Digitalization has turned from a fancy trend to an absolute necessity for businesses. As a result, the demand for IT services is constantly growing these days. That’s why customers often cannot find a suitable software development service provider in their local areas.
To mitigate this mismatch between supply and demand in the IT service market, more businesses turn to offshore software development. This method offers many benefits, most notably saving time, costs, and effort. For this reason, offshoring is very advantageous for startups and small businesses. However, it also appeals to enterprises that prefer hiring a dedicated software development team from a distant country rather than managing an in-house software development department.
This article will define offshore outsourcing of software development projects, show you its potential benefits for your business, and explain how to avoid mistakes while selecting the right company and cooperating with them.
What is Offshore Software Development?
When a customer, for example, a startup, an SMB, or an enterprise, hires a software development company from another part of the world, that company will perform offshore software development. In other words, this means outsourcing a task or a project that involves providing software development services to a team located in a different time zone.
The distance between the customer and the hired team is the defining factor that distinguishes offshore, onshore, and nearshore software development. When the time zone difference is large, and the parties are located at opposite sides of the globe, these circumstances imply offshore relations. This is the case, for example, when a business in the USA hires a team from India or Ukraine. Businesses choose an offshore software development model because it offers a lot of benefits, most notably much lower costs, but also involves certain challenges.
If the distance is significant but the time zones are approximately the same, this case is called the nearshore relationship. An example of this case is when a customer from Western Europe outsources a job to a company from Eastern Europe. Nearshore software development generally offers lesser cost reduction but also has fewer drawbacks.
In the case of onshore software development, the customer and the development team are located approximately in the same area and share the same time zone. For example, this is usually the case when a client and an offshore software development outsourcing company are in neighboring states. Due to the short distance and minimal time difference, there are almost no obstacles to cooperation between these two business parties. However, the costs of services are not as advantageous as those offered by offshore outsourcing software development companies. In general, the larger the distance between a customer and an IT service vendor, the larger price reduction can be achieved by a customer without impacting the quality of provided services and the final product.
What Types of Services Can Be Outsourced?
Successful offshore software development outsourcing is possible when an IT services vendor can ensure the high quality of its work and effective regular communication with its customers. The main factor of success during outsourcing is the ability of remotely located companies to collaborate and communicate with each other. This means that if the development team has enough experience, basically all software-related services can be outsourced. Let’s take a look at the most popular outsourced services.
Web Development Services
Though web development is a complex and challenging process, it can be effectively outsourced to offshore developers. A skilled team will be able to deliver a top-quality web application at a reasonable price despite possible inconveniences and challenges resulting from long distances.
According to a customer’s requirement, most offshore software development companies can perform either the whole development process or provide selected web development services. Usually, this is required when a customer has already hired a team but needs additional specialists.
Mobile Development Services
Mobile app development is another highly demanded type of services in offshore software development. Similar to the web development process, mobile software development also requires a lot of skills and experience and well-coordinated teamwork.
The immense popularity of mobile applications and their vital role in enhancing all kinds of businesses is an established modern trend. That is the reason why so many offshore software development outsourcing companies are focused solely on providing mobile development services. Again, like with web development, such companies can offer a full software development process or just particular services to create native or hybrid mobile applications.
UI/UX Design Services
One of the most useful advantageous features of offshore software development outsourcing is that customers can choose beforehand whether they want to delegate the whole development process to an offshore company or just some of its steps. This way, a customer can hire a team to provide only one particular service or even hire a single specialist for that purpose.
Talented UI/UX designers are hard to find, especially in the IT industry. Their role is especially important when an application must be adapted to various devices with different screen resolutions and aspect ratios. That’s why UI/UX services are in constant high demand among businesses that need software solutions with both functional and visually appealing user interfaces.
QA and Testing Services
Quality assurance is an essential part of any software development process. The creator of a software product must ensure that every part, module, and component works as intended in various scenarios. Comprehensive testing is a very exhaustive and time-consuming process, so it is often outsourced to a skilled team of specialists focused entirely on this task. This way, the main team of developers is able to concentrate on other tasks and finish the project earlier.
Alternatively, you may have two testing teams working simultaneously to cover more platforms and use scenarios of a future software product. This method requires more coordination and is commonly used, for example, to speed up cross-platform or hybrid mobile development. One team may ensure the quality and performance on Android devices, and the other team may perform the same tasks on iOS devices.
Customer Support Services
Customer support services are universally famous for being outsourced to offshore companies, even by the largest enterprises. The high demand causes some countries to focus their IT industries on such services and create numerous call centers and other required infrastructure. As a result, enterprises benefit from immense cost savings while customer support service providers from other countries enjoy profits.
It should be noted that many other software-related services, like IT consulting and product post-release maintenance, can also be outsourced. Offshore software outsourcing benefits both customers and IT service vendors and even drives economies in many countries.
