Offshore Software Development – Benefits, Challenges, Costs and More

Sudeep Srivastava June 21, 2022
Offshore Software Development - Benefits, Challenges, Costs and More

Whether you are a founder starting an app business or a project manager launching an app, software development outsourcing is a complex business decision. There are a number of factors to consider, and the things at stake if you make a bad decision are too high. 

Last month, a founder came telling us how he had contracted an offshore software development company that came with an unmatched price and timeline guarantee. The firm had promised them that they would deliver the software in 4 months.

What happened, in reality, was something different. The software firm kept delaying the project, and after the founder warned that they would take the business elsewhere, they got software that was completely unstable. Now, while the founder had the money to find another offshore software development company, not many entrepreneurs have that privilege. 

The sad truth about outsourcing software development is that this is not a standalone case. These instances happen all the time. However, what cannot be ignored are the obvious benefits of offshore software development. 

So, in order to answer the complexities around software development outsourcing, we decided to prepare an extensive guide on the best approach. 

What is offshore software development?

Offshore software development services are a set of practices where businesses hire offshore developers from locations that offer tech support at lower rates compared to their home countries. It is upon the businesses whether they want to take help for end-to-end development services or certain processes such as mobile app development, web development, UI/UX design, and quality assurance

Typically, the most popular areas for outsourcing projects are South America, Poland, and India. There is an abundance of skilled resources in these regions, because of which the offshore software development rates by country are generally low. 

How is offshore software development different from outsourcing?

While often used interchangeably, there is a difference in outsourcing and offshoring software development. 

Outsourcing is generally ideal for short-term projects where you need an app without constant iterations and delivery. In case of offshoring, you build in developers to create long-term or complex projects. 

The right offshore company can handle recruitment and assessing of the team who would be ebay for your project, on your behalf. In the end, offshoring is about finding the talents you cannot in your own geographical region. What this leads to is that you are able to get developers from locations which have them in abundance. 

Who should hire offshore developers?

More or less, every company can benefit from outsourcing development. After all, the approach comes with time-tested benefits like:

Who should hire offshore developers

  • Direct access to best-in-class developersFinding a reliable development team with the right set of skills ranging from design, development, and testing becomes a lot easier when you take an outsourcing route. It becomes a lot easier to find competent technical experts in the business domain you are operating in and scale up according to your needs. 
  • Reduced operational costs – When you decide to work with an overseas startup developer team, you don’t have to set up any workspace, day-to-day infrastructure, or any equipment or IT system. Another aspect of reduced operational cost through offshoring is how you are able to save on all the hiring time and costs. 
  • Lower development costs – Majority of the offshore development agencies offer flexible prices for their state-of-the-art skillset. For example, in India, the cost of hiring a skilled developer would only range from $60 to $100 per hour. 
  • Faster project delivery – The time businesses spend on speeding up the development process in-house can be lowered by collaborating with multiple skilled developers. This way, with a little extra money, they will be able to deliver the project much faster in the market. 
  • High scalability – Development processes can be complex. You can never be sure how much time or resources it will take to build a product. An offshore software development company makes it easier to scale up the number of developers and speed up the delivery time. 
  • Access to latest technologies – Most of the offshore software companies specialize in top technologies and skills which are rare to be found in case of in-house developers. So, while you will be able to hire a developer who is skilled in a certain technology, it will be difficult to hire an entire team having multi-tech specializations. 
  • Low development risks – When you build a software in-house, you have to become responsible for things which can go wrong during the development or deployment time. However, when you partner with an offshore development company, the responsibility of testing the product and ensuring glitch-free deployment depends entirely on them.
  • Concentrate on core activities – When you have a remote software team handling your custom offshore software development services needs, all you have to focus on are the key business activities. 

So now that we have looked into the many benefits of offshore software development, let us get down to who or rather which types of companies benefit from them the most. 

benefits of offshore software development

Startups with a restrictive budget 

Startups generally have the best ideas when it comes to acing the digital world. They, however, lack the budget. And with a number of 71,153 startups operating in the US alone, what this leads to is that they either get stuck to the MVP stage with a product that is not made up to its true potential, or they partner with offshore software developers who build their products for a lot less. 

Businesses that lack tech expertise 

It is not uncommon for founders with the best ideas to lack technical expertise. It helps businesses to partner with an offshore software development company having the relevant technical skills to build the product. Through the model, you will be able to find and hire the best team. 

