Difficult Choices in Software Development Outsourcing: Choosing an Onshore Freelance Team or a Dedicated Nearshore Team

Highlighting the pros and cons of choosing an onshore freelance team versus working with a dedicated nearshore team in a software development outsourcing engagement.

A recent prospective client of ours scratched her head while deciding whether to hire a software team through an on-demand freelance website, or to search abroad for a proper company that she could use as a software development partner. Both alternatives seemed attractive to her because of the savings they promised to offer: between 30 to 100% savings when compared to hiring a reputable software development outsourcing firm onshore in the US.

But how to decide, then, between the two alternatives? Although there is no cookie-cutter answer to such a question, we've highlighted the advantages and disadvantages of each. To make the stakes more clear, we've structured our discussion using the claims of a popular freelance website dedicated to sourcing US engineers.

The freelance site claims that hiring a freelance team through their site is "30 to 50% less expensive" than hiring "their competitors" (which we surmise are other established software development firms in the US who staff their own engineers and offer their services via their own hired workforce).

Onshore Freelance Site

Software development outsourcing model:

But hiring a company versus hiring a recently-formed group of freelance engineers comes with many additional benefits. Including the following 5 important advantages:

1. A company provides a clear and distinct corporate culture into which it hires and develops the engineers it deploys for a client.This culture imprints the project with specific behaviors pertaining to leadership and communication skills that can be instrumental to the success of an initiative 

2. A company trains its engineers in specific methodological approaches that are coherent across the team, providing a common vocabulary and a minimum training standard that aids project coordination and establishes a minimum benchmark for technical solvency

3. A company feels responsible for minimizing the churn of the engineering team it assigns to a client, and is better able to manage expected or unexpected churn incidents than a sporadic team of freelancers put together by a website--the company can recruit faster, train faster, move resources around to fill a gap in a project, etc. which is harder to do for a group of chosen freelance specialists

4. A company has a clear leadership structure and escalation points should trouble arise, that is hard to mimic under a freelance scenario: because a company has a long-term reputation at stake, a company offers significant insurance and assurance and is willing to go the extra mile if something goes wrong; 

5. If a project has a long-term orientation, working with a company can provide more stability to the knowledge base that is developed during the project than working with a group of freelancers (the company can generate processes and procedures to make sure the knowledge base always remains within the deployed team, even if specific resources within the team rotate. This is much harder to arrange within an environment where various freelance engineers interact, as there is no organizing principle above the freelancers that is willing to invest in knowledge perpetuation. 

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The freelance site claims as an advantage that it is "100% Onshore":

Onshore freelance site:

Software development outsourcing model:

The freelance site claims they have a deep bench and hence are able to find talent in 1 or 2 weeks, rather than having the client wait 60 to 90 days to find senior software engineers.

Onshore freelance site:

Software development outsourcing model:

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Key Takeaways:

ALL ABOUT PSL: We specialize in outsourcing and nearshoring Agile software development, software maintenance, quality assurance and staff augmentation. With offices in Colombia, Mexico and the US, PSL has customers all over Latin and North America, ranging from enterprising startups to Fortune 500 companies.