Offshore Software Development Process
Truth be told, an offshore process is identical to its nearshore or onshore counterpart in the IT industry. It has the same stages and includes the same routines, such as requirement gathering and analysis, architecture design, coding and implementation, security and quality assurance, deployment, post-release maintenance, and others.
Just like in-house teams, offshore developers also work full-time, prepare project documentation, and communicate with clients on a regular basis. The main feature that distinguishes an offshore process is the remote cooperation and unique challenges resulting from it.
Considering this, there are several steps you should take to mitigate these challenges before you find a suitable offshore software development company.
Understand your needs. Since the main offshore-related challenge is communication, make sure you have a clear picture of your business needs and can formulate them clearly. Identify your business problems and how software can solve them. This way, your offshore developers will quickly understand your goals and requirements.
Define your goals and timelines. Analyze the market to find your target audience and the optimal time to release your software product. This information will be vital during your future communication with a potential development team, especially when discussing deadlines.
Stay informed. Try to keep yourself updated on what’s going on in the IT field, the most popular technologies, new advances, etc. The knowledge of terminology and trends will facilitate your future communication with the development team.
Browse offered services and investigate candidates in advance. Before settling with the team, you need to research the information about them. For instance, their expertise in your industry and technology, their portfolio (Case Studies), feedback from clients, company size, etc. Due to the remote nature of your cooperation, you will have to be 100% sure of your candidate.
Prepare documentation. Ideas are elusive, so you should write down your vision in as many details as you can. Then, add everything you have defined regarding your future software. This way, you will have a chance to revisit and alter your concept before you discuss it with an offshore company. After the development process starts, it will be more difficult and potentially expensive to change requirements.
Challenges in Offshore Software Development
The benefits of software development delegated to offshore companies come at the cost of certain drawbacks and risks. Here are some of them.
- Time difference. An offshore company will operate according to its time zone, so its working hours may be widely different from yours. You need to define some compromise regarding calls and online meetups.
- Cultural and language differences. Usually, IT specialists are required to be fluent in English in order to easily interact with colleagues and clients and write accurate documentation. Still, in some countries, this requirement is sometimes overlooked, and language barriers may slow down the development process or impair the product quality due to miscommunication. Luckily, such cases are not as common in business as they used to be. Cultural differences, such as different approaches to work or national and religious holidays, may also add certain unwanted complications to cooperation.
- Lack of supervision and transparency. Though offshore development teams are self-managed, this can be both a benefit and a drawback. If you like to personally supervise the work of your hired staff, it will be difficult for you to cooperate with offshore companies. In the case of long-term projects, you may need to visit the location of the offshore company or arrange a visit of its project manager to your company’s headquarters. This involves additional costs for travel and accommodation.
- Potential data leaks. Usually, software developers in in-house or offshore teams sign NDAs to ensure the protection of your business secrets or other sensitive information. However, some countries do not have strict legislation regarding data protection or fail to enforce it. This also means that the source code of your software may eventually leak, and its vulnerabilities may be exposed due to the negligence or the lack of work ethics in an offshore team.
- Need for additional coordination. Even if you delegate the entire software development process to a remote team, you still need to assign one or several managers to stay in touch with it. This way, your managers will be able to handle minor issues immediately and inform you about matters that require your personal involvement. Your company has to double-check and guide the development process to ensure it is performed according to your requirements. This means working together with the managers of the offshore team without getting into each other’s way.
Offshore Software Development Cost
The cost of offshore software development differs depending on the geographical location of the service vendor. The total price also depends on the complexity of your project, as it determines the number, type, and skill level of required specialists and the extent of provided services. The following services contribute to the overall cost: staff training, project management, design and planning, coding, quality assurance, post-release support, etc. This list is not exhaustive, so your project may require some other services and auxiliary costs.
Here are the top 8 countries for offshore software/IT project outsourcing:
Software Development Billing Rates in Different Countries
These price ranges are based on information obtained from such online platforms as Clutch, GoodFirms, PayScale, Upwork, Indeed, and others. They are rather illustrative but may not be entirely accurate, so you always need to discuss offshore software development outsourcing costs directly with every IT company.
Benefits of Offshore Software Development
Choosing an offshore software development company for creating from scratch or upgrading software for your business has many benefits to offer that include but are not limited to the following points.
By choosing an offshore vendor of software development services, you can save up to 30% of your total expenses, including costs on recruitment processes, salaries, etc. Compared to hiring and training in-house specialists, you also won’t have to spend resources on licensed software and hardware because these expenses will also be handled by offshore developers.
Needless to say, you won’t have to deal financially with staff training, paid vacations, sick leaves, and things like that when collaborating with one of the offshore software development companies.
Attention to Core Activities
This may be the biggest benefit when hiring an offshore development team that includes a project manager. A company’s management can focus on things like planning, implementing a solid business strategy, finding additional investments, and so on because the technical side of the product creation will be fully handled by the development team.
