One of the questions I field on a weekly basis from small business owners to Fortune 500 CEOs is what are the differences, benefits and pitfalls of onshore versus offshore iPhone development?

Having worked for professional programming firms on many projects, I can tell you the benefits and pitfalls are pretty much the same for most non iPhone-related software projects. While keeping your project here in North America will mean better accountability and overall project management, some budgets force the development to take place in the Eastern Europe, India or the Far East.

Overall, open source programming and database projects seem to be managed quite well with solid completion rates overseas. However, in the world of iPhone development I have witnessed many cultural breakdowns and huge time lags to market using overseas development firms.

So let’s breakdown the core issues that I have seen over the last year with iPhone development, both good and bad:

Onshore:
• Larger budget requirement. Your budget will be developed according to your needs, whether you’re working with a professional development firm or a freelancer. And with mobile phone application development, you really do get what you pay for.
• Better project management, more accountability.
• Time to completion 1.5 – 4 months depending on complexity of the project.
• References you can check more easily.
• Easier accounting and payment methods.
• Cultural & language connection. In most cases, you can speak directly with the developer.

Offshore:
• Larger cost savings. Rule of thumb is that projects requiring less design and more programming will benefit most from offshore development.
• Less project management. Normally the PM is conducted locally, with a 3rd party developer programming or designing overseas. This can lead to budget and time overages.
• Longer time to completion. In most cases because of the time difference, it is very difficult to provide and receive adequate feedback, which makes the development process take twice as long, on average.
• Ownership of project on the developer’s side. It can be tough to find a “champion” for your project even within your own company. When the project is shuttled overseas, don’t expect the developer to be passionate about your vision.

Our firm receives a significant amount of business from what I call “shattered overseas projects”. You need to conduct due diligence. I have heard of satisfied customers using offshore developers, but also an equal amount of angry comments from prospects who have been burned.

The most common complaint is that while the offshore developer was initially much less expensive, the communication and time lag were so limiting, extra labor hours had to be added to the cost of the project… so much so, that in many cases the project could have been done in the U.S. for the same budget and in a faster time frame.

Bottom line: Do your research, check references and understand the difference between contracting with a freelancer and a professional development firm. Also understand what it means when either entity is located offshore. If you get several bids and one is a 1/3rd of the cost of the other bids, then 99% of the time you are dealing with an offshore firm that is represented in North America.