Everything You Need to Know About Offshore Software Development

Offshore Software Development: Definition, Benefits, and Things to Consider

Technologies have taken over the minds of business leaders, urging them to constantly increase investments in tech initiatives in the pursuit of additional sources of income and lower operational costs. Spendings for digital transformation alone have been growing for the past four years, according to data revealed by Statista. Analysts predict an even more rapid increase of the invested finances in the coming years: businesses are expected to spend $2.3 trillion in 2023, which is a trillion more compared to 2020.

In a race for cutting-edge technological solutions, representatives of all industries, from retail to tech-giants, often choose IT outsourcing and offshore development options, in particular, which we are going to elaborate on in this article. 

Before we cover the peculiarities and benefits for business, let’s define what offshore software development is. In its essence, it’s IT outsourcing, with the only remark - developers and QAs are located in a different country, far away from the headquarters.

Why Go Offshore?

Why might you choose to outsource software development from distant locations when you can hire IT engineers and UX/UI designers from your own country? Here are the main advantages of going offshore:

  1. Lower Operational Costs

Whether you are a well-established company with a constant flow of income or a start-up, cost optimization is always on the agenda. Offshore software development is an ideal solution, allowing businesses to get high-quality IT products at a much lower price. 

The secret lies in the wage rates that are much more affordable in Western Europe, India, or China, compared to Eastern Europe and the US. Figures speak volumes: an average yearly software engineer’s salary in the USA is $70,570 as of April 2021, while in India, it’s only around $6,860 (in March 2021). The huge gap of approximately $63,000 is a lot for a single developer, let alone for a whole IT team.

  1. Access to a Pool of Talent

With 40% of HR leaders admitting talent scarcity in IT in 2021, getting access to a pool of highly qualified developers, DevOps, UI/UX designers, and QAs is a significant competitive advantage. After all, it’s humans who drive value and deliver meaningful business effects. 

If you look at offshore software development geography, you may notice that there appear to be established destinations from where the US and Europe source talents. In an attempt to maintain competitiveness, Asian and Western European countries constantly improve the level of IT-related education by upgrading both private and public curriculum. Therefore, while finding a perfect fit in the USA or Eastern Europe is a real challenge, businesses can easily spot one or two professionals with extensive backgrounds from India or Ukraine. 

  1. Higher Efficiency and, as a Result, Enhanced Scalability

There are several reasons why offshore software development drives business efficiency:

  • Focus on Core Functions: According to Deloitte's study, this is the most popular benefit businesses notice when outsourcing. Indeed, if IT solutions aren’t your main source of income, you may not be able to maintain operations while managing IT development in-house. 
  • The Abundance of Resources: Going offshore can deliver both enough talented workforce and more finances due to reduced operations costs. Moreover, you have more time as there is no need to hire and supervise IT specialists. 

Combine both factors described above and scalability doesn’t seem like an unattainable goal anymore: you have people, more money, and time to speed up time-to-market and launch before your competitors do.

Offshore vs. Nearshore: The Main Differences

Offshore outsourcing is often compared to nearshore, which implies delegating software development to specialists located nearby - for example, for USA-based companies, it’s IT engineers from Mexico. While both outsourcing types have a lot in common, they do have some significant differences:

Time Zones

When dealing with an offshore team, you need to realize the impact of the time difference: if you are from LA, but your IT subcontractor is from India, there are more than 12 hours difference between you, which means scheduling a meeting may become quite a challenge. Nearshore teams, however, are more or less in the same time zone as you are, which facilitates communication.

Distance

If you are building long-lasting relationships or delegating all IT functions to an outsourcing company, you may want to visit the office to meet the employees, see how the business processes are managed, and build a rapport. Traveling halfway around the world is costly and time-consuming, which scores another point for nearshore teams.

Cultural Issues

Cultural differences are both exciting and terrifying. On the one hand, you get to know a whole different culture, local habits, and traditions. On the other hand, a lack of common ground may lead to misunderstandings, which can undermine the project’s success. That’s why you need to be flexible and accept the differences if you plan to hire an IT team, for example, from the Middle East or China. Nearshore software developers, however, are unlikely to have a 180-degree different mentality. 

Rates

Nearshore vendors typically have more or less the same rates as onshore ones - located in your country. For example, the average software engineer’s salary in the Netherlands slightly surpassed €38,000 at the end of March 2021, and in France, it almost reached €37,500 as of April 1, 2021. Offshore software development will cost much less, as we have already mentioned.

What to Consider When Choosing Offshore Software Development

Offshore software development attracts businesses with optimized budgeting and faster scalability. But on the run for low costs, many can fall into a trap and face the following pitfalls:

  • Miscommunication

Failure to build a rapport is a common problem for distributed teams. Lack of personal contact often results in an inability to clearly explain your objectives and share them with all team members. This, in turn, may lead to wasted resources as poor results fail to deliver the desired value. 

