Let’s face it. It’s quite a feat to hire developers for startup, especially in its early stages. The numbers also look discouraging. According to the IMF, there will be a global shortage of more than 85 million tech specialists by…
Offshore Software Development: How To Do It In 2022?
Building an in-house team of talented developers can be tricky. Let alone the fact that your company may be based in a well-paid location where experienced software engineers come at a heavy price.
Tough competition, escalating operational costs, and scarce local talent have further spurred local businesses to outsource their tech functions to another, more affordable destination. Thus, offshore software development has grown into an effective business practice that unlocks a wealth of exciting opportunities with no undue stress, hassle, or overspending.
With that said, we’ve created a comprehensive manual on offshore software outsourcing for you to recognize the value it delivers. This post will also unveil top practices to help you make the most of this business practice.
What Is Offshore Software Development?
Offshore software outsourcing is the process of delegating all or a part of development tasks to a third-party company located in a remote location. Typically, a product owner hands over the business activities to a place off the shores of his residence, i.e. another country or continent.
Just to give you an example, it may be an LA-based company farming out software development tasks to an outsourcing service provider in Ukraine.
When Do You Need Offshore Software Outsourcing For Your Business?
When You Want To Focus On Critical Tasks
A software development process is a resource-intensive activity. Business owners have to allocate time and money on building the product, instead of focusing on the core business. Offshore development draws focus back to mission-critical tasks by letting offshore developers handle non-core functions.
When You Have A Limited Budget
While enterprise companies can foot the bill for custom software development, SMEs often feel the pinch. In this case, the latter should turn to offshore software development services to get the job done for a fraction of the price. Offshore software outsourcing also allows businesses to reach top engineers on the way to success while sticking to their software development budget.
When You Are Short On Time
A faster time to market is crucial in the modern competitive landscape since it gives companies a head start over the competitors. If you don’t have the time to perform a rigorous screening process and dedicate your resources to recruitment, leverage offshore programming. In this case, you can react faster to market changes and always be one step further.
When You Are Lagging On Quality and Technologies
The software world evolves at a rapid pace. That is why some companies may find themselves way behind in the game. If you are facing decreased quality and are working with legacy software, it’s high time to bring new expertise to the table.
When Flexibility Matters
Hiring offshore software developers allows companies to be agile and responsive to changes and obstacles that might arise. Since offshore software companies operate on a contract basis, it’s the optimum option for both long- and short-term needs. It also means that you can build up and down your in-house team according to the current workload.
Benefits And Risks of Offshore Software Development
It’s not easy to trust a third party with taking over your business operations. However, offshore software development services is an attractive business option thanks to numerous benefits:
According to the Deloitte report, cost reduction is a top priority among companies, especially in the face of a likely pandemic-induced global recession. Offshore software development helps companies avoid investing in IT infrastructure or spending time recruiting, hiring, and training employees. All these translate into lower costs and higher efficiency.
Access to a huge candidate base
Much of the rationale for offshore programming is considered to be a need for expertise that outstrips the talent available. With offshore software outsourcing, you get access to a vast pool of expert programmers with ample experience developing software applications of global standards and quality. Also, offshore software development is the right way to go when you’re looking for rare tech stacks that aren’t presented in the local market.
Expedited market introduction
By going offshore, you don’t have to rely on in-house resources that can often be quite limited. In this case, all the time frames are set based on the strategic tasks and goals in the offing. It also means that your product will be presented to the users way faster without compromising quality.
Any successful product needs regular updates and technical maintenance. Passing these activities to outsourcing, you get consistent support without ballooning the workload of your internal developers and growing the company staff.
However, it’s not all unicorns and rainbows when it comes to offshore programming. When hiring an outside provider, you should also be aware of the risks this practice brings. In particular, these include:
Risk of data leakage
When farming out your business operations to other locations, mind that security standards may vary by country. That is why you have to take additional measures to secure vulnerable data and avoid possible data breaches. Make sure that an outsourcing contract has adequate provisions on data security and hire a vendor that follows international data security standards.
Apart from data security, the legal system may differ in various locations. Thus, some countries do not recognize the jurisdiction of the United States or other countries on a confidentiality agreement. That is why it is critical to exercise due diligence in studying relevant terms and conditions before hiring an offshore software company.
Communication risks may occur due to the lack of physical communication, language and culture barriers, and time zone differences. You can eliminate these risks by working with an offshore software development company that offers flexibility in your hiring process. This refers to regular visits to your offshoring partner’s office, hiring English-proficient developers, and others.
How To Work With Offshore Software Development: Best Practices
Plenty of choices makes it challenging to pick the best fit. In most cases, offshore software development is not just about expertise and impressive portfolios. Here are some pointers for you to make the right call.
Do your homework
Even before liaising with an offshore development company, you should develop a profound understanding of your niche and marketplace. Without studying the basics, it’ll be difficult for you to hire the right team of offshore developers.
Also, consider performing competitor research to gain valuable insights about the tech stack and best value propositions. After that, we recommend creating a detailed specification of the project requirements and research the outsourcing models available based on your requirements.