In case you hire a team with a project manager, they will regularly update you on the progress, challenges, and other crucial things you need to know.
One of the best parts of working with an offshore development vendor is that you can hire a scalable team for your project. Thus, you can hire a large team to create your business product from scratch, and you don’t have to keep the entire team long-term. After the product design, development, and testing processes are finished, you can scale down the project team and leave only the tech specialists you need for product maintenance and support.
At the same time, when you need to upgrade or somehow change your product in the future, you can hire the required specialists back. Companies that specialize in offshore software development often propose different collaboration models like dedicated teams, fixed prices, time and material, etc.
Access to a Larger Talent Pool with Bigger Expertise
Seeking tech specialists on your own takes more time and resources when compared to working with an offshore software development company. This is because they know exactly how to distinguish an expert or promising specialist from a mediocre one and where to find them. Choosing a company that provides offshore software development services will grant you access to a massive talent pool with tech experts who work with both the latest and trusted technologies.
Having specialists with broad and solid expertise in your team is exactly what will make your product stand out on the market and leave your business competitors behind.
In addition to being cost-efficient, offshore firms have everything required to create and launch your software product faster so that you can start gathering feedback from your first clients or show a fully-functioning MVP or complete product to investors.
Time is money. The more time you spend on creating and testing your product, the higher the chance that someone else will launch a similar product and “skim the cream” from the customers that could have been yours.
They Try Harder
Even though there is a common belief that in-house specialists are more motivated to provide top-quality results, offshore software development teams are equally motivated to give their clients the best possible result and collaboration experience because of the competition in the IT market.
Every software development company understands that even one unsatisfied client may affect their reputation and scare away dozens of leads.
Advantages of Offshore Software Development from Intellectsoft
Choosing Intellectsoft as your offshore software development company will bring you and your business multiple benefits. Being a company with 15+ years of experience in the IT market and the one that has delivered over 600 projects to businesses across the world, here’s what we offer our clients:
- Engineering workforce in 21 countries across the Atlantic;
- Expertise in multiple industries like fintech, healthcare, construction, logistics, and a lot more;
- Tech specialists have advanced English;
- Great communication skills;
- No difficulties with time-zone difference;
- Solutions that fit your budget;
- Extensive technology expertise and talent pool;
- Positive feedback from our clients (we have a 4.9 rating on Clutch and a 5 rating on Business of Apps);
- Last but not least, 27% of our teammates are females.
In times of technological advancements, choosing offshore software development brings companies of all sizes multiple perks. While in-house teams, onshoring, and nearshoring software development have their own benefits and drawbacks, the advantages of offshore software development are undeniable and can save your company time, money, and other crucial resources.
Intellectsoft is a company that has been providing offshore software development services for over a decade. We don’t limit our expertise to one company size or a single industry. Instead, we offer top services to businesses ranging from startups and scaleups to Fortune 500 enterprises. The range of industries we cover is also enormous; however, our domain expertise lies within such industries as fintech, insurance, healthcare, dental, construction, logistics, eCommerce, and others. To learn more about our work, please read our most prominent Case Studies.
If you want to explore our expertise more and learn what custom solutions we can offer your business, don’t hesitate to get in touch with us and state your requirements. Let us help you achieve your business goals with our offshore development knowledge and expertise.
What are the benefits of offshore software development?
Here are the main advantages offered by offshore software development outsourcing:
- Reduced prices compared to your region.
- Faster solution delivery.
- Great scalability and flexibility.
- Large pools of certified specialists.
What is the average cost of offshore software development?
The hourly rates of offshore software development specialists vary greatly depending on the region, skillset, experience, and many other factors. Here are the approximate ranges:
- Eastern Europe: $30-65.
- Western Europe: $55-150.
- Asia: $20-45.
- South America: $35-70.
- North America: $90-150.
To get more accurate information and avoid misunderstandings, you should always negotiate prices directly with offshore software development firms.
How do you cooperate with offshore software development companies?
Communicate effectively. You need to maintain regular communication with your development team to see whether the process is going in accordance with the project timeline. Even though you are the boss of the project, effective communication also means answering the team’s questions regarding the project without delay.
Arrange visits. In case you have a long-term project that lasts months or even years, it would be useful to visit your offshore development team for more efficient collaboration and team building. However, instead of going to the company’s offshore location, you can invite the team to your workplace.
Use professional collaboration tools. Jira is perfect for task management, tracking, and reporting. As for communication, you can use Slack for secure instant messaging and tools like Google Meets, Zoom, or Skype for video calls.
Provide feedback. When discussing the progress of your project with your offshore developers, always give them your feedback. Effective collaboration is always about communication and feedback.
What is the biggest challenge of offshore development?
The large distance between a customer and a hired offshore team is a key factor that results in several risks and restrictions. Among them, the time difference is perhaps the most inconvenient. Overall, most distance-related risks and drawbacks may be effectively mitigated with proper management and a responsible choice of an offshore company.