Offshore Software Development: The Ultimate Guide

If you have been in the business world for a while, especially in the technology-related industries, you must have been familiar with the term “Offshore Software Development”. Whereas some people assume that going offshore is a painstaking and time-consuming process, a large number of profitable business can attest to its efficiency. Rather than employing a software developer with an eye-watering price tag, it is a wiser choice to hire an offshore development team to offset the cost of growing your software business. Not only does it offer you access to a wider pool of talent but going offshore also help you stay away from the high rate of competition prevalent in your home country. Sound exciting, right?

Before you take the leap and recruit your very first offshore developers, there are a few things that you should take into close consideration.

Offshore Software Development: Basic Concepts

1. Outsourcing

As you’re wondering what offshore software development is, remember outsourcing. Outsourcing is a business practice in which a company hires another company or an individual to perform tasks, handle operations or provide services that are either usually executed or had previously been done by the company’s own employees.

The outside company, which is known as the service provider or a third-party provider, arranges for its own workers or computer systems to perform these tasks or services either on-site at the hiring company’s own facilities or at external locations. Nowadays, these outsourcing tasks are increasingly diverse, ranging from information technology services (such as programming and application development) to customer service and call service functions. Many firms can outsource other types of work as well, including manufacturing processes, human resources tasks and financial functions such as bookkeeping and payroll. They can choose between whether to outsource entire divisions, such as its entire IT department, or just parts of a particular department.

2. Offshore, Nearshore, and Onshore

From the geographical standpoint, outsourcing can be presented by onshore, nearshore and offshore development services.

Onshore

If your partner company is located within your country, then it is onshore outsourcing. This way, it is approachable, mobile and adaptable to any changes, as well as offers better control. For instance, in the USA, onshore development would be a company from one state hiring a team from any other state.

Nearshore

Nearshore service is characterized by a similar time zone. Understandably, nearshore providers will be chosen from the neighboring nations. One of the huge advantages of this method is cultural and work ethic similarity as well as geographic proximity. In particular, the USA business customers can apply for the providers in the nearest neighbor Mexico. In case they decide to choose other Latin American countries, it will no longer be called nearshore one.  

Offshore

In sharp contrast to onshore or nearshore services, offshore software development indicates that the company of providers is located in a foreign country which is far away from your country. It can be even the different continent hence the customers might face the notable time zone difference. Fortunately, in our digital era, it is not a problem at all. It is well proven that a large number of American businesses have successfully collaborated with providers from all over the world.

Offshore Software Development: Its Pros and Cons

For several businesses, offshore development services have become an integral and indispensable part of their general work process. Let’s go through these benefits and drawbacks of such an outsourcing service to see whether it’s worth your partnership consideration.

Major Pros:

• Enhanced Business Productivity and Cut Costs

Actually, it’s challenging and costly to maintain an in-house IT team that has well-established expertise in the latest technologies. By offshoring your software development, you not only don’t have to bear such heavy labor wages but also decrease overhead costs – things like building rent, equipment bills, payroll taxes, and lease. Rather than being busy recruiting, hiring, and training employees, freeing up time allows you to leverage your strengths and core operations, and work towards sustained business growth.

• Access to A Vast Pool of Skilled Specialists

With offshore development, you can gain access to a vast pool of talented and knowledgeable software engineers with extensive experience developing software applications of international standards and quality. Furthermore, as the offshore partner has experience working on international custom software development projects for other clients, they will truly understand the challenges involved.

• Use of Offshore Partner’s Technical Know-How

The majority of offshore development companies specialize in particular technologies. They keep on improving employers’ skills. Regular training and gaining new experience are held on a regular basis. As long as you look for experts, offshore programming will definitely have the payoff.

• Faster Time-To-Market

With a dedicated team for each project, you can be sure to have qualified people working around-the clock-to deliver quality software. Not only can you get work done faster, but you can also ensure your product reaches the market sooner. Plus, an external team can offer new insights to improve your business processes, letting you leverage innovation and creativity at each stage of the software lifecycle

• Focus on Core Business Activities

Instead of worrying about managing the complex and time-consuming process of software development, going offshore enables you to focus more on your core business strategy. It directs your company’s attention to key practices without the additional stress of running and managing a software development department.

• Smart Downsizing by Going for Offshore Outsourcing

Besides the freedom of hiring whatever number and type of developers as you wish, you can expand, re-prioritize and downsize your business partners easily with using the offshore outsourcing services. Of course, it’s always necessary to take into account current laws, security policy, and employee lawsuits.

Some Cons:

• Communication Issues 

Sometimes time zone difference can result in communication slowing down. Actually, it is about dealing with the issues in a timely manner. Fortunately, in our Internet-centric age, there are several modern ways of communication such as video calls, email correspondence or even instant messaging. It will just require a little bit more organization and coordination.

• Cultural Difference 

It is recommended to consider this criterion because of the cultural barriers and different work ethics. Whereas the USA, Canada, Australia find the Eastern European mindset pretty similar, some companies have failed when it comes to the communication establishment in Asia and the Middle East. Eastern mindset is quite different from the Western one.

