What is Offshore Software Development? Why Hire Offshore Development Team?

With tech startups mushrooming like never before, the software industry has become incredibly saturated and faces stiff competition.

Tech experts predict that there will be over a million software companies worldwide within the next ten years.

A majority of these businesses will be based in Western Europe or America, and with high development costs, there arises a need to tackle this growing competition.

Offshore software development services are seen as a solution for businesses looking to thrive in this competitive ecosphere. Essentially, these services provide an alternative to companies that do not have the budget to recruit in-house software developers.

Companies can now look overseas for software developers to achieve their project goals. The reason is almost all companies prefer to hire expert developers who can build the software using the latest software technologies and trends. This software outsourcing has made it more profitable for both sides of the business spectrum by opening up opportunities worldwide.

This post will take an in-depth understanding of what offshoring is, the business model’s benefits, and how you can offshore your software development processes to remote locations.

What is Offshore Software Development?

Offshore software development is all about the process of developing software solutions wherein the product owner delegates the entire software development tasks or some parts of it to a third party.

It is essentially done because of a lack of specialists required to develop the said solution.

Why do businesses prefer this alternative? For starters, it helps companies reduce operating costs, gather large talent pools, and provides them with opportunities to scale quickly. Businesses also find it beneficial to opt for offshore software developers to cater to the high technical demand generated without additional costs and hassles.

Difference Between Offshore, Nearshore, And Onshore Development

Before we get into the nuances of offshore development software services, let us better understand the various mobile application development services in operation today.

  1. Onshore Software Development

    As the name suggests, when a business recruits a software development team within its geographic location, it is referred to as an onshore software development process.

    This is an option taken by many IT companies as software engineers are more approachable in their own country. However, setting up offices for the development team incurs additional production costs, which may cut into companies’ profitability metrics.

  2. Nearshore Software Development

    Nearshore software development services are characterized by both service lenders and recipients in a similar time zone. This promotes the efficiency with which businesses operate, and developers in the same or neighboring countries are approached.

    Due to the geographic proximity, there is a cultural similarity due to which both service lenders and recipients expect a smooth transaction of business.

    Western European countries, for example, have the nearshore option among Eastern European countries, such as Poland and Ukraine. Likewise, USA-based IT companies can opt for software service providers from North America.

  3. Offshore Software Development

    Offshore software development indicates how businesses seek software services from vendors located in a foreign country. One may think that both ends of the business spectrum being in different time zones may create problems.

    But the successful collaboration of North American businesses with Western European software vendors proves otherwise.

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When to Hire Offshore Developers?

When to Hire Offshore Software Development Team

As we build on the advantages and disadvantages of offshore software developers, it is vital to understand whether your business needs to hire an offshore software development crew or not.

If yes, when is the optimal time of hiring them, and what benefits will they bring to your business.

You need to ask yourself these questions –

  1. Operational Costs Going Through The Roof?

    In times of globalization, travel allowances account for a significant amount of operational costs of a business. Other employee-centric costs like wages, insurances, and yearly bonuses tend to drive your operating costs through the roof.

    Research conducted in 2018 shows that the average salary of an engineer in the UK is roughly 48,000€.

    Thus, hiring local talent in the West may not be economical. By opting for an offshore software development service, you can save a significant amount of money while increasing margins and profitability without any adverse effect on your output.

  2. Scalability Issues?

    The worst situation to be as a business is where you have to decline profit-generating orders as you can’t cater to them. In such cases, adopting a quick-fix solution by outsourcing the demand through other software developers is not going about things.

    You need to conceptualize a long-term solution that involves scaling up resources, where an offshore software development model can prove invaluable. Not only do you have access to a massive pool of talent to choose from, you essentially build up your capacity as a business without incurring too many additional expenses. As a result, you will be able to take on more projects and generate more profits.

Who Should Use Offshore Software Development?

Now the question arises, which businesses should use this offshore software development model?

  • Typically, these services are used by non-technical service-based companies who are experts in their industry but need to rely on external developers and their technology stack to meet the ever-changing software industry’s demands.

