The future of software development: Back to Onshore?

♪ The future of software development: Back to Onshore?

In an increasingly connected and globalized world, the shift of software development projects in more cost-effective countries, the so-called offshoring, seemed to be the unchallenged royal route for many years.

The temptation to drastically reduce development costs and access a huge global talent pool was simply too big for many companies to ignore them.

After years of practical experience, however, a more differentiated picture emerges.

The initial savings, which are purely on paper, are often accompanied in reality by a whole series of unexpected challenges and considerable hidden costs.

More and more companies recognize that successful software development depends on far more than low hourly rates. Factors such as smooth communication, cultural compatibility and consistently high quality return to the foreground.

This article highlights the reasons for growing scepticism towards the offshore model and shows why the conscious decision for onshore development and thus for cooperation with local experts often represents the more strategic and ultimately more economic choice.

The deceptive promises of offshore development

Short: The idea of massively reducing development costs through the outsourcing into countries with a significantly lower wage level is extremely attractive at first glance.

The idea of massively reducing development costs through the outsourcing into countries with a significantly lower wage level is extremely attractive at first glance. However, practice often paints a completely different picture.

The disadvantages of such a globally distributed strategy are manifold and have the potential not only to deplete the expected financial advantage but to reverse it.

A typical scenario that many companies experience: A medium-sized company decides to award the development of its new core application to a team in Asia. The hourly rates are unbeatable.

But soon the first cracks in the foundation of the project will be shown.

Daily votes are due to a time shift of six hours to the nightly load sample for the German project managers.

Cultural differences in the way of working – for example, a less proactive response to potential problems – lead to misdevelopments being recognized lately.

The result is expensive improvements and significant project delays.

Challenges in offshore development

Short: The problems are not individual cases, but rather systematic.

The problems are not individual cases, but rather systematic. The following table summarizes the most common and serious challenges that may arise in offshore development:

Challenge	Description
** Communication barriers	Significant time shifts make spontaneous agreements impossible and force communication at unfavorable times. Language Nua

References and further reading

Short: The following independent references complement the topics in this article:

The following independent references complement the topics in this article:

• Bitkom – German digital industry association
• German Federal Office for Information Security (BSI)
• European Commission – Digital strategy
• MDN Web Docs (Mozilla)
• W3C – World Wide Web Consortium

"AI in mid-sized companies works when processes are measurable and data is trustworthy—a pilot without a success metric is theatre."

— Björn Groenewold, Managing Director, Groenewold IT Solutions