Offshore outsourcing software development is a form of delegation, where you hire a foreign company for your software development projects. These offshore companies provide high-quality custom software development services at lower costs.
In this article, we’ll cover what offshore outsourcing software development is and how it could benefit your company. We’ll also tell you how to select the right offshore outsourcing partner and give you some simple tips to help you out.
This article contains:
- What is Offshore Outsourcing Software Development?
- 8 Key Benefits of Offshore Outsourcing Software Development
- How to Select an Offshore Outsourcing Software Development Firm
- 5 Simple Tips to Get the Most From Your Offshore Team
Let’s get started.
What is offshore outsourcing software development?
Offshore outsourcing software development is the practice of hiring a development company in a different country to handle your software development needs.
But before we get into that, let’s briefly discuss the three different outsourcing models:
- Onshore outsourcing: hiring a company in your country or region.
- Nearshore outsourcing: hiring a software company in a nearby area, usually in the same time zone.
- Offshore outsourcing: hiring a company in a far-off country, usually in a different time zone.
Some companies can use a combination of all three software development outsourcing models based on their needs.
Now, let’s get back to offshore outsourcing.
In offshore outsourcing software development, you hire a foreign company for the entire development process or specific tasks like testing and maintenance. For example, if your company is in the US, you can hire an Indian firm for software development.
But why do companies engage in offshore outsourcing?
Let’s find out.
8 key benefits of offshore outsourcing software development
Here are eight reasons why companies outsource their software development tasks to offshore entities:
1. Low development costs
According to Deloitte’s 2020 Global Outsourcing Survey, 70% of respondents pointed to cost reduction as the main reason for software outsourcing.
The lower costs of outsourcing tie heavily to the location selected for your offshore development company.
The cost of living in the most common outsourcing destinations is significantly lower compared to Western Europe or the USA. For instance, the cost of living in London is about 82% higher compared to Bangalore, India.
If your London-based company is offshoring its IT development to Bangalore, then your India-based developer is likely to charge $18 per hour. On the other hand, a UK-based developer could charge $40-55 per hour at a similar level.
2. Access to top IT talent
IT talent is one of the most sought-after and expensive resources in the world. As such, you may notice a shortage of expertise in a development service near you.
If you want to invest in bold ideas and new technologies, hiring skilled developers from around the world is the right move. You can employ developers and freelancers with the high caliber of education, talent, and experience needed to thrive in this competitive industry.
Additionally, companies often seek to outsource their software needs due to availability.
For example, Indian universities produce roughly 1 million engineering graduates every year. This translates to the high availability of skilled software developers for companies.
3. Opportunity to scale business
Retaining existing employees, training new ones, forging client relationships are essential aspects of growing your core business. However, when you’re worried about your software development, these can take a backseat.
By outsourcing these software requirements to another company, you’re sharing the workload. This allows your offshore development team to focus on the software while you focus on scaling your organization.
Another advantage of outsourcing software development is exposure to a global market. Your offshore software development team can help you understand the changing trends and risks you may not be aware of.
They could even point you in the right direction for additional offshoring locations, enabling you to expand quickly and sustainably.
4. Quicker deliveries
The IT industry is constantly innovating at breakneck speeds. By the time you’ve familiarized yourself with one product or technique, it can be outdated.
In such a time-sensitive market, you must get your product into the market before your competitors. And employing a team focused entirely on your software development could help you out there.
Based on their location, your offshore development team may continue working when you’re off.
For example, a USA-based company with an offshore Indian team can maintain a 24-hour workflow due to the time zone difference. The offshore team works during the day while the offshore team works during the night.
This continued workflow and expertise keep your internal team on its toes, leading to overall increased productivity.
5. High-quality products
Offshore software companies are well-versed in every aspect of their specialty and keep themselves up-to-date on all developments. These skilled developers understand that their knowledge and experience help set them apart from dozens of other candidates.
Additionally, the offshore company understands that their future projects depend on satisfying every client’s need and delivering on time. So the result you receive is of high quality and meets international standards.
6. Reduce HR costs
Hiring a software developer is a time-consuming process.
Let’s say you’ve managed to hire a team in record time. There’s still the cost of training, paying for resources such as new hardware and software tools, and keeping the internal team engaged during lull periods.
On the other hand, you outsource to an offshore company, and you have an entire dedicated team of experienced offshore software developers at your fingertips.
You don’t need to expend valuable resources towards hiring and HR management. The offshore vendor will take care of all formalities.
7. Tackle complex projects
An offshore software development team specializes in various domains and will develop high-quality products that evolve with changing times and are resilient to security risks.
However, you’ll need to do your research and determine your needs.
Some of the most commonly available offshore software development services are:
- Backend development.
- Mobile application development.
- Web development.
- Blockchain development.
- AI development and integration.
- E-commerce development and maintenance.
- Data security services.
8. End-to-end services
When you launch a cutting-edge software product, you’re bound to run into some problems — no matter the developer by your side.
Maintenance, debugging, integration, and continuous upgrades are part and parcel of technology advancement. With a specialized full-time offshore team, you receive top-notch software development services around the clock to help you compete in this market.