  • From something as trivial as redesigning their existing website to more complex projects like trying to develop a digital product that will increase their profitability, these businesses require external support. Hiring local developers may not be economical, and this is when offshoring provides an excellent option for your business.

  • Additionally, businesses that already have an in-house software development crew but cannot scale and take on more oversized orders may need to consider outsourcing software development.

Services Offered By Offshore Software Development Agency

Offshore software development agencies provide a broad spectrum of services that they can provide for your business. Some of these include but are not limited to:

  1. Software Automation

    Offshore developers allow businesses to integrate software automation and help maintain and upgrade and develop existing software. This will enable companies to offload the hassles of keeping track of tech upgrades and software updates.

    Offshore developers help businesses focus on handling operations in their area of expertise while the offshore team handles software-related operations.

  2. Quality Engineering & Support

    By recruiting an offshore outsourcing development team, you can be assured of quality development. From superior product testing to ensuring reduced bugs and associated fixes, your business will gain a competitive edge over the others. Most offshore developers provide customer support, too, and thus your customers can get their queries resolved almost instantaneously.

  3. Digital Transformation

    Recruiting an offshore outsourcing development team allows you to assess your current state of technology implementation. Further, they conceptualize and help you chalk out a working plan to help your business meet digitization goals that improve the profitability metric.

    The offshore team also helps to upgrade your business to the latest technology if the technology you are using is obsolete in the current market ecosystem.

  4. Enhanced User Experience

    Intuition is critical for websites and applications to thrive. If your business is focused on a non-technical product, an offshore software development crew can come in and help revamp your website to make it more intuitive.

    By reducing the number of clicks the customer has to make to place an order, your business can expect a higher number of sales post the upgrade.

  5. Custom Software Development

    Software development may not be your expertise which is why you have opted to recruit an offshore software development crew. Let the experts handle this area by building customized software products according to your customers’ unique needs.

    From cloud-native, analytics-enabled web & mobile apps that provide tangible business value to Internet Of Things (IoT) and Artificial Intelligence (AI), offshore development allows you to incorporate cutting-edge technology into your business operations.

What are the Benefits of Offshore Software Development?

Having established the need for offshore software development, let us now look at the benefits provided by the model and why switching to this service may be critical for your business’s profitability.

Benefits of Offshore Software Development

  1. Access to Engineering Talent

    With the saturation of the software ecosystem comes a demand for skilled developers. Therefore, hiring developers becomes very expensive, but it is also challenging as talent is scarce. Despite the growing number of IT courses offered in colleges, there is still a considerable gap between graduates and businesses’ expertise to hire them.

    Thus, offshore software developers provide a great alternative to fill in this requirement gap. Countries like India, where approximately 1.5 million graduates are produced each year, see high demand from businesses in the West for offshore development services.

  2. Lower Costs of Operation

    Throughout this article, we have mentioned that offshore software development leads to a reduction in operational costs. But how exactly does this happen? Let’s understand this better with the help of an example.

    Let’s say you have recruited an offshore software development team in North America to help your business and your local team at home in London. When trying to identify areas to improve profitability, you notice that the salaries of developers in North America are 3-4 times lower than London’s personnel.

    Further investigations into the matter led you to discover that the total cost of doing business in North America (offshore location), including premises, administrative staff, legal work, payroll, developer salaries, and other operational costs, is typically lower than their counterparts working in-house.

    Thus, the differences in the cost of living between your business location and the area from where you are offshoring your software solutions play a critical role in expense reduction while improving efficiency.

  3. The Opportunity To Scale Quickly

    Ask any business, and they will tell you how difficult it is to scale up efficiently. Why is it so difficult? Recruiting new skilled employees is an investment that comes with significant risks. If these employees decide to leave, there is not much you can do.

    In addition to being overburdened with work, your software services’ quality drops, which drives your customers away.

    However, if you hire an offshore software development team, the risks are substantially reduced. You do not have to invest as much in an offshore team as you would have otherwise. The decrease in expense allows your business to endure more prolonged periods of downtime. Additionally, you can expand your offshore software development and scale your business quickly, allowing you to meet growing demands and thereby increase profitability.

