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The past several years have seen rapid growth in Internet of Things (IoT) devices, and they’re only poised to grow faster in the near future. With 7 billion IoT devices worldwide in 2018, the figure is expected to more than triple to 22 billion by 2025.

As the need for IoT development firms has risen drastically, we’ve also seen an increase in the use of offshore IoT development. This trend is right for some organizations, yet also missuited for others. In this article, we’ll discuss how you can choose between onshore and offshore IoT development.

What is Onshore IoT Development?

The term “onshore” refers to outsourcing to a third-party company that is based in the same country as you are. Often, this will be an agency that is in the same city or region in order to get the most benefit from the partnership.

Many businesses are also starting to use “nearshoring”; outsourcing to countries that are relatively close in location. For the U.S., common nearshoring destinations are Mexico, Central America, and South American countries such as Argentina and Brazil.

The Benefits of Onshore IoT Development

Better communication

Communication is essential for any partnership with a third party. With onshore IoT development firms, you have the assurance that you’ll be speaking the same language, using the same terminology, and working in similar time zones.

Logistics

Especially for IoT development, access to fast shipping methods is key in order to get the necessary hardware to team members as soon as possible. Because both parties are in the same country, there’s no need to worry about restrictions or import fees.

In addition, both parties operate under the same set of technology laws. This is particularly important for specialized industries such as healthcare and retail that have regulations for handling sensitive and confidential data.

Flexibility and familiarity

It’s often a good idea to meet in person from time to time, especially at the start and end of the project. Working with an onshore IoT development firm gives you the ability to meet in real life when it’s necessary.

Vetting an onshore company is often easier because their clients will also be located in the same country. This is particularly important for the niche skills that are needed for IoT and electrical engineering. Make sure that potential onshore partners have case studies available for the industries or domains that you’re working in.

The Obstacles of Onshore IoT Development

Higher costs

Because they’re located in the U.S., onshore IoT development firms typically carry a higher price tag than those located overseas. However, many clients find that the expenses are justified by the advantages given above.

What is Offshore IoT Development?

Offshore IoT development uses the traditional concept of outsourcing, in which companies work with foreign entities overseas. Common destinations for offshore development include Eastern Europe, India, China, Vietnam, and the Philippines.

There are many great developers working overseas who charge much less than their competitors in the U.S.. Still, the lower cost also comes with a greater degree of risk.

The Benefits of Offshore IoT Development

Lower costs

For IoT and other technology projects, the primary attraction of offshore development is as a cost-saving measure. Due to the lower market rate for developers in other countries, overseas partners typically have hourly or per-project rates that are not as high as U.S. developers.

Specialized talent

You can find really great, highly specialized talent overseas, often in eastern Europe. Many offshore developers are familiar with niche or older technologies that are difficult to find talent for in the U.S.

The Obstacles of Offshore IoT Development

Time differences

Working with an overseas partner can mean there is little or no overlap in your working hours, especially for developers in Asia. You can usually plan for and work around these matters, but they can nevertheless create delays in response time.

Language barrier and communication

Many offshore development firms rely on a translator to communicate with your organization. Even those developers who speak English can find it tricky to use the precise technical terminology that’s required for IoT development.

Besides the language barrier, actual communication can be difficult (whether via email, slack, phone or other avenues). Offshore firms often have different standards about how and when to communicate, and sometimes have infrastructural problems such as Internet speed issues.

Logistics

The general logistics of working with an overseas partner can be more difficult. For example, conveying the ideas, requirements, or limitations for an app may be a challenge depending on language and cultural barriers. Hardware and software regulations may also be different overseas, and it can be hard to find a reliable shipping method.

Which Type of IoT Development is Right for You?

With all that said, the choice of onshore vs. offshore IoT development will depend on a few factors, such as:

  • Risk tolerance: Working with an overseas partner is more risky for a variety of reasons. Your appetite for risk may depend on the maturity of your organization and your current situation.
  • Project complexity: The more complex your project, the better off you are working with a partner that’s close to home.
  • Product lifespan: If you need to build something that will grow and scale over the long term, it’s better to stay within the U.S. This makes it easier to build a long-term relationship with the same firm and employees. Offshore development firms can be acceptable for a quick proof of concept or a smaller project that won’t have too much longevity.
  • Budget: Overseas partners typically have a lower price tag. However, be wary of extremely low bids. This can be a sign that the firm does not fully grasp the scope and complexity of your project.

Final Thoughts

Finding the right IoT development partner is crucial, whether you’re going onshore or offshore. The good news is that no matter your budget, project, and location, there’s a third-party IoT development firm that will fit your business needs and objectives.