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IT Outsourcing

What’s the Difference between Offshore, Nearshore and Onshore?

Frédéric Lasnier
Frédéric Lasnier
Chief Executive Officer, Pentalog

‘Nearshore offshore onshore’ is one of the Google searches that most frequently leads to our Pentablog.

After so many years, we figured it was about time to write a short article on the topic.

Offshore Outsourcing

In the 90’s, when the term “offshore” first appeared in the IT lexicon, it was used to veil any form of service production that was outsourced to a different country for reasons related to costs or labor market stringency.

This word was equally associated with coast oil drilling and tax havens, territories where certain taxes are levied at a low rate or not at all. At that time, the countries considered to be offshore were mainly India, a small part of Eastern Europe and Russia.

IT Outsourcing - Offshore, Nearshore, Onshore

When locating an outsourcing project, there is a wide array of competitive destinations to choose from. Contact us to learn more about the differences between nearshore vs offshore and onshore location.

Nearshoring Perspectives

Then, with the rise of the internet, people had the idea of shortening the distances and especially time zone offsets. These factors were reduced to such an extent that businesses shifted work to a lower-cost organization, within their own region. That is how the “nearshore” approach appeared.

For the U.S. this term applies to Mexico and, by extension, countries in South America, like Argentina or Uruguay.

For the European countries it covers their own national regions up to the Eastern part of the continent (Poland, Czech Republic, Romania, Bulgaria, Moldova, Serbia, Turkey) and some North-African countries such as Tunisia, Algeria and Morocco.

Going Onshore

There is a slight variation of nearshore outsourcing: the “onshore” approach.

For our German partners, working onshore defines a working method based on the proximity of the Central and Eastern Europe, which allows them to intensify the exchanges with their foreign team.

Thus, the foreign collaborators are working on their client’s site up to 20-25% of their project time. After all, it only takes you a couple of hours to travel from Bratislava to Vienna, whereas Wroclaw (the biggest second technological city of Poland) is just 3 hours away from Berlin.

So, are things more clear now?

Whether we talk about nearshore, offshore or onshore, let our collaboration become the next success story, using our top IT services!

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