  4. The Ability To Focus On Your Expertise

    Multitasking leads to decreased efficiency as your attention is diverted amongst many verticals. By bringing on an offshore software development team, they can handle administration, employee accommodations, and insurances.

    At the same time, you can focus your attention and resources on expanding your business and working on the profitability metric. This also gives you ample time to market your core ideals while the offshore software development team can handle your business’s software-related aspects.

  5. Access To The Newest Technologies

    For a business that bases its expertise in non-software-related products, keeping track of the latest technology on offer can become a hassle. By recruiting an offshore development team, you will have access to the most recent technology and high-quality software procedures, documentation, and structured digitized strategies.

    The offshore development team will keep track of the latest technological advancement and replace systems as and when necessary.

  6. Opportunities For New Projects

    The funds saved by hiring an offshore development team rather than an in-house team can be allocated towards research and development. You can streamline your funds into projects and ventures that were a part of your business roadmap but could not be implemented due to financial constraints.

    Additionally, the time and resources that are saved by hiring an offshore software development team can be used elsewhere, including ideas for new ventures. It is thus a win-win situation for your business.

Do you want to know how offshore development is beneficial for your business?

Get in touch with us today and we will discuss how it will benefit your business.

How to Manage Offshore Software Development Team

How to Manage Offshore Software Development Team

Once you have brought on an offshore development team, building a rapport with them to create an efficient workflow throughout the development cycle is of utmost importance. How do you go about and establish this relationship while maintaining an air of formality around the business? Here are a few tips to help you effectively manage your newly recruited offshore software development team.

  1. Share the Vision And Goals of your Business

    This is perhaps one of the most critical steps that is often overlooked by businesses. As a step of initiation, it is essential to formally introduce your business, the principles that it is based on, and your business’s goals and project requirements in the years to come.

    This helps the offshore developers fully understand your business and its role in trying to grow it. The more they know about your business, the more invested they become in your cause.

    It may be the vase that your business requires the service of an offshore software development team only to execute some development processes and nothing more. Even then, it is essential to establish common grounds between both parties before starting the tenure.

    This communication should continue even during the term to ensure that all the stakeholders are on the same page about driving the business ahead.

  2. Bridge The Culture Gap

    It is only natural for you to encounter some cultural differences with your offshore software development team. However, instead of letting that get in your way, you should use it as an opportunity to learn more about contemporary culture.

    Be open to getting to know the offshore developers’ cultural practices and reciprocate by introducing your cultural practices to them.

    It is essential to establish this unification of cultures to no hindrances while collaborating on a joint project.

    Thus, it is your responsibility to make sure that the offshore team feels at ease while interacting with other employees. Visiting your offshore team once in a while will help in the cultural exchange.

  3. Collaborate And Communicate

    When working with an offshore team, it is of paramount importance to maintain effective communication. Thus, it becomes critical to create an environment where collaboration is the basis of all software development projects. Some communication channels that you use between your in-house and your offshore teams include:

    • E-mail And Calendar: Official communication, schedules, and setting up project-related meetings can be done via online calendars accessible to everyone.
    • Messaging: Tools like Slack and Skype are efficient in relaying information to and fro regularly.
    • Project Management Tools: Monitoring the progress of your project is critical when working with a technology partner because, without it, you wouldn’t know the specifics of the project they are working on. Tools like JIRA, Asana, Slack, and Basecamp help the project manager to keep track of everything.
  4. Consider the Time Difference

    Differences in time zones are bound to come up when working with offshore development teams. Instead of letting this be an obstacle, you can overcome it by working in alternation and overlapping the work hours.

    For example, working hours in the UK may span onto late nights in other countries, which is why you should establish proper coordination between your in-house and remote development team to avoid communication issues.

    By factoring in the time difference and staggering the working hours will help you build a more efficient schedule for your business. Try and overlap meetings and weekly progress calls to ensure that communication between your teams is not affected because of the time difference and that they can work in tandem to create the best results.

  5. Avoid Micromanaging

    Are you trying to manage every little detail on a project? Do not try and micromanage.

