Outsourcing or Offshoring Development: What to Choose?

In recent years, new words have taken root in our minds – offshoring, outsourcing, outstaffing, personnel leasing. Now new semantic expressions are on the way – reshoring, profit sharing, uberization. What is the relevance of these meanings for development companies? Let’s start by analyzing the specific characteristics of outsourcing and offshoring.

Why outsourcing versus offshoring

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Most of us are not used to this yet, but in many ways, these two terms, “offshoring” and “outsourcing,” have the same meaning: transferring some of the professional web development services to freelancers. Over the past decades, as a result of globalization, this has become a trend in manufacturing, in line with constraints to cut costs, such as China, India, Russia, etc.

But the reality of today is that the costs of offshore production are growing, contributing to the return of business to Western countries. This not only strengthens the logistics functions (the speed of supply is required) but also improves the quality of finished products (the level of training of cheap personnel in some countries leaves much to be desired).

Herein we can see the emerging tendencies of reshoring (business returns are still facing considerable problems). This, and additional risks from significant investments, and the level of its own personnel (either guest workers or former refugees). But it is obvious that the withdrawal of capital can provoke stagnation in the IT industry.

Therefore, there is a good prospect for outsourcing. The idea is to fill the vacant niches. This will save time and money, balance the final cost of production while adhering to quality principles and ensure responsible performance supervision.

What is outsourcing?

Outsourcing is a cost-saving option in which the customer receives the result of work from another company. In fact, this is a subcontract, but the fundamental difference lies in the terms of cooperation. An outsourcing company should become a part of the customer’s business process for a fairly long time. The principle of outsourcing is to save money by attracting a qualified workforce to support business processes.

In turn, the financial burden is reduced due to:

  • freeing up the customer’s production space
  • reducing the time and required resources of the customer
  • the ability to focus on your key tasks

What is offshoring?

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At its core, offshore custom development can be compared to outsourcing, in which another organization, but from a different country, becomes a service provider to reduce costs for certain development tasks and processes. Offshoring seeks to take advantage of the low labor cost, tax-laxity, and a host of other benefits that such a model can provide.

Industry trends

The global economic downturn has forced many companies to explore all the options available to improve efficiency and reduce costs. Consolidation processes take place; large companies take over small service providers. The political situation is not in favor of developing countries. But even in such a difficult situation, outsourcing is on the rise.

The service provider market is gradually expanding and restructuring. The professional qualities of small companies the strengthening of their specialization allow you to create the prerequisites for company growth.

Drawing the line

Ultimately, the best solution for the market as a whole depends on the needs of its participants. If you need a high level of quality and control, outsourcing may be the best solution. If low costs and a distributed business are needed, offshoring will remain an efficient model.