Onshore vs. Offshore vs. Nearshore Software Development – Which is right for your business?

Businesses these days are always looking for the best solution while also prioritizing cost savings.

Many companies outsource their software needs to third-party companies, as this can often save time, money, and resources. These services can either be provided by companies within one’s own country (onshore) or outside of one’s country (offshore and nearshore).

But what exactly is the difference between onshore, offshore, and nearshore teams, and which is best for your business? Each comes with its advantages and disadvantages, making the decision a crucial one for businesses aiming to optimize their operations. In this post, we’ll delve into each to determine which might be the best fit for your business needs.

What is Offshore?

Offshore developer teams refer to any teams that are located abroad, typically in distant locations such as Asia or Europe. These teams offer their services at a much lower cost than local teams, making them an attractive option for businesses looking to cut expenses. However, offshore teams may face challenges related to time zone differences, language barriers, and cultural disparities, which can impact communication and project management.

What is Onshore?

Onshore teams are those located within the same country as the hiring business. They offer proximity, and similar time zones, and often share cultural and linguistic nuances, facilitating seamless communication and collaboration. While onshore talent tends to come with a higher price tag compared to offshore and nearshore options, the benefits of working closely with a team in your country can outweigh the costs for many businesses.

What is Nearshore?

Nearshore teams are located in neighboring countries or regions, compromising the benefits of onshore and offshore teams. They provide cost savings compared to onshore teams while still offering advantages such as overlapping time zones and cultural similarities. Nearshore teams are a relatively newer concept but are becoming increasingly popular as businesses seek to balance cost-effectiveness and operational efficiency.

Benefits and drawbacks of offshore talent

Offshore talent is typically much lower priced, making it an appealing option for businesses aiming to reduce expenses. Additionally, offshore teams may offer specialized skills and expertise that are not readily available locally. However, challenges such as time zone differences, language barriers, and cultural disparities can hinder communication and collaboration, potentially leading to project delays and misunderstandings.

Though it has its fair share of shortcomings, the draw of offshore developers’ lower costs is undeniable – it’s been reported that a whopping 54% to 80% of companies engage with offshore talent.

Cheaper Labor

The biggest upside of hiring offshore talent is the cheaper labor costs. According to JDI, offshore developers cost about 40% less than onshore workers on average. When mass-hiring large teams of developers at once, could potentially save your business hundreds of thousands of dollars annually, which is huge, and, depending on your company’s needs, may be all you need to succeed.

However, as the saying goes, you get what you pay for, and this cheaper labor comes with its fair share of drawbacks.

Language barrier

Quite often, offshore developers aren’t native English speakers, meaning they may sometimes have difficulty understanding what you mean when assigning tasks or projects. Having a team that precisely understands your project and its various needs is crucial for success, and this language barrier may otherwise cause delays or other problems down the road.

Time zone differences

Since offshore teams can live as far as the other side of the world, they work very different hours than your business. Because of this, it may take several hours for your teams to be able to communicate with each other. For example, if your team has a twelve-hour time difference, that essentially means that your developers will have to wait for 12 hours or more before receiving a reply. This creates delays, so if your team is under a tight deadline, this can pose a very significant problem and cost you more in both time and money.


Another drawback to offshore software development is the concern of data security. Working with a fully remote team of developers across vast distances may increase the chances of data breaches, especially when working with sensitive data. Because of this, it is vital to implement data security protocols and ensure that you ensure encryption, 2-factor authentication, password protection, firewalls, and other security measures.

Developer replacements

Because offshore developers often work under very tight deadlines, this, unfortunately, sometimes results in developer burnout. This can lead to extending the project length due to offshore developers needing to hire new developers, with offshore partners having a staggering 40% annual turnover rate on average. This additional time required to hire and train new developers may cause delays or other issues over time.


While it would be unfair and biased to say that local developers offer a higher level of quality than offshore developers, quality expectations may vary. Everyone’s version of quality is different, so it’s important to understand that an offshore developer’s quality standards may differ from your own – which can again cause delays and cost you more money in the long run.

