The onshore decision is usually argued on quality, which is the weakest available ground since excellent and poor engineers exist everywhere. The arguments that hold up are about law, communication latency and specific obligations, and they are worth stating precisely because they are the ones that justify the cost.
The four reasons that survive scrutiny
Contracting and enforcement under domestic law, which matters when the work is commercially critical. Straightforward handling of worker classification, where the IRS assesses the substance of the relationship rather than the contract label. Clean answers when a customer or regulator asks where data is processed and by whom. And shared working hours, which matter when requirements are being discovered rather than executed. Quality is not on that list and should not be argued as if it were.
What offshore IT services genuinely save, and what they cost
The rate difference against a US median annual wage BLS puts at $135,980 for software developers in May 2025 is real and substantial. Against it sit coordination overhead, more written specification, slower correction of misunderstanding, your own management time and travel. Model a realistic productivity discount and a management tax, put your own numbers on both, and see whether the decision still holds. If it only works at zero overhead, it does not work.
Export control is the question nobody asks about IT offshore services
Under 15 CFR 734.13 an export includes releasing technology or source code to a foreign person, and such a release inside the United States is a deemed export to that person's most recent country of citizenship or permanent residency. For ordinary business software nothing restrictive follows. If your technology touches controlled areas such as encryption, defence or certain sensors, get an opinion before granting repository access rather than after.
The split that usually beats either extreme, including offshore web development services
Keep discovery, architecture and the work that changes weekly close, whether in house or nearshore, and send genuinely specified streams such as platform migrations, test automation build out and well defined integrations offshore. That captures most of the saving without paying the coordination penalty on the work least able to tolerate it, and it is what most companies converge on after trying one extreme.
Questions people ask about onshore software development
Is onshore development higher quality?
No, and arguing it that way weakens a good case. Excellent and poor engineers exist everywhere. The arguments that hold are domestic contracting and enforcement, classification clarity, clean answers about data processing, and shared hours.
How much does offshoring actually save?
Less than the rate difference implies. Model a realistic productivity discount and management overhead against the rate, using the BLS median of $135,980 for software developers in May 2025 as the domestic anchor. If it only works at zero overhead, it does not work.
Does sharing code with an offshore team raise legal issues?
Potentially. 15 CFR 734.13 treats releasing technology or source code to a foreign person as an export, including inside the US. Ordinary business software is usually unproblematic; controlled technology needs an opinion before access.