Companies are actively looking for ways to optimize project implementation costs, as well as speed up their time to market. Many find a solution in engaging third-party contractors through outsourcing and offshoring. These two approaches are closely related, but have differences that are important to know. If you are considering cooperation with an offshore software development company in Ukraine or Poland, then understanding the specifics is especially important. In this article, we will look at the difference between outsourcing and offshoring and how to choose between them.
What Is Outsourcing?
Outsourcing involves hiring a third-party company or individual to perform tasks that could otherwise be performed within the customer’s company. This approach can be used in a variety of areas, but is most popular in marketing and IT.
In software development, outsourcing means that you hire a group of developers to build an application or business processes for you. This can be an entire project or just a portion of it (for example, if there are issues in the application codebase that need to be fixed before further work can begin).
What Is Offshoring?
Offshoring involves transferring certain company operations to a company in another country that specializes in the relevant industry. The customer may choose this approach to performing operations for several reasons, including the desire to reduce costs, the need to develop new functionality, or the search for unique specialists without the intention of hiring them.
In the IT sector, offshoring can also mean forming a development center in another country and creating a team of developers there. Modern businesses have to make many decisions, and one of the most important is the choice between outsourcing and offshoring. Let’s delve into the features of these two approaches.
Key Differences Between Outsourcing and Offshoring
Offshoring can be considered a form of outsourcing, and it is important to understand the differences between the two. Both approaches involve hiring a third party to perform some portion of your IT tasks. A separate team or specialists are assigned to perform these tasks, while the customer company focuses on its other operations.
The main difference between outsourcing and offshoring is that the first approach usually involves hiring a company to perform work in the customer’s country, while offshoring involves assigning the execution of certain tasks to a development center in another country.
In addition, offshoring is usually cheaper than outsourcing, as the cost of labor or remote teams in other countries, such as Ukraine or Poland, is usually lower. At the same time, the level of training of specialists is at a very high level.
Outsourcing and Offshoring: Which to Choose?
The decision between outsourcing and offshoring is made taking into account several factors. The type of project, the skills and resources required from the specialists, and the price are important. However, there are a few considerations that can help you decide:
Outsourcing is best used for projects with clearly defined tasks that specialists can complete without much interaction with the client. Offshore software development is best used for projects that require a step-by-step approach, as well as collaboration with the client.
If you are looking to achieve savings during the implementation of the project, then offshoring may be the best option, if we are talking about Eastern Europe or India, for example. Outsourcing may be more expensive, but it can provide long-term savings due to reduced labor costs.
Benefits of Outsourcing
Outsourcing web development offers companies many benefits that make this approach attractive in terms of resource optimization and business efficiency:
Outsourcing is an opportunity for companies to focus on their core competencies
This is one of the main reasons why companies outsource software development. It allows them to focus on their core competencies and entrust the development to a specialized team. By outsourcing development, you gain access to more experienced developers than if you were to try to hire them on an in-house team. This saves time and money in the long run, as a more experienced developer will generally produce better results than a less experienced one.
Outsourcing can help small businesses grow faster
Outsourcing software development can be a great way for small businesses and business owners to grow faster than they otherwise would, as it allows them to cut out non-core activities by outsourcing technical work to third-party companies in a neighboring country. Additionally, it allows small companies to gain access to more experienced developers or even outsource just one programmer instead of an entire team.
Outsourcing allows you to hire the best people in the world, regardless of their location
One of the main benefits of outsourcing is that you can hire the best people in the world, regardless of their location or cultural differences. This is because outsourcing companies have a global reach, and you can find the best developers regardless of their location.
Outsourcing allows you to reduce costs
Another benefit of outsourcing is that it allows you to reduce costs, as outsourcing companies can often offer lower prices. This is also due to the fact that outsourcing companies have more experience with different types of projects, so they can find the best solutions for them and therefore charge less. They may even be able to hire developers at a lower price than you could find in your region, all to the benefit of your business model.
Final Thoughts
Both outsourcing and offshoring can be effective strategies for software development. It all depends on the goals of the project and preferences for interaction with the team. If you are looking for a reliable offshore software development company in Poland or Ukraine, pay attention to N-iX. This is one of the leading IT providers in the region with impressive experience working with international clients. Cooperation with such a company will allow you to combine high quality development with favorable prices and transparent processes. Selecting a reliable partner plays a vital role in the long-term success of a project.
