Estimated reading time: 10 minutes
Planning your next software project? We’ll share the differences between working with freelancers and two kinds of software development companies (onshore and offshore), to help you decide which better fits your project’s requirements.
For this blog’s purpose, we’ll be using the following definitions:
Freelancer – is a self-employed person who designs or develops websites, webshops, or apps, but doesn’t work as a regular employee in a company.
Onshore software development company– a company that operates in the same country your business is located in. In other words, a local software development company.
Offshore software development company – a company that works outside the country your business is located in. For example, if you’re a European company, “offshoring” means hiring companies from India, Vietnam, Pakistan, or the Philippines to do your work.
1902 Software – an offshore Danish-managed software development company operating in the Philippines for more than 23 years.
Outsourcing – although this term is often associated with hiring companies from overseas, it’s actually a broader term that covers the act or process by which a company or organization hires an external party to do a specific job or jobs, whether onshore or offshore. In this blog, we are specifically focusing on software development, but you can also outsource tasks like design, writing, monitoring, online marketing, engineering jobs, and so on.
Don’t let choosing between these options overwhelm you. Below, we have listed several factors that you can consider in choosing a software development company, along with a comparison among onshore freelancers, onshore and offshore software development companies, and 1902 Software.
| Factor | Hourly rate (pricing) |
| Onshore Freelancer | Low – medium |
| Onshore software development company | High |
| Offshore software development company | Medium – high, depending on company location. |
| 1902 Software | Low – medium. 1902’s rates are usually the same as an onshore freelancer |
| Factor | Skillset |
| Onshore Freelancer | Freelancers often specialize in 1 or 2 skills where they excel at. Since they usually provide their services alone, they tend to rely on others where their skills do not extend or suffice. |
| Onshore software development company | By nature, a company with 50 or 100 employees has a bigger pool of talents to draw from, with different skills and departments. Therefore, they’re also able to provide a wider range of services. |
| Offshore software development company | |
| 1902 Software |
| Factor | Process maturity (i.e., how well-defined are the project processes?) |
| Onshore Freelancer | Processes tend to be more freeform since they work alone |
| Onshore software development company | It depends on the company; some may be highly organized while others are not. Younger companies tend to be less process-oriented. |
| Offshore software development company | |
| 1902 Software | Highly organized; at 1902 Software we have a process for everything—from onboarding new clients, to design, development and deployment, everything follows a well-defined process that has been built and improved since 1998. |
| Factor | Minimum monthly purchase |
| Onshore Freelancer | Normally without |
| Onshore software development company | Often, you’ll have a contract that stipulates a minimum number of hours you have to purchase or a minimum turnover every month. |
| Offshore software development company | |
| 1902 Software | No minimum purchase; pay as you go |
| Factor | Local knowledge (i.e., knowledge on the culture and local customs that can help in communication and business ideas) |
| Onshore Freelancer | Very high |
| Onshore software development company | |
| Offshore software development company | Low |
| 1902 Software | Low – medium |
| Factor | Advance notice for relationship termination |
| Onshore Freelancer | Usually none |
| Onshore software development company | Often, you’ll have a contract that stipulates 30, 60 or 90 days advance notice if you want to terminate the relationship. |
| Offshore software development company | |
| 1902 Software | None, you can terminate any time you want without any advance notice. We will even refund you any unused pre-payments within 5 working days. |
| Factor | Rounding to the nearest hour or half-hour for rates (e.g., when you contact them with a small question) |
| Onshore Freelancer | Normal practice |
| Onshore software development company | |
| Offshore software development company | Not a normal practice |
| 1902 Software | No, we do not round up to the nearest hour or half hour; you only pay for the exact time consumed. |
| Factor | Service availability (i.e., how fast do jobs get done?) |
| Onshore Freelancer | It depends on the freelancers’ availability. Freelancers often have one or more projects running on the sidelines. If they’re busy with other projects, you will have to wait until they’re ready or accept an intermediate solution. |
| Onshore software development company | Jobs tend to get done faster because a company has several employees available to work on a job. |
| Offshore software development company | |
| 1902 Software | We are generally overstaffed by about 10 – 15% so when we get an urgent job from a clients, we often accommodate them right away, within hours. If a developer or designer gets sick, we have another person who can take over. |
| Factor | Service outside working hours and during holidays |
| Onshore Freelancer | Freelancers are often accommodating, especially in the early days of the working relationship, but constantly contacting them outside working hours and while they’re on their holiday is of course not a long-term solution. |
| Onshore software development company | Many bigger companies, onshore or offshore, have a support system in place outside of their normal working hours. |
| Offshore software development company | |
| 1902 Software | At 1902 Software, you can get support outside working hours and during holidays if there is an emergency issue on your site. For instance, if a webshop checkout stops working we will fix it right away, but if you want to change the color of a button from red to orange then it has to wait until the following working day. |
| Factor | What happens if your contact resigns? |
| Onshore Freelancer | You must find a new supplier or partner |
| Onshore software development company | Many bigger companies, onshore or offshore, usually have another project manager who can take over and continue the project but some disturbance must be expected. |
| Offshore software development company | |
| 1902 Software | At 1902 Software we have a buddy system, where each project has a project manager and a project coordinator. If the project manager is prevented from working on the project, the project coordinator takes over. |
| Factor | Is there a middle-man that’s taking a cut of the cake? |
| Onshore Freelancer | No, usually you are dealing directly with the person doing the job and therefore do not overpay. |
| Onshore software development company | Many onshore software development companies actually outsource a part of the work to offshore software developers (or freelancers). This obviously makes it more expensive without necessarily adding any value. |
| Offshore software development company | Usually no, because you are dealing directly with the company doing the work. |
| 1902 Software | No, since you deal directly with 1902 Software. |
| Factor | Overall contribution and value |
| Onshore Freelancer | Cost-effective and performs best with small, specialized tasks |
| Onshore software development company | Has more resources available but can get expensive |
| Offshore software development company | Has more resources too, but often don’t provide value beyond development |
| 1902 Software | We take initiative by providing suggestions and actionable ideas, beyond our development services, i.e. marketing and optimization. |
Ultimately, the software development company you choose should depend on your goals and the tasks you have in mind. If you’re only looking to get some graphic design work done or make some software checks or audits, then you can just opt for freelance designers or freelance QA testers.
But if you’re looking at a bigger software project or a long-term engagement where you need not just design but also development, testing, and UI/UX optimization, then a software development company that offers all these services may well be a better choice. When you choose a software development company, don’t just limit yourself to your local talent pool. Consider outsourcing offshore, where you can access broader skills and more talents at a lower cost.
Companies choose 1902 Software for the following reasons:
- We have been in business for a long time, since 1998.
- We have very low and competitive rates, around 50% of comparable Western European companies.
- We have successfully launched more than 1300 projects.
- We have a well-defined process based on many years of experience, ensuring that your project not only gets done but often gets done on or before the deadline.
- We don’t focus on just one set technology; we do ecommerce, websites, apps, custom IT systems, design, UI/UX and last but not least, we also do the post-project support for you year in and year out.