Understanding Offshore, Nearshore, and Onshore Outsourcing

IT Outsourcing

Apr 15th - 2024



The terms ‘nearshore,’ ‘offshore,’ and ‘onshore’ frequently guide people to our blog, prompting us to clarify these concepts in a brief article.

Offshore Outsourcing Defined

In the 1990s, “offshore” entered the IT vocabulary, referring to services outsourced to another country, often for cost savings or to navigate a tight labor market. The term shared associations with offshore oil drilling and tax havens—places with low or nonexistent tax rates. At that time, typical offshore destinations included India, parts of Eastern Europe, and Russia.

The Emergence of Nearshoring

With the internet’s growth, the focus shifted to minimizing distances and time zone differences. This led to the ‘nearshore’ approach, where work is transferred to a lower-cost organization within the same region.

For the U.S., nearshoring often involves Mexico and South American countries like Argentina or Uruguay. In Europe, nearshoring can extend from within national borders to Eastern Europe (including Poland, Czech Republic, Romania, Bulgaria, Moldova, Serbia, Turkey) and North African nations like Tunisia, Algeria, and Morocco.

Onshore Outsourcing Explained

A variation of nearshoring is ‘onshore’ outsourcing. For German partners, for example, onshore outsourcing means working closely with teams in Central and Eastern Europe, facilitating frequent exchanges with their foreign team.

In this model, foreign collaborators may spend up to 20-25% of their project time on the client’s site, benefiting from the geographical proximity. For instance, traveling from Bratislava to Vienna or from Wroclaw to Berlin takes only a few hours.

Clarifying the Concepts

Whether discussing nearshore, offshore, or onshore outsourcing, the goal is to create successful collaborations using top IT services. Each approach has its own advantages and is chosen based on the specific needs of the project and the proximity desired by the client.

Let’s make our partnership the next success story with Belatrix’s leading IT services!

IT Outsourcing

Apr 15th - 2024