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What Is the Difference Between Onshore, Offshore, and Nearshore Outsourcing?

    It’s common business practice for companies to use outsourcing, but what is it? And why do companies choose to use it?

    Keep reading to find out more about the different forms of outsourcing and their benefits.

    What Is the Difference Between Onshore and Offshore Outsourcing?

    The biggest categories of outsourcing are onshore and offshore outsourcing. But what’s the difference between them?

    Onshore outsourcing turns to external companies or contractors within the country to do the outsourced job. For example, a small business in Arizona looking for help with customer service can turn to a call center based elsewhere in the United States to help them better manage their customer service calls.

    Onshore outsourcing is the most expensive outsourcing option, but is used because it is easier to work with companies that share culture, language, and even a common time zone.

    Offshore outsourcing goes to the international market to find a company to partner with. The same U.S.-based company looking for customer support help could turn to a call center based in the Philippines.

    Offshore outsourcing is used because of the massive cost benefits it can provide a company. Even the added complications behind communications and establishing an international supply chain are often offset by the extreme savings offshore outsourcing can provide.

    What Is the Difference Between Nearshore and Offshore Outsourcing?

    Nearshore outsourcing is a form of offshore outsourcing. Nearshore outsourcing still uses an international company or provider but is in a country that is nearby. Nearshore outsourcing provides the same cost-saving benefits but eliminates the hassle of trying to set up meetings and communicate with a company twelve time zones away.

    Additionally, countries near the United States have a better understanding of American culture and can better accommodate the needs of US-based companies.

    What Type of Outsourcing Is the Best?

    The best outsourcing depends on your company’s needs and expectations. For some companies, the best option is to use nearshore or onshore outsourcing, while others find more benefits in going with offshore outsourcing.

    Rather than a one size fits all solution, it’s essential to understand the advantages and disadvantages of each option.

    Offshore Outsourcing


    • Cost savings: Offshore services deliver significant cost savings compared to any other option.
    • Scalability: With offshore outsourcing you can quickly increase your resource pool when demand increases.


    • Language barriers: Differences in language can make it difficult to train, and assess how well your offshore resources truly understand their training. This can lead to quality control issues and decreased efficiency.
    • Technology differences: Offshore providers may not have technology that can integrate with your company.

    Onshore Outsourcing


    • Ease of communication: When dealing with onshore companies, you are unlikely to encounter many communication or cultural differences. It’s simply easier to work with onshore companies.
    • Greater level of control: When you outsource locally, training and quality control issues are easier to handle. It’s a more straightforward process to work with them in person and set up personal meetings and physical demonstrations.


    • Higher cost: Onshore outsourcing is still more cost-effective than trying to establish your own in-house processes, but it is the most expensive option.

    Nearshore Outsourcing

    Nearshore outsourcing takes the strengths of both onshore and offshore outsourcing and combines them.


    • Time zone compatibility: Unlike offshore outsourcing, nearshore outsourcing doesn’t require you to have meetings at bizarre hours to communicate with your team.
    • Cultural closeness: While nearshore companies are not US companies, because they are neighbors to the US and nearby, they better understand the cultural needs of a US company.
    • Infrastructure quality: Nearshore teams have better infrastructure quality than you’ll find in other parts of the world. They have a more reliable communication infrastructure and stable internet connections.
    • Close proximity: Your nearshore partner is close enough for you to easily meet with them in person. This makes it easy to sort out crucial issues when they arise in all stages of development.


    • Higher Cost: Nearshore outsourcing is cheaper than onshore outsourcing but can sometimes be more expensive than offshore outsourcing. Fortunately, Excel Softsources is known for our cost-saving solutions!

    Why Outsource Software Development?

    Nearshore software development is a great option for most companies. Because of the high amount of training, skills, and knowledge required in software development, nearshore outsourcing gives you access to a talented skill pool at a fraction of the cost.

    Choose Excel SoftSources

    If you’re looking to hire the best nearshore web development team, Excel SoftSources is who you are looking for. We offer the advantages of offshore software development with the benefit of a nearshore contractor.

    Contact us today to find out how we can meet your outsourcing software development needs.