Businesses that want to speed up time to market

In the software domain, time trumps everything. If you take a lot of time in the software development stage, chances are your competitor will launch something similar, leaving your idea to waste. Choosing offshore developers means the elimination of the hiring and training time. You get the best team working on your project from day one.

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How to hire the best offshore software developers?

The benefits and the types of companies that are most likely to be on the receiving end, which we covered just now, can only be achieved when you hire the best offshore developers. One wrong move there, and you might end up increasing the deadline and spending a lot more than the stipulated amount. 

Here are some things you should take into consideration when hiring overseas startup developers. 

How to hire the best offshore software developers

1. Experience

There is no doubt that validation of the software development company experience is necessary. When you are in the market, you should look at the quality of the software design and the project architecture or code. 

This validation is something that can be achieved with careful consideration of the previous work and client reviews.

2. Technology

Note the technology that the software development company excels in. While it is okay to part with a generalist firm that holds expertise in multiple technologies, we would recommend partnering with someone who holds expertise in a specific technology. This way, you will get dedicated support from the team.

3. Development cost

It is crucial to find a software development outsourcing partner that quotes an appropriate amount of money. While you could get attracted to hiring the best developers in the market, the price might not meet your budget. On the other hand, hiring a team that asks for a very low price quote also seems like a lucrative offer, but that could cost you quality. 

The ideal situation would be to hire a team that quotes an appropriate cost structure. Wondering what it would be? Here’s our mobile app development cost guide, which can help.

4. Flexibility

You should partner with an outsourcing software development company that would give you flexibility in terms of time allocation and team size. Our advice here would be to start on a sprint and deliverable model instead of sending a contract for months of work. When you work around a project-based relationship, there is no pressure for having a long-term relationship, and you can move up the requirement as the project moves.

5. Commitment

Do you know what feels good to hear when you are out looking for a software development outsourcing partner? Yes. However, firms that just say yes to every requirement of yours are more or less red flags. 

What you should look for is a team that asks questions, challenges your idea, and makes you think in another direction.

6. Time and process

Building software can be a complex process. But the fact is you need that software to become a market leader, and for that, you would have to know a timeline of when the project will be developed.

Likewise, you would need a team that has a process in place to get you there in record time without compromising on the quality.

7. Communication

When we talk about the role of communication in custom offshore software development services, it can be seen on two fronts: 1. Fluency 2. Time. The development company should be fluent in terms of conveying the project update. At the same time, they should be available in your time range or when the rest of your team is active.

8. Lock-in legalities

The last element that we advise founders to look into is the lock-in legalities. 

First, you should ensure that the IP rights remain yours. This way, if you ever decide to take your project to some other company, you will be able to. Second, look at the code lock-in terms. Ideally, the code should get transferred to you once it has been developed. 

What are the cost components of hiring the best offshore software development team?

There are a number of cost elements involved in hiring an offshore team. Here are the top ones:

  • Training and hiring
  • Development 
  • Project management
  • Quality assurance
  • Auxiliary costs
  • Service costs
  • Infrastructure cost

Another factor that makes it to the cost element list is the geographical region the company belongs to. Here are the average hourly rates of offshore software development companies across the globe. 

Regions Average Hourly Rates (in US$)
North America 80-150
Western Europe 50-200
Latin America 30-60
Eastern Europe 25-50
Asia 20-45

When you are in the stage of considering how to partner with the best offshore development team, it can help to keep a note of what can go wrong as well. 

Challenges of offshore software development

Offshore software development comes with a lot of undeniable benefits for a startup. However, there have also been incidents where businesses lost their time and efforts because of the model. Let us name some of those top challenges

  • Time-zone differences

When you work with an offshore development company, the time difference becomes a challenge. Because of different geographical locations, communication becomes difficult which can sometimes lead to delay in product development.

At Appinventiv, we set up pre-scheduled calls with you, while being available in your time zone so that there is a complete alignment between us and your team. 

  • Security issues 

Partnering with an offshore development company which you haven’t verified can lead to security concerns around them using private data even after the app has been handed-over. Or worse, them sharing your app idea to some other client. 

At Appinventiv, we share an NDA before even starting our interaction with you. This way, you can be rest assured that your idea won’t be shared. Moreover, in our handover stage, we give you the entire codes and the IP rights.

