A clear comparison of nearshore, offshore, and onshore software development — real cost differences, timezone implications, communication trade-offs, and when each model works best.
What's the difference between nearshore, offshore, and onshore development? Onshore means hiring a development team in your own country. Nearshore means hiring in a nearby country with similar timezones (e.g., a US company hiring in Mexico or Colombia). Offshore means hiring in a distant country with a significant timezone difference (e.g., a US company hiring in India or Vietnam). Each model trades off cost, communication ease, and talent availability differently.
The terms nearshore, offshore, and onshore get thrown around as if they're well-defined. They're not. A company in New York hiring in Brazil is "nearshore," but so is a company in London hiring in Poland — and those are very different engagements.
Here's what actually matters when choosing between these models.
| Factor | Onshore | Nearshore | Offshore |
|---|---|---|---|
| Cost savings | 0% (baseline) | 30–50% | 50–70% |
| Timezone overlap | Full | 1–4 hour difference | 6–12 hour difference |
| Communication ease | Highest | High | Moderate |
| Talent pool size | Limited to your country | Moderate | Largest |
| Cultural alignment | Highest | High | Variable |
| Travel feasibility | Easy | Easy | Expensive/complex |
| IP protection | Strongest (local law) | Strong | Varies by country |
What it means: Your development team is in the same country as your business.
Regulated industries. If you're building healthcare software (HIPAA), financial services (SOX/PCI-DSS), or government systems (FedRAMP), onshore development simplifies compliance. Data sovereignty requirements alone can make offshore impractical.
Real-time collaboration is essential. Some projects — especially early-stage products where the spec changes daily — need constant, real-time communication. Same timezone, same working hours, instant Slack responses.
The code IS the business. If your software is your competitive moat (proprietary algorithms, core IP), keeping development onshore provides the strongest IP protection and control.
A US-based development agency charges $150–$300/hr. A full product build runs $80K–$300K. For a funded startup or enterprise, this is the "safe" choice — but it's 3–5x more expensive than offshore alternatives for the same work.
What it means: Your development team is in a neighboring or nearby country with similar timezones.
| Your Location | Nearshore Options | Timezone Difference |
|---|---|---|
| US East Coast | Brazil, Argentina, Colombia, Mexico | 0–3 hours |
| US West Coast | Mexico, Colombia | 0–2 hours |
| UK / Western Europe | Poland, Romania, Ukraine, Portugal | 0–2 hours |
| Australia | Philippines, Vietnam, Indonesia | 2–4 hours |
You need timezone overlap AND cost savings. Nearshore gives you 70–80% of the communication convenience of onshore at 40–60% of the cost. That's a meaningful trade-off.
Your project requires iterative collaboration. Agile sprints with daily standups work well with 1–3 hours of timezone difference. You can have morning standups that align with the team's afternoon.
Cultural familiarity matters. Latin American teams working with US companies share more cultural context than teams in South Asia or Southeast Asia. This isn't about capability — it's about communication style, holiday schedules, and work expectations.
What it means: Your development team is in a distant country with a significant timezone difference.
| Destination | Avg. Rate Range | Timezone (from US East) | Key Strength |
|---|---|---|---|
| India | $20–$85/hr | +9.5–10.5 hrs | Largest talent pool, English proficiency |
| Eastern Europe (Poland, Ukraine) | $35–$120/hr | +6–7 hrs | Strong technical education, process maturity |
| Vietnam | $15–$50/hr | +12 hrs | Growing ecosystem, competitive rates |
| Philippines | $15–$55/hr | +13 hrs | English proficiency, US cultural familiarity |
Cost is a primary driver. If your budget is $30K and the project requires $80K of US-rate effort, offshore is your only realistic option. The savings are substantial and real.
You have clear requirements. Offshore works best when you can define what needs to be built before development starts. The timezone gap makes real-time iteration expensive — but a well-defined project with weekly milestones works beautifully.
You're building a standard product type. An e-commerce platform, a SaaS dashboard, a customer portal — these are patterns that experienced offshore teams have built dozens of times. You benefit from their repetition.
The timezone difference is actually useful. "Follow the sun" development — where you assign work at the end of your day and receive deliverables the next morning — can accelerate timelines by 30–50% for the right project.
Read our detailed guide on outsourcing to India — the world's largest offshore market.
Here's what we've learned from the other side of the table: the onshore/nearshore/offshore label matters far less than the specific team you hire.
A great offshore studio (with clear communication, strong process, and real expertise) will outperform a mediocre onshore agency every single time. And a bad onshore agency will waste your money just as effectively as a bad offshore shop — they'll just charge 3x more for the privilege.
Focus on:
These four things predict success better than geography.
If this guide resonated with your situation, let's talk. We offer a free 30-minute discovery call — no pitch, just honest advice on your specific project.
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