What Is False-Shoring?

If you've ever shopped around for custom software development work, it is likely that you have encountered agencies practicing false-shoring without even recognizing it. False-shoring, a term coined here at Active Logic, refers to the practice of an agency promoting itself as on-shore (or US-based) despite the development work and team being located off-shore. Typically, the “on-shore team” being represented by their claims consists of staff members such as business development analysts, project managers, front-end designers, etc.

Although these positions play a role in the development of an application or software system, the barriers presented by international development teams do not simply vanish behind the wall of US-based leadership.

On-shoring vs. Off-shoring vs. False-Shoring

Before we continue to discuss the various “shores” of outsourcing software development, let’s be sure we’re comparing apples to apples.

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On-shoring: the practice of transferring a business operation that was moved overseas back to the country from which it was originally relocated.
Off-shoring: the practice of basing some of a company's processes or services overseas, so as to take advantage of lower costs.
False-shoring: the practice of falsely identifying an agency as “onshore”, despite the development work and team being located “offshore”.

The Sneaky Barriers of False-Shore

Both off-shoring and on-shoring come with their own sets of benefits and barriers - it’s inevitable. The issue with false-shoring agencies isn’t the fact that certain barriers exist, but rather the fact that they advertise themselves as being free of them. These agencies set client expectations and charge rates comparable to that of an on-shore agency while still leaving the client to face multiple off-shore barriers such as:

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Time Zone Differences:

Although the on-shore leadership team may operate within reasonable time zones relative to the US, there is still the potential for extended timelines when communicating with their off-shore counterparts. This sluggish communication process can impact deadlines and objectives, pushing them past due or incomplete altogether.

Cultural Differences:

The cultures of countries across the world are either considered low-context (US, Germany, Eastern Europe) or high-context (China, India). Generally speaking, low-context cultures emphasize deadlines/timelines, are more receptive to change, and utilize more "logical" decision-making processes. High-context cultures are nearly the opposite: deadlines are considered less important, traditional values supersede all potential change, and intuition is favored in the decision-making process. While each has its own strengths and weaknesses, these differences must be addressed and accounted for to successfully execute the project's future roadmap, potentially increasing the overall timeline and costs.

Communication Challenges:

Interacting with international off-shore development teams can cause significant misunderstandings due to language and accent barriers, as well as differences in context and connotation. Existing tools can help mitigate these issues but at the cost of increased communication time.

What’s the Problem With False-Shoring?

Certain industries need to be particularly cautious about whether their development work is done within the US. These are industries where the software’s impact on the health, security, or financial state of its users is significant. Such industries include:

• 1. FinTech
• 2. MedTech
• 3. Logistics
• 4. Real Estate
• 5. Cybersecurity
• 6. Business Development

How to Identify False-Shore When Shopping For Software Development Services

Simply knowing that such a practice exists can enable decision-makers to vet potential software agencies more rigorously. For example, a shift in the way initial discovery questions are asked can reveal typical signs of a false-shore development agency.

Image courtesy of Active Logic

DO ASK: “Where is your development team located?”
DON’T ASK: “Are you an on-shore software developer?”

DO ASK: “Who will I be interacting with throughout development and how frequently will we meet?”
DON’T ASK: “Do you have managers who oversee your development?”

DO ASK: “What portion of your development team is full-time employees?”
DON’T ASK: “How large is your development team?”

DO ASK: “What experience does YOUR DEVELOPMENT TEAM have in our industry?”
DON’T ASK: “Do YOU have any experience in our industry?”

Is False-Shore Illegal?

Long story short — no. False-Shore is not illegal, nor is it even a commonly used term. False-Shore is a term we 'created' to identify this deceptive marketing tactic used by development agencies to take advantage of flexible FTC laws regarding false advertising. Could the argument be made that false-shoring is considered false advertising?

That wouldn’t be our place to say for two important reasons:

1. 1. We write software — we’re not lawyers. There will be no legal advice coming from us anytime soon.
2. 2. We’re a tad biased because we actually are 100% on-shore — we hold firm on that stance and it will not change."

The Moral of the Story?

If you’re in doubt about the validity of the next “on-shore” development agency you encounter, we’ve got two pieces of advice.

Ask About the Team NOT the Agency:

Sales and marketing teams thrive on the ability to bend facts in their favor by falsely associating the accolades of their US-based staff to their off-shore development team. Focus on inquiring about the software development team themselves as opposed to the entire organization as a whole.

Avoid Yes/No Questions:

Make a point to ask open-ended questions to get them talking more and more. You’ll have a lot more to make a judgment call based on.