When it comes to global business operations, the terms “onshore” and “offshore” have become increasingly important. But what do they mean? Onshore and offshore teams refer to different types of teams -- those that are physically located in the same geographic area and those that are located further away. In this blog post, we’ll discuss the pros and cons of both onshore and offshore teams and how companies can best use them to their advantage.
Onshore teams are located in the same country as the company and are typically responsible for duties related to HR, marketing, and other areas of the business. Offshore teams, on the other hand, are located in other countries and are typically responsible for tasks related to software development and customer service. Both types of teams come with their own unique advantages and drawbacks, which we’ll explore further in the post.
We’ll also look at how companies can make the best use of each team.
Onshore and Offshore teams
Onshore teams are teams that are located in the same geographical area or country as the company. The members of the team are typically local residents or at least citizens of the same country. This means that onshore teams can easily collaborate with the company and its resources. They are also familiar with the local laws, regulations, and culture, making it easier to comply with the law. Onshore teams are usually more expensive than offshore teams due to their local salaries and overhead costs.
Offshore teams, as the name implies, are teams located in other countries, usually in countries where labor costs are cheaper. Offshore teams are usually hired on a contractual basis, meaning that all communication and collaboration with the company is done remotely. This makes it challenging to ensure the quality of work and trust between the team and the company, given that it is hard to know what’s really going on at the other end. Offshore teams are much cheaper than onshore teams, making them attractive for companies who want to cut costs.
Cost is usually the deciding factor for many businesses when it comes to choosing between an onshore and offshore team. While both types of teams can produce high-quality products and services, their costs can vary significantly. Onshore teams usually charge a higher hourly rate than offshore teams, but businesses should also factor in other costs such as taxes, training, and equipment. Additionally, businesses should consider the cost of travel and time spent communicating with the remote team when deciding which type of team is the best option. Onshore teams may be the more expensive option in the short term, but they may also provide long-term cost savings if the team is already well-trained and experienced in the business's specific tasks.
One of the most significant differences between onshore and offshore teams is the time-zone differences. Working with an offshore team can present a challenge when it comes to communication, because of the time difference. Depending on the location of the offshore team, the time difference can be anywhere from a few hours to an entire day. This means that when you are communicating, you may have to stay up late or get up early, and you may have to wait extended periods of time for responses to your inquiries. This can be difficult to manage, and it can slow down the work process.
Research shows that India is the most preferred destination for outsourcing (offshore services) IT and software development (source: https://www.outsourceaccelerator.com/articles/outsourcing-statistics/). The US is one of the leading outsourcing counties to India followed by the UK and Australia. India is 10 hours and 30 minutes ahead of Washington, DC, USA which implies that when it is 6:54 am, Wednesday in Washington, It will be 5:24 PM, Wednesday in India! To add to this challenge, the US has multiple time zones!
Communication is a key factor for successful cooperation between onshore and offshore teams. There are several communication barriers that can arise in such a setup. For example, language barriers can make communication difficult, as the remote team may come from a different cultural or linguistic background. At times, the difference in accent may pose a challenge in spite of both countries speaking the same language. An article on Linkedin describes an interesting anecdote based on this accent difference. The author talks about the experience of his Egyptian friend who had to interact with a custom inspector in India. The Egyptian friend smiled and nodded thoughtfully at suitable intervals as the inspector continued talking to him at a rapid pace. When the Egyptian finally managed to get a chance to speak he requested the inspector to translate what he had spoken all the while, into English. You can imagine the awkwardness of the situation when the inspector was indeed speaking in English all along!!
Time zone differences can also be challenging, as it may be difficult to establish a direct and efficient dialogue when the teams work at different times of the day. Additionally, cultural differences can cause misunderstandings and lead to inefficient communication. It is therefore essential that both teams have a good understanding of each other's culture and language in order to maintain a successful collaboration.
Quality Control Considerations
Quality control is one of the most important considerations when working with either an onshore or offshore team. When working with an onshore team, you have the ability to have a more hands-on approach and can better monitor the quality of the work. On the other hand, when working with an offshore team, the ability to monitor the work is more limited, making it more difficult to ensure quality. Therefore, it is important to have a process and communication plan in place to ensure that quality control is maintained. This includes setting expectations, providing feedback, and having regular check-ins to monitor progress and address any issues that arise.
In conclusion, the decision of whether to choose an onshore or offshore team will depend largely on the specific needs of your business. Onshore teams offer the advantage of close communication and cultural familiarity but may be more expensive than offshore teams. Offshore teams offer increased cost savings but may require more effort to ensure teams are on the same page and able to communicate effectively. It is important to carefully weigh the pros and cons of both onshore and offshore teams to determine which is the best fit for your business.