Offshore vs Onshore AI Consulting: What's the Right Choice?
Offshore AI development can save 50-70% on costs. But hidden costs in communication, quality issues, and rework can erase those savings. Here's an honest assessment.
Understanding Both Approaches
Same timezone, same culture, face-to-face
Best For:
Companies prioritizing quality, communication, and reliability
Lower cost, remote delivery
Best For:
Well-defined technical projects where cost is the primary concern
Key Differences at a Glance
| Factor | Onshore/Local AI Consulting | Offshore AI Development |
|---|---|---|
| Hourly Rate | $100-$300/hr | $20-$80/hr |
| Communication Quality | Same timezone, in-person possible | Time zone gaps, remote only |
| Rework Rate | Lower (direct communication) | Higher (miscommunication risk) |
| Data Security | Local data governance | Cross-border data transfer concerns |
| Cultural Understanding | Understands your local market | May lack local business context |
| Cost Savings | Premium rates | 50-70% hourly rate savings |
When Each Approach Works
- Your AI project involves business strategy, not just coding
- Data sensitivity requires local handling
- Clear communication and cultural understanding are critical
- You want face-to-face meetings and workshops
- The project requires deep understanding of your market
- The project is purely technical with clear specifications
- You have strong internal PM to manage remote teams
- Cost is the primary decision factor
- Data sensitivity is low or manageable with proper agreements
- You're building commodity AI features (chatbots, basic automation)
Total Cost Comparison
Hourly rates don't tell the full story. Consider total project cost including rework, management overhead, and communication friction.
| Factor | Onshore/Local AI Consulting | Offshore AI Development |
|---|---|---|
| Hourly Rate | $100-$300/hr | $20-$80/hr |
| Typical Rework Rate | 5-15% | 20-40% |
| Management Overhead | Low (direct communication) | High (coordination needed) |
| Data Security | Local governance | Cross-border risk |
| Government Funding Eligible | ||
| True Total Cost Savings | Baseline | 20-40% actual savings (not 70%) |
Choose Onshore/Local AI Consulting When...
- Your AI project involves business strategy, not just technical coding
- Data privacy and local governance are important
- You value clear communication without timezone barriers
- The project requires deep understanding of your local market
- You can access government subsidies to offset local premium rates
Choose Offshore AI Development When...
- The project has crystal-clear technical specifications
- You have experienced technical managers to oversee offshore work
- Data sensitivity is manageable with proper NDAs and security
- You're building commodity AI features (not strategic AI)
- Cost reduction is the top priority and you can accept quality tradeoffs
How Pertama Can Help
Whichever approach you choose, Pertama Partners can support your AI journey.
Frequently Asked Questions
Hourly rates are 50-70% lower, but actual savings are typically 20-40% after factoring in: (1) communication overhead (2-3 hours of management per developer per week), (2) rework from miscommunication (20-40% vs 5-15% for local teams), and (3) coordination across time zones. For strategy-heavy AI work, savings can be even lower.
It can be. Cross-border data transfer introduces compliance complexity (PDPA, GDPR if applicable). Offshore teams may have different security standards. For AI projects involving sensitive business data, local delivery provides simpler compliance. Always use strong NDAs and data agreements regardless.
Yes. A common pattern is: local/onshore team for strategy, workshops, and sensitive work; offshore team for well-defined development tasks. Pertama can serve as your onshore AI partner while you use offshore resources for specific technical components.