These fast and efficient problem-solving capabilities not only keep you in the game but also create a loyal consumer base that trusts your product.
Check out more offshore outsourcing pros and cons.
How to select an offshore outsourcing software development firm
If you’re convinced that an offshore software development team is exactly what your business needs, let’s see how you can choose one:
1. Define your goals
Before you consider outsourcing any part of the development process, you need to have a clear idea of your company’s needs and overarching goals.
Remember, your remote team will look towards you for guidance.
It won’t help your collaboration if you’re uncertain about the details of the software project and your expectations from your offshore development team.
Make a decision about which aspect of your business you wish to outsource. Additionally, ask yourself questions like:
- What is the ultimate objective?
- What are your requirements during the development process?
- What are your time constraints?
- How will you collaborate with your offshore vendor?
2. Set a budget
After deciding what your expectations are, you can allocate a budget for the software development process.
Your budget will depend on factors such as:
- Offshore software development company location.
- Software project complexity.
- Prior experience of the remote team.
- Product development team size.
- Estimated time to market.
- Existing software engineering capital.
This budget should also consider the investment you can make into the entire development process, the return you expect, and how willing you are to adjust your budget for additional offshoring costs.
This is a crucial step, as your budget will often dictate where you decide to offshore your software development project.
3. Study available locations
Depending on where you choose to outsource, you can cut a fair portion of your software development project costs.
Various factors can play a role in this decision:
- The overall cost of software outsourcing.
- Experience of the offshore development center.
- Time and cultural differences between the native and offshore developer office.
- English language skills of the software development team.
- Portfolio diversity of the offshore development center.
For instance, India provides some of the best value-for-money offshore software development services in the world. But if you’re based in the UK and the time difference is too much for you, you may choose to outsource to Eastern European countries such as Ukraine, Poland, Belarus, or Romania.
Each location comes with its own set of risks and benefits. Your research and requirements will help you decide which to shortlist.
4. Do your due diligence
Due diligence is a basic requirement.
In the case of outsourcing software development, this includes:
- Researching established providers.
- Reviewing references and testimonials.
- Communicating with your offshore development center about their portfolio.
- Considering the scope of knowledge, skills, and expertise of the software development company.
- Reviewing security policies of the outsourcing company and country.
5 simple tips to get the most from your offshore team
After all this, you’ve finally decided on the location and the software outsourcing company that best suits your needs.
Let’s explore how you can ensure things are going smoothly and according to your expectations.
1. Communication is key
When it comes to a remote team, regular communication and progress reports can help you keep track of how things are progressing.
You can do this through Google Meet, Skype, Zoom, Slack, regular email updates, etc. It’ll help you put faces to names and go a long way towards nurturing long-term relationships with the offshore developer for future projects.
The more you communicate about your company’s path and future direction, the more likely your offshore team will work with you rather than for you.
2. Maintain proper documentation
A well-laid-out contract holds both you and your offshore development company answerable and accountable for decisions and processes during the entire project.
Ensure that all details of the software development project, deadlines, payment structures, and technical specifications of the project are outlined in the contract clearly.
Documentation also provides a layer of security to your collaboration.
Protect yourself against intellectual property theft by making the outsourcing partner sign NDAs (Non-Disclosure Agreements) as soon as possible.
3. Treat the offshore team as your in-house team
You may never meet your offshore development team, but they’re still your employees and colleagues.
When you treat your offshore team members with respect, you’ll get the same in return. This is especially important if there’s a cultural gap, as misunderstandings can often arise due to cultural and language barriers.
During these situations, it’s best to have common ground you can default on. This common ground will also go far in establishing long-term productive relationships with your offshore vendor.
Another way you can show your appreciation is by rewarding the offshore software developers with bonuses and increments during long-term projects.
4. Provide manageable milestones
Most people respond best to specific and challenging goals. This also improves overall performance in a group setting.
But how do you transfer this to remote working?
You adopt a development model that mimics these properties.
One of the most commonly used methodologies for software development, Agile, is a perfect fit as it focuses on breaking a software project into multiple phases.
A PWC study found that Agile projects are 28% more successful compared to traditional projects.
Simply put, whenever your software development team passes a phase or achieves a goal, this helps them focus on the larger project. So breaking up goals helps both you and your remote team visualize your targets.
5. Manage team productivity with productivity management software
When it comes to keeping track of what your employees are doing, offshoring software development presents a couple of problems.
For instance, how do you ensure your offshore developer is working the required hours on your software project?
You can resolve these issues with productivity managing software like Time Doctor.
Time Doctor allows you to:
- Track the time spent on each task and project.
- Note when offshore members are on time, partially absent, absent, or late.
- Ensure the team is actively working during working hours.
- Analyze the overall productivity of the outsourcing company through detailed reports.
- Pay the offshore software developer directly through in-built payroll management features.
Offshore outsourcing your software development can be a beneficial and cost-effective practice that helps grow your business.
Use the information above to make an informed decision about whether offshore software outsourcing is right for you.
And if you do, ensure you do your due diligence and take advantage of productivity management software such as Time Doctor to make offshore outsourcing a breeze!
Andy is a technology & marketing leader who has delivered award-winning and world-first experiences.