, having dealt with projects which in many ways can be similar to yours.

Culture – Countries which are in close proximity to one another usually have very few cultural and language differences – which makes communication much more straightforward. For example, countries within Europe tend to be fairly accessible and time zones vary only by an hour or two in most cases. 

Proximity – It stands to reason that you may want, at some point, to visit your software developer for a face to face meeting. Nearshoring caters for those who appreciate or require frequent communication and personal visits.  

With all its benefits, choosing nearshoring also carries some risks which must be considered before making a decision.

How do you make a decision about outsourcing software development?

Making the right decision all depends on your needs and your budget. Many brands are now adopting the process of ‘rightshoring’ or ‘bestshoring’ where different business needs are sourced from different countries in order to take advantage of the best talent and the best price. 

Your outsourcing checklist should include, among others:

Budget – how much do you want to pay for your software development and what are the ‘extra’ costs involved in outsourcing?

Communication – how involved do you want to be in the project and how important is regular communication to you?

Culture – how important it is to have similar culture and work ethics?

Talent – is there a specific talent required for your project and, if so, have you researched the best place to find that talent?

When considering a software development project, you need to do your research to make sure that you know what’s involved in each option. For example, if it’s important for you to be able to have a close relationship with your software developer then onshoring or nearshoring is probably the right option for you. On the other hand, if price is your sole concern then you may want to consider farshoring. 

Whichever option you decide is right for you, it’s important to know all the facts before making the final decision. 

Related Posts



This website stores cookies on your computer. These cookies are used to improve our website and provide more personalized services to you, both on this website and through other media. To find out more about the cookies we use, see our Cookies policy.