The importance of constant dialog can’t be overestimated in such a case. Regular videoconferences or at least group calls with a team is a working solution that helps to communicate the project’s goals and get to know all team members better, which fosters productivity.

  • Unqualified Team 

Although there are many talented offshore teams, running into an incompetent software engineer is a real possibility, especially if you got tempted by extremely low pay rates. The first rule is to question agencies and freelancers offering too cheap prices. The second one is to check professional background by investigating a specialist’s portfolio or carrying out tests.

  • Poor Management

Managing remote teams is a challenge that can potentially undermine all the devoted efforts. To avoid missed deadlines and launch the product in time, you need to work out a schedule and monitor the process on a daily basis. Hiring a PM (Project Manager) who is a compulsory team member in outsourcing agencies takes the pressure off the project owner and fosters the timely implementation of every development stage.

  • Legal Issues

Every country has specific government-wide regulations and restrictions that may become a barrier on the way to successful project implementation. That’s why when choosing offshore software development, you need to make sure that your vendor fully complies with local regulations, confidentiality, data protection policies, intellectual property rights, and non-solicitation terms.

By outsourcing to a reputable agency with a proven record and extensive professional background, businesses can avoid these and other pitfalls and count on smooth offshore software development.

How to Hire Offshore Specialists Yourself?

Once you are sure that offshore development is an ideal option to build your IT infrastructure or mobile application, you are stumped with the question of how to find a reliable vendor or freelancer. These tips will facilitate sourcing offshore software development services:

Set the Objectives

The first and foremost step in software development is to define your goals. They will help you to determine key metrics, which facilitates assessing the outcome. Besides, objectives are a starting point to determine:

  • A business plan
  • Type of software
  • Functionality
  • ROI metrics

Find the Perfect Fit

Once you have a clear picture of what you need, you can start looking for an ideal offshore software developer. Here are four things to consider:

  1. Geography. Typical destinations for offshore software developers are India, China, and Western Europe. While you may find attractive rates and qualified specialists in all three locations, look at the country’s educational background to minimize the risks and speed up the search. Western Europe, for example, boasts an extensive IT curriculum, regularly attends global educational events and tournaments, and even wins them. Take ICPC as an example: Russian participants had been winning for eight consecutive years.
  2. Values. Shared beliefs are the common ground that unites specialists from different parts of the world. If you want smooth cooperation with full understanding, hire a team that will share your vision and values.
  3. Tech Stack. You won’t hire an artisan with expertise in metal processing when you need wooden furniture. The same works with software development: define the tech stack and make sure that your candidate has a good command of it.
  4. Background. Besides certificates and bare allegations, check the proven professional background. You may even ask for referrals from previous clients or use the products if they are freely accessible.

Why Hire a Dedicated Team?

When choosing an offshore software development service, hiring a dedicated team is the best solution. By a dedicated team, we usually understand it to mean an IT outsourcing company that is perfectly suited for your team. 

The work is based on three main concepts: affordability, talent, and commitment. In other words, when you outsource software development by delegating work to a dedicated team, you get devoted, competent professionals with relevant experience and skills at a competitive price.

The logical question is why choose an agency over freelancers, who may come with lower costs but without compromising the expertise factor? 

  1. Time. You need to consider time resources: finding separate developers may take weeks, if not months. Suppose you managed to gather the whole team except for a DevOps engineer. You can’t start building your app until you have all the puzzle pieces together, which a dedicated team offers.
  2. Management. You are the one to set up a distributed team of foreign specialists. They may have tech stack discrepancies and miscommunication. An aligned team that has already stood beside each other has a team spirit that fosters efficiency and productivity.

Taking these factors into account, a team approach is much better in terms of speed, quality, and effort. Therefore, your time to market is reduced, and you have a chance to launch software just in time.

Offshore Software Development: Final Thoughts

Outsourcing offshore software development is a viable solution if you are looking for a talented team that can drive value at an affordable price. Reduced costs, however, aren’t the only crucial benefit of such an approach: you have a pool of agencies and freelancers to choose from, differentiated by tech stack, professional background, and geography. Therefore, you won’t have to limit your choice as it usually happens in terms of onshore software development due to talent scarcity.

In order to not compromise on time and quality, look for a dedicated team that will build custom software for you, devoting not only the mind but also the soul. We at Develux have proven that such an approach drives value. Our team of offshore software developers isn’t comprised of mere IT engineers. We are passionate about every project we do, aiming to meet the client’s requirements and satisfy the end-user with our deep expertise in the field and years of experience. If you are looking for a team that has experts in every tech stack and can successfully implement your wildest ideas into reality, let us know! Together we can show the world what the future of tech looks like!

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