  • Quality assurance

Partnering with an offshore software development company would require you to be a part of their workflow, especially if you want to be on top of the quality checks they are doing. 

At Appinventiv, we have weekly updates meeting with the clients informing them of how the project is moving. We also keep them in the loop in every build, ensuring that the project is going as per their expectations. 

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When to outsource software development?

You can hire software development outsourcing at any stage of the development process

  • When you are brainstorming the idea – If you have a fair idea of what the app will be about but don’t know the technicalities, it’ll be good to partner with software consultants.
  • When the project reaches the development stage – Once you have the idea and the structure of the app ready, now would be the time to connect with the software development partner and initiate the journey. 
  • When the software is developed – Even after the app has been released, there might be a chance that you need maintenance support. You can partner with the firm to help with app updation or maintenance

[Also Read: What is the cost of maintaining an app in 2022?]

How to manage your offshore developers? 

Managing an in-house team of developers is difficult. Imagine how complex it can get to manage a team of remote developers! In fact, reasons around team management majorly make up the list of top offshore software development challenges.

How to manage your offshore developers

However, all the challenges can be eliminated with proper team management. Let us give you some tips on that. 

Ensure that you are on the same page

It won’t be new to get lost in translation or miss out on important things because you miss-assumed something. So, before the project starts, spend some time with the team aligning your vision with their capabilities and processes. 

Agree on tracking tools

The offshore development team you are going to partner with won’t be in-house. This makes it all the more important to agree on tracking tools where you would be able to be on top of the tasks done and the time that went into them. 

Eliminate micromanagement 

You should always note that the team is not your in-house team of employees. Meaning, you will have limited control over them. In that capacity, it helps to get in touch with the team only when necessary or you need an update. 

So here is everything you need to know about hiring offshore software developers. Ultimately, it is a great approach for lowering delivery time and cost. The model works great for startups and for established firms without a technical team. 

However, it can be difficult to find the right partners who understand your vision, work in your timezone, and are aligned with your team’s culture. We hope that this guide helps you find the right team to offshore your software project to. 

[Also Read:  Software Developer vs Software Engineer – Who is the Best Fit For Your Business Needs]

How can Appinventiv help with offshore software development?

We are sure that you must have gathered that even though partnering with the right offshore development company can be the best choice, it can get overwhelming. 

Well, we have just the solution for you. Partner with a brand that has 1,000+ subject matter experts of all the leading technologies who work across a set of different time zones as and when the need arises. One that has made over 10,000+ digital products across a number of industries. 

Appinventiv has been helping a number of entrepreneurs across industries fulfill their dreams of creating digital empires. We work around the time zones our clients are active in, while giving them timely updates on how the work is progressing. We have experts in every time-tested and up and coming technologies whom you can employ for your software projects at competitive price quotes. What’s more? We are the name behind some of the top featured apps in Play Store and App Store (Domino’s, Adidas, IKEA, and more), who deliver quality apps before the delivery timeline. We help you maintain and rule the competitive space. 

FAQs about offshore software development

Q. What is offshore software development?

A. Offshore software development is when an organization hires a dedicated development team and opens a new office for them in another country. They are permanent employees like a company’s local employees, the only difference being they are based at a different location.

Q. What is the difference between offshore and onshore software development?

A. Onshore development is when an organization outsources its software development project within the bounds of its own country. Offshore development means outsourcing the software project to a company that is based in another country. 

For instance, if your company is based in the US, any company that is a part of the United States is considered as onshore. However, if a company is based in any other country such as Canada or India, it is considered offshore.   

Q. Why should I offshore my software project?

A. There are a number of benefits that come attached with offshore development. It ranges from direct access to best-in-class developers and lower development risks to reduced operational and development costs, faster project delivery, higher scalability, and access to latest technologies.

Q. How can I handle security confidentiality with the offshore team?

A. You can sign an NDA before even getting on the first call with the team to ensure that they don’t share your idea with someone else. Another thing which you can do is have a contract that ensures your IP rights and codes will be handed over once the project ends.

Q. How can I monitor the project progress?

A. You can ask the development team to work on a collaboration platform whose access you share. This way, you will be able to track the progress. Next, you can schedule meetings to get constant updates on how the project is moving.

Offshore Software Development - Benefits, Challenges, Costs and More

THE AUTHOR
Sudeep Srivastava
DIRECTOR & CO-FOUNDER
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