Benefits and drawbacks of onshore talent

Onshore talent offers the advantage of proximity, facilitating easier communication, collaboration, and project management. Additionally, onshore teams are often more attuned to local market trends and regulations, which can be beneficial for businesses operating within specific industries or regions. Working with onshore teams can be very beneficial for businesses that want more control over outside talent, with similar timezones allowing them to communicate and work with hired talent faster and more efficiently.

However, the higher cost of onshore talent may be prohibitive for some businesses, particularly those operating on tight budgets. As stated earlier, onshore talent almost always costs more than offshore workers, though it could be argued that the higher cost is well worth the investment.

Shared timezones

While it may seem like a small plus, being able to work alongside talent that shares your timezone is a massive benefit. Instead of having to wait an entire workday to hear back when working with offshore developers, onshore talent is capable of replying almost immediately. This can save a lot of time and make collaborative work a whole lot easier for all parties involved.

Real-time collaboration, stronger connections

Working with developers in the same county as you also means that it will be more possible for your team to collaborate with onshore devs in real-time, whether that means working together over a video call or meeting in an office in person. Simply having the option to work together and being able to discuss in real-time to help solve any issues that come up can do wonders for productivity.

Additionally, because you’re capable of chatting with your hired talent in real-time, it also means that you’ll have a stronger connection, making the partnership more enjoyable.

Better communication

Staying within your own country helps to negate the risks of a language barrier, allowing you to communicate more effectively, work more efficiently, and complete tasks faster than otherwise.


Some industries, due to government regulations, cannot share private data outside of the United States, meaning that to stay compliant, their only option is to hire onshore talent. For example, companies that handle healthcare data are contractually obligated not to share sensitive data outside of the country. If your business falls into this category, then you may have to stick to onshore talent.

Higher Costs

All of the perks of hiring onshore talent unfortunately come at a price. In software development, you pay for what you get. Obtaining a higher quality product from your home country means that you will have to pay a competitive price for it.

Benefits and drawbacks of nearshore talent

Nearshore talent combines the advantages of onshore and offshore teams, offering cost savings while maintaining proximity, overlapping time zones, and cultural similarities. This makes nearshore teams an attractive option for businesses seeking to optimize their operations without compromising on quality or communication. However, businesses should be mindful of potential challenges such as language differences and regulatory issues in neighboring countries.

Better communication

Nearshore offers many of the same benefits as onshore teams, with easier and faster communication being perhaps the biggest one. Since neighboring countries share a lot in common with yours, including likely having the same native language, cultural similarities, and similar working cultures and standards, it will be easier for your team to collaborate with nearshore developers and be on the same page.

Reduced time zone difference

Like onshore teams, nearshore developers live close to your business – though not quite as close as onshore – meaning that they will be only a couple of timezones away, making communication fairly easy. While time zones may still have a difference of a few hours, communicating with a nearshore team will be much more convenient than working with offshore developers.

Lower cost

While still more expensive than offshore talent, nearshore is usually more affordable than onshore developers. Nearshore is an attractive option for many businesses because it offers a nice balance between convenience and quality while also costing less than local talent.

Data and privacy

Similar to working with offshore talent, conducting business with nearshore talent increases the possibility of data branches and potential privacy concerns. And on the same note, you should strive to implement security measures to mitigate these risks. By enacting common security practices, you can help lower the risk of data breaches and protect your information.

Which is best for your business?

Choosing between onshore, offshore, and nearshore talent is a critical decision that can impact the success of your business. By carefully weighing the benefits and drawbacks of each option and considering your specific needs and priorities, you can make an informed decision that aligns with your long-term goals. Whether you prioritize proximity, cost-effectiveness, or specialized expertise, there is a solution that's right for your business.

How 7Factor can help

While offshore and nearshore teams have their benefits, we believe that the best possible quality comes from onshore talent – and you’d be hard-pressed to find a team more talented or devoted than 7Factor’s team of developers. Contact 7Factor to learn more about how our team can support your business's success today!