Offshore, Onshore, Lakeshore — What’s the Difference?

As the need for innovative software development continues to explode across all industries, CIOs are finding it difficult to meet requirements, deadlines, and budgets. There are typically three choices to choose from: hire more employees, outsource to offshore teams, or outsource to onshore teams. But what if we provided you another option: lakeshore? When it comes to hiring an outsourced IT team, let’s discuss the pros and cons of offshore, onshore, and lakeshore, so you can decide which is right for your company.

Offshore Outsourcing

Outsourcing software development to offshore companies, such as those in India or Philippines, isn’t a new thing. In fact, the concept been around since the early 1990’s, and for sure since the advent of the internet. However, with the rapid expansion of our modern digital era, offshore outsourcing usage has become heavily leaned on as a way to meet IT infrastructure needs, while keeping the costs low.

Pros of Offshore

Hiring offshore developers typically comes down to cost, but it’s not the only reason companies will go that route. Let’s take a look:

  • Perceived Low Labor:

    The biggest advantage of using an offshore company for software development has to do with their perceived lower cost compared to hiring domestic employees or using an onshore outsourcing team.

  • Skilled Workers:

    Workers in offshore companies do have skilled workers who provide quality services to their clients.

  • Just-in-Time Tactical:

    Offshore provides a just-in-time “lights on-lights off” workforce where companies can quickly ramp up and ramp down workers as capacity is needed.

  • Non-Current or Legacy Technologies:

    Offshore firms are able to tap into a workforce that have skills in legacy (think Cobol) or non-current technologies.

Cons of Offshore

There are a number of issues that arise when you’re working with a team in a country different from your own. Let’s cover the big ones:

  • Time Zone Differences:

    The first major issue that will arise when hiring an offshore IT team comes down to time zones. It’s hard to communicate and keep on top of deadlines, resolving issues, or getting everyone on the same page when your entire IT team is ten hours (or more) ahead of you.

  • Language Barriers:

    Even if your offshore team speaks English, there’s a good chance it’s not their first language. When that’s the case, instructions can be lost in translation, costing you time and money.

  • Cultural Differences:

    Different holidays, work hours, and even PTO can get in the way of the velocity of your software build. Additionally, cultural differences in how work is defined and understood may leave projects with unmet expectations or needing to be re-worked in order to meet expectations.

  • No Designated Teams:

    Once you’re done with a specific IT project, the people designated as your team will be dispersed to work on new projects. This means the next time you have a software design project ready to go, or if your current project needs issues resolved, you will likely get an entirely new team of people. This means they will need to learn your systems again and increases the cost by having to get them up to speed as you reshare your IP.

  • Loss of your IP:

    As mentioned above, when your project is finished, the people assigned to your project will be assigned to new projects with other clients. Any unique or novel capabilities, business workflows, and system strategies found within your applications will be retained by the workforce (how do you forget what you have learned) and offered up as innovations to other clients.

  • Foreign Courts:

    If you end up having issues with a foreign worker or offshore outsourcing company, getting the matter resolved may be a bigger hassle than it’s worth. It can be expensive, tedious, and still not go on your favor.

  • Workforce Churn:

    Even within an offshore team dedicated to a client, you will likely experience substantial workforce turnover as IT workers pursue opportunities with other clients. Often times, this turnover can approach 30% per year, driving a significant hidden cost to development efforts due to re-training, delays in delivery, as well as budget and schedule overruns.

Onshore Outsourcing

Around the same time offshore IT outsourcing began picking up steam, there was an equal backlash for those wanting to keep domestic workers in jobs. In the United States, it means outsourcing IT jobs to companies who are located within the US.

Pros of Onshore

For companies wanting to keep money in their home country, or who prioritize communication and proximity, onshore outsourcing might make the most sense. Let’s take a look at the pros for sticking with outsource software development companies at home:

  • Communication:

    Obviously, when you hire an onshore company to work with, you’re likely going to work with people who speak the same language and deal with the same holidays, hours, and benefits. Matching up your needs with them is likely easier, helping to decrease miscommunication and speed up velocity of your software delivery.

  • Same Regulations:

    When you hire onshore, the teams you work with are bound by the same regulatory bodies you are. If you run into issues with someone in the onshore company, or the company itself, getting legal resolution is much easier.

  • Common Business Understanding:

    With onshore firms utilizing people based within the US, the workforce has a foundation in American business concepts and strategies, resulting in less mis-understanding about business requirements and context.

  • Proximity:

    Having a team in the same geography makes it a lot easier to monitor their progress and even travel to, if an instance arises for it.

  • Skilled Workers:

    The same skilled tech workers exist all around the world. Onshore companies know how to tap into the domestic tech talent in their area and utilize their skills to develop quality products for their clients.

Cons of Onshore

If you’re able to get past initial perception, it’s possible to view onshore outsourcing as a solely positive experience. However, here’s the initial con most people think of when dealing with rural onshore software development outsourcing.

