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Is Offshore or Onshore Engineering Better for Your Company?

Is Offshore or Onshore Engineering Better for Your Company?

One of the most important decisions a CEO or founder has to make when building their tech team is whether to hire offshore or onshore engineers, or some hybrid combination. Both options come with pros and cons, and it’s crucial to pick a strategy that aligns with your company’s needs and goals.  Some things to consider:

Cost Considerations

One of the biggest advantages of hiring offshore engineers is the cost advantage. Offshore engineers generally come at a significantly lower rate than onshore engineers, which could save your company a ton of money in the long run.

However, cheaper rates sometimes mean a lower quality of work. Offshore engineers may not have the same level of training or experience as onshore engineers, and communication can be a barrier resulting in miscommunication and errors. You’ll also want to consider the added cost of international compliance. Some companies that assist with international workforce compliance are Deel and Oyster

While onshore talent will cost you more upfront, there are government tax incentives for hiring US W2 or 1099 talent, like the R&D tax credit, which can help offset the cost. Your company may even qualify for capturing this tax credit more instantaneously through payroll tax offsets. 

Cultural Fit

When it comes to cultural fit, onshore engineers have a clear edge over offshore engineers. Onshore engineers are more familiar with the local culture, work standards, and have a better understanding of the expectations from their employers. Offshore employees may have different work styles and practices, which can lead to misunderstandings and conflict. 

However, there are also proven statistics to support a diverse workforce improving company performance as well. If you are going to hire overseas, a recommendation would be to hire people overseas who have successfully supported US companies in the past and are more familiar with the professional norms and expectations. 

Communication and Collaboration

Effective communication is essential for the success of any team, and this is where onshore engineers generally have the advantage. The time zone difference can make it more challenging to communicate with offshore teams in real-time, which can cause delays and project backlogs.

However, technology has allowed us to overcome this time zone barrier to a great extent. With the right tools and software, remote communication and collaboration can be seamless.

Management Flexibility

Hiring offshore engineers provides more flexibility in terms of management. Companies hire offshore engineers to complete specific projects, and one can adjust the number of employees according to their needs. This is not always possible with onshore employees due to legal and ethical obligations.

However, with remote employees anywhere, you’ll want to be extra careful when it comes to confidentiality and IP protection.

As we’ve seen, there’s no clear winner between offshore and onshore engineering. Each option comes with its own set of advantages and disadvantages, and the decision ultimately comes down to your company’s needs, goals, and budget. We recommend clearly weighing the pros and cons with your team and assessing the overall financial impact, inclusive of potential tax credits associated with US onshore talent. 

Onshore resources we trust 

If you decide a US based company is best for you, here are some of our trusted partners we can confidently recommend: 

We hope this blog post has given you a better understanding of the benefits and limitations of hiring offshore or onshore engineers. Ultimately, we advocate for the best option that will help you achieve your desired results efficiently and effectively! 

If you’d like to learn more about the benefits of leveraging the R&D tax credit to offset your engineering labor costs, please contact us to schedule a call

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