    According to a survey conducted by Trinity Solutions, over 60% of respondents considered changing jobs due to managers attempting to oversee every tiny detail on their project.

    It also hinders work and overall performance.

    Because your offshore team is a thousand miles away from you, it is best not to meddle with every tiny detail on every project. The offshore team will feel constrained; this lack of freedom will affect performances for the worse.

    Therefore, communicate with your offshore team at the start of any project and only relay important information. Micromanaging things is not the way to go here.

Still, have some queries or questions related to the offshore software development or offshore team? Here, we have answered some of the most asked questions.

Frequently Asked Questions

  1. What is an offshore software development company?

    It is essentially an offshore software outsourcing company that remotely provides its software services to businesses, typically based in another country. The offshore team becomes an extension of the business and helps them scale up efficiently without incurring excessive expenses.

  2. How does an offshore team work?

    Typically, offshoring entails a business sending in-house projects and other business operations to contractors, essentially an IT outsourcing company or offshore software developers. The company retains full ownership of its business, with the offshore team – the software development center – being one of its subsidiaries.

  3. Should I opt for an offshore software development company for my business?

    An efficient way to determine whether your next business move needs a high-quality software developer or offshore development company is to consider these issues:

    • Operational Costs: High fixed costs added to variable expenses like employee allowances and wages may be eating into your profitability metric.
    • Scalability Issues: If your business’s demand is high and you cannot cater to the orders, an offshore development team can help you scale up quickly and efficiently.
  4. What is onshore and offshore in software development?

    When a business recruits a software product development team within its geographic location, it is an onshore software development process. Offshoring software development is when companies seek software and web development partner/services from development companies/vendors/talent pool located in a foreign country.

  5. What is offshore web development?

    Offshore web development services provide an alternative software outsourcing model to businesses that do not have the budget to recruit in-house software developers. These businesses can now look across the globe – in a country of their choice – for a custom software development company or a dedicated team of app developers, software developers, or software development companies to tackle their software products, software development project, mobile app development, web application development projects, and core business activities.

  6. How to hire an offshore development company?

    • Define your requirements: Before hiring one of the offshore development companies for offshoring software development services, make sure to define what exactly you require from their IT services.
    • Prior experience: Before software development outsourcing, try and find out whether the offshore team has any previous experience in the business operations you are recruiting them to handle.
    • Management capabilities and cultural fit: Learn more about the offshore development companies, offshore team, and their cultures. Also, getting a better business analysis into their management capabilities as working remotely requires can get overwhelming without proper workload management.
    • Cost-effectiveness: Try and estimate the benefits the software outsourcing teams or the offshore team will bring into the business. It is essential to consider the metric of cost-effectiveness rather than merely setting up costs.
  7. What is better offshore or onshore development?

    This depends on your business model and its needs. The offshore company or outsourcing software development company model offers scalability, customer support, and other advantages at minimum cost. In contrast, an onshore model ensures a quick turnaround and acts as a hedge against delays caused by time zone differences.

  8. What are the top offshore destinations for hiring offshore software developers?

    North America (Mainly Canada), India, Ukraine, Belarus, Poland, Czech Republic, Estonia are countries that provide some of the best destinations that house the best software outsourcing companies or offshore software development centers.

Conclusion

The modern business ecosystem is rapidly evolving. Features like top offshore software development services have meant that you can use these to your advantage, provided that you have a proper understanding of what’s on offer.

Recruiting offshore software engineers or software development outsourcing is not as overwhelming as it seems, and by striking the right balance, your business can thrive with the newly available resources.

By carefully defining your business operations and choosing the best offshore developers or software development companies, make the most of the opportunity on offer.

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Author Bio
Rakesh Patel
Rakesh Patel
Designation: Co-founder and CEO of Space-O Technologies

Mr. Rakesh Patel is a Founder and CEO of Space-O Canada. He has 28 years of IT experience in business strategies, operations & information technology. He has expertise in various aspects of business like project planning, sales, and marketing, and has successfully defined flawless business models for the clients. A techie by mind and a writer at heart, he has authored two books – Enterprise Mobility: Strategy & Solutions and A Guide To Open311.