However, with the hectic pace of globalization, cultural differences should not be a major problem. Perform some research on your targeted partner’s cultural background and communication etiquette, make some efforts into accommodating yourself to his or her working culture – and then just wait to harvest the good outcomes of a successful partnership.

Offshore Software Development Partners

Now you’ve figured out some fundamentals of offshore software development, it’s time to move on another critical part – to find the right partner for you and your project.

The very first criteria to consider is where to find a suitable outsourcing provider. You should keep in mind such factors as geographical proximity, qualification, and language requirements. Due to the geographical location of your provider, it also covers time difference and cultural similarity. It is generally accepted to differentiate service providers into several destinations, namely Eastern Europe, Latin America, Asia, and the Middle East.

Choosing the destination is only the first step on the way to your final goal. Besides, you should be aware of what offshore development services the companies typically provide. They can be either responsible for the whole project or just deal with specifically defined tasks. In fact, there are some available collaboration models that are well worth your attention.

#1 Project-Based Offshore Development Model

If your current project requires extra hands or you are looking for the offshore development team to complete a certain task, then project-based collaboration model will be a smart choice. Usually, it is a one-time collaboration for fulfilling outlined requirements.

This option is represented by either “time and material” or “fixed-price” outsourcing contracts. Time and material contract certainly defines all required services. All expenses are estimated in man-hour – that’s why any further assistance or collaboration is the matter of other contracts. A fixed-price contract is a reasonable option for per-project oriented tasks, in which you pay the fixed price for the whole project – and it will not rely upon how many hours or resources the offshore software company is going to spend on it.

From your side, this collaboration model requires to be really specific and provide all detailed specifications. Applying this model into your project, you should not forget about setting the project duration period, which is usually no longer than a 6-month period.

#2 Dedicated Development Team

You’re going to embrace this collaboration model in case your company needs to enlarge its staff by the team of remote developers who will work alongside the in-house team. The only difference here is they will be geographically located in the other part of the world. Speaking of this model, several businesses prefer to have a dedicated development team due to the talented pool of available offshore software developers and expenses decrease as well. Whereas the providers help you both to handle routine tasks and reach the new goals, you always are managing the project and in control of the required expenses. When looking for dedicated and long-term support, the remote team will be a rewarding option for your company.

#3 Offshore Development Center

Self-explanatory, this term refers to the branch of the company located in a different country managed by other company onsite. This model is rather popular for business startups and enterprise companies, in which the tasks will be quite integrated and extended. Their teams will be responsible for various and numerous important services like engineering, creation, and testing, making solutions and managing different projects, customer and technical support. Opening that kind of center for your company, you get access to the new skilled workforce while saving the infrastructure costs and enlarging your business possibilities.

Offshore Software Development: How To Choose One?

The decision of choosing the most suitable offshore development partner is, by all means, a tough one. After all, your would-be provider is going to have remarkable impacts on your business profitability. Thus, when it comes to partnering with such a third-party, it is imperative to take it seriously and consider all the details, requirements and the final goals.

Undoubtedly, the outsourcing market is constantly growing – there are various choices while competition helps to improve the quality of services. Anyway, the sufficient work of the provider is equivalently supported by the customer’s abilities to set up the collaboration process. Keep in mind those required actions to facilitate your choice:

• Define well your goals: You should outline them first, clearly determining which specific technologies you are interested and which particular result your company expects. Remember that proper goals notably increase productivity.

• Seek for the established provider: It’s more than vital to choose the experienced offshore software development company. Besides, they should not specialize in all technologies at once; rather, their developers must be professional in the chosen branch.

• Review references: It’s highly advisable to check ranking aggregators such as Clutch.co and visit your targeted company’s website. Go through some important web pages and have a look at the information of the previous projects. Any developer team worth their salt will be happy to give references or show a portfolio – take the time to check them out! Don’t be shy about calling references. And also, don’t waste your time with potential partners who can’t back up their claims with real results.

• Choose the right offshore development model: As fore-mentioned, there are three main available options: Project-based contracts, Dedicated developer teams, and Development centers. Take a second look at these collaboration models then decide which one is going to satisfy all of your requirements!
• Protect your data: There is no denying that the provider should be granted access to the customers’ information. To keep these pieces of information confidential, any outsourcing contract should contain a non-disclosure agreement and clearly regulate how the IP is managed to prevent any data leaks.

• Stay hands-on: Keep in mind that a remote team isn’t a fire-and-forget solution. It is of great importance to always keep in touch with your provider, give timely guidance as well as fully control the developing process. In these cases, communication is a fundamental element of success.

On the whole, every single business customer (like you) should be as well organized as your providers – to share the same ideas, find the common language and be open for collaboration. After all, the process of its establishment will define the final results: Get it right, and you’ll lay a solid foundation for your entire project; get it wrong, and you could tank the whole thing, even months down the line.

The Bottom Lines:

Given the pace at which the industry is thriving, offshoring software development for technological and cost reasons is a natural business move. By offshoring a range of software development tasks – from simple coding to custom development, software support and maintenance, mobile application development, and website design and development – you are not only freeing yourself from the challenge of hiring and empowering skilled staff, but also ensuring you get the best quality software delivered to you in the shortest possible time. So, why not?

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