If you work in any business-related field, you would have seen the terms “offshore” and “outsourcing” more than once, in either news articles or daily documents.

Have you ever wondered what these terms mean exactly, and aren’t they the same? “Offshore” and “outsourcing” are both about how to delegate parts of or a whole project to another company, which specializes in that particular field, such as software development or marketing campaigns. Often, people often assume that “offshore” and “outsourcing” are similar concepts, but they are not.

Now, let’s SotaTek help you clarify the differences between offshore development and outsourcing and the advantages of offshore development.

Definitions of “Offshore” and “Outsourcing”?

Outsourcing is often defined as “outsourcing the business to another company”.

In other words, regardless of whether the business is outsourced domestically or overseas, simply outsourcing to other companies can be called outsourcing.

However, on the other hand, “Offshore” is defined as “a company outsourcing its operations to other companies or subsidiaries overseas,” which means that the outsourcing company maybe another company or its subsidiary. It is called offshore software development in the IT industry.

“Offshore” is defined as “a company outsourcing its operations to other companies or subsidiaries overseas”.

In the past, companies in developed countries like Japan, the USA, and Europe used to rely mainly on local Software Development Agency. Nevertheless, due to the lack of a high-skilled workforce and extravagant expenses, countries like Japan start outsourcing their projects to overseas companies, especially Southeast Asian entities, considering the excellent products at a reasonable cost.

Why are companies in developed countries willing to outsource to overseas companies? Offshore development should have advantages that outsourcing does not have.

Benefits of offshore development

• First, Offshore Development offers high-quality services at a lower cost. While the US or Europe and Japan IT companies are currently facing the lack of excellent IT engineers, together with the rising prices of IT engineers. Many countries overseas have excellent software developers, and labor costs are cheaper than the domestic market. Therefore, those companies can significantly reduce the cost of software development by leveraging offshore development. For example, companies doing offshore development in Vietnam can reduce system development costs by 40%.

Many countries overseas have excellent IT engineers, and labor costs are cheaper than the domestic market.

• Excellent engineer teams with outstanding professional skills... Many developing countries prove to have a competitive edge with rich human resources that can meet the demands of developed companies. Among them, Vietnam’s IT engineers are evaluated to be young, serious, and dynamic. By doing offshore development for companies such as Vietnam, it is easy to attract excellent human resources and succeed in developing higher quality systems.
• Efficient Development timeline. Offshore development allows us to hire many engineers with low labor costs instead of hiring high-cost engineers. Therefore, many engineers work on development at the same time. As a result, you can save time in getting your Software Development Service to your satisfaction.

Offshore development trends in Vietnam

In recent years, Vietnam has been achieving remarkable economic and social growth and is attracting attention as an attractive contractor. Vietnam has expanded its offshore development activities such as Offshore Web Development, Offshore Application Development, etc, and is working to meet the needs of overseas customers. We believe there offshore development trend in Vietnam will continue to grow exponentially in the foreseeable future.

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As one of the leading Software Development Companies in Vietnam and the APAC region, SotaTek is proud to provide hundreds of international clients with advanced Software Solutions, by integrating the state of the art technology into our projects such as AI, Blockchain…

Considering starting your software development project? Contact us now for a free consultancy!

Source: Medium by Teddy Nguyen - SotaTek's co-Founder