  • Higher Perceived Labor Cost:

    While most onshore companies will indeed charge more per hour than some of the offshore counterparts, they may actually save money in the long run by avoiding miscommunication and increasing project velocity.

  • Workforce Churn:

    While not as pronounced as offshore, turnover can be prevalent within dedicated teams due to the highly competitive IT market in most metro US locations.

  • No Designated Teams:

    Once you’re done with a specific IT project, the people designated as your team will be dispersed to work on new projects, just like with offshore. This means all the same losses of IP, will be happening here. This increased the budget and timeframe by having to get new people up to speed.

  • Loss of your IP:

    When your initial team disperses to work with new clients, your intellectual property goes with them. It doesn’t matter if you’re onshore or offshore. So this means, each time you have a new software development project, you have to train new people with the valuable insights of your company.

Lakeshore Outsourcing

While technically an onshore option for US-based companies, Gullview Technologies also provides offshore outsourcing support for our international clients. With this in mind, we’ve created a third option: Lakeshore. Located in central Minnesota’s lake country, we’re known for our 10K+ lakes and over 180K miles of lakeshore.

Pros of Lakeshore

Not only does Gullview offer the benefits of an onshore outsourcing company, we can offer a very competitive Total Cost of Ownership (TCO) for our clients compared to using offshore. But that’s not all. Here’s what makes our Lakeshore Outsourcing the best of both worlds:

  • High Velocity Development Efforts:

    As compared to offshore and domestic onsite options, our Lakeshore model builds a dedicated strategic workforce aligned to each client. This strategy enables the workforce to become very knowledgeable about the client’s systems. In turn, this knowledge retention means each project assigned can be done without the learning curve typically present with offshore and onsite efforts, leading to much higher velocity, AND quality.

  • IT as a Strategic Differentiator:

    An ongoing challenge for most IT leaders is building and maintaining the technology workforce to “keep up” with the business transformation occurring in every industry vertical today. Our Lakeshore model, with our dedicated client teams, stable workforce with very low turnover, and protection of your IP, enable clients to build a strategic IT engine that can keep up with rapidly growing business needs.

  • Midwest Work Ethic:

    We don’t know if you’ve heard, but the Midwest is known for their unwaveringly pragmatic approach to work. We believe hard work and perseverance, rooted with a sort of quiet humility, will ultimately equal success. And most of the time, it’s totally true. We’ll brave blizzards, crazy code, and anything else that stands between us and our goals. Then, we’ll go to the lake to celebrate.

  • Intellectual Property Retention:

    When you hire an outsourced IT team to get a project done, it’s great when the project is finished. But what happens when you have ongoing software development that needs attention? Losing IP due to employee turnover or a brand-new team for each project equals money and time lost. We work with our clients in mind, strategically planning with them so we can partner for the long haul. This everyone time and retains your intellectual property.

  • Designated Teams:

    The way we manage IP retention is by leaning on designated teams who work specifically for one client. But more than that, we’re also employee focused, so our talent feels valued and appreciated. This, in turn, means there’s no revolving door at Gullview. When you need your team, they’re here for you.

  • Rock Star Communication:

    As Minnesotans, you betcha we have some of the clearest speech around. But more than that, that Midwestern work ethic dictates we ensure our clients are satisfied and that means keeping the communication lines open and clear.

  • Velocity:

    When you combine all of the above, what you get from Gullview Technologies is unparalleled velocity. By retaining relationships and IP, our software developers and tech teams can jump right in and hit the ground running the moment a new project is born. This means we’ll be able to mean or beat deadlines.

  • Lakeshore:

    Work life balance is crucial to keeping fresh. We work hard, there’s no doubt about it, but we also play hard. We love our recreation area and just think, when you come to visit our offices, you’ll have the beautiful lakeshore to fall in love with, too.

Cons of Lakeshore

Take a look and judge for yourself whether the cons of Lakeshore outsourcing should stop you from giving us a try. Here are two possible cons to consider:

  • Not a Project House:

    At Gullview, we are long-term strategy driven. Okay, so not really much of a con here, but if your company is not in the position to think strategically yet, our visionary lakeshore approach might be intimidating. We’re an ongoing software development company designed to solve your IT and software problems, even before you know you have any. We match up our employees to be with you through the long-haul.

  • Higher Perceived Labor Cost:

    Just like with onshore, there is a higher perceived labor cost for working with onshore software development teams. However, because we’re located in beautiful central Minnesota (and not, say… the Twin Cities), our cost of living is lower. This helps us tap into the incredible tech talent north of Minneapolis / St. Paul and keep our costs down.

If you’re ready to develop a strategic IT partner who will be with your company for the long haul of digital transformation, we encourage you to look no further than Gullview Technologies. Contact us today to get a copy of our Case Study, showing how we have partnered with our clients to drive development velocity and save money. Email us at info@gullviewtech.comor give us a call at 612–803–6224. Let us show you just how transformative it is working with us at the lakeshore.