Build a rapport with all offshore developers
Once you have found the right technical partner, make sure to establish contact with all offshore team members. Especially if you’re delegating a big part of your software development. This trick will help you stay in the loop and be aware of the current project progress or any obstacles occurring.
A well-established partnership with an offshore software development team is half the battle and bodes well for fruitful collaboration.
Get things straight upfront
To avoid any possible misunderstandings or blind spots, you should settle every detail during the negotiation stage and contract signing process. Your points of interest may include intellectual property rights, data security, payment terms, and others.
For example, we often get asked what software is used for offshore development. Typically, our team chooses a workplace communication tool that is convenient or familiar to our clients such as Jira, Slack, Trello, and others.
It’s easier for us to work around client’s preferences since our team of offshore developers has rich experience in different team management tools. Therefore, we prioritize a customer-oriented approach, placing customer convenience and transparency at the heart of all processes.
Ensure overlapping working hours
Although multiple time zones might seem concerning while outsourcing, it’s actually a valuable benefit. Various time zones allow for 24 development support and round-the-clock operations. However, we do recommend having an overlap in working hours.
It is necessary for face-to-face communication between clients, technical teams, and other stakeholders. This keeps everyone in sync and ensures efficient onward movement.
Bring your offshore software development on site
Relocating an offshore software development team is a popular business practice. If you wonder how to bring your offshore software development in-house, there is such a practice among some outsourcing vendors. They include the option of hiring a programmer or a whole team of developers on a full-time basis and buying them out in some time. That is when an offshore software development team can become part of your internal workforce.
However, if you’re planning on bringing outsourced personnel in-house, make sure to clarify the terms in the very beginning. The terms may vary based on the size of your offshore team, time frames, and the party accountable for relocating.
Top 3 Locations For Offshore Development
Offshore software development has blurred geographical boundaries. Global businesses can now tap into a greater pool of skilled labor and reach new markets. The world is your oyster, but here are the top three destinations to outsource your software development:
Asia is among the most sought-after locations thanks to low labor costs and a large pool of IT talents. Asian tech hubs include:
India remains an uncontested industry leader among Asian countries due to its breadth of English-speaking personnel and flexible pricing options. Apart from significant cost savings, the quality service offered by India has made it the front row in the outsourcing industry among others. Also, the Indian IT industry welcomed more than 200,000 new hires and boasted over 880,000 digitally skilled talents in 2019.
Businesses of all sizes stand to benefit from the Philipino attractive outsourcing climate. The difference in staff costs and operational effectiveness between countries makes this destination an appealing outsourcing location as well.
China’s IT industry has experienced impressive growth due to the rising tech investment by companies across the board with evolving new technologies. From 2021 through 2025, its revenue is expected to show an annual growth rate of 12.56%, resulting in a market volume of more than $28m by 2025. These numbers are setting the stage for China to become a top world player in the upcoming years.
2. Eastern Europe
In 2021, this region remains a high-priority target region for offshore software development. Its huge and diverse IT market, convenient time zone, English proficiency, and access innovation make this destination The Silicon Valley of another continent. Let’s have a look at top outsourcing locations in this region:
Ukraine has gained its reputation as an established IT outsourcing destination, repeatedly proved by numerous awards. This IT hub has a diverse tech ecosystem with more than 4,000 IT companies operating on the market and over 191,000 experienced programmers. All this makes Ukraine an offshore location worth noting.
Poland is another very popular spot for global businesses to farm out IT activities. Developers there have not only domain expertise, but also the western mindset and great command of the English language.
As an offshore software development destination, Romania is particularly attractive for European SMEs. This location is a popular pick for small and medium-sized businesses due to significant cost cuts and a reservoir of creative and rigorous specialists. Also, the technical know-how of local offshore developers covers all mainstream technologies and frameworks.
3. Latin America
This humid region is another offshore hotspot for offshore software development. Since Latin America is in a great position to provide IT services, lots of global companies outsource their tech operations to one of the following locations:
Outsourcing to Mexico allows results to be achieved at an affordable cost and sometimes with better quality service providers. A fantastic pool of college-educated job seekers with excellent English proficiency and solid infrastructure make outsourcing to Mexico an idea worth exploring.
The Argentinean software development market has grown to become very cost-competitive over the last decade. With a dynamic workforce of over 110,000 IT professionals that are mostly senior and semi senior, abroad companies can find plenty of opportunities to amplify their tech activities.
Throughout recent years Brazil has turned the spotlight on as a fantastic resource of outsourcing opportunities. Major enterprises, including IBM, HP, and Capgemini have had Brazilian operations for years benefitting from cost-effective service rates and a growing talent pool of tech specialists.
Offshore Software Development Cost
All the offshore locations mentioned above share one significant benefit: cost reduction. Still, an average hourly rate for offshore developers varies greatly by location. Apart from geographical factors, there’s plenty of other aspects that influence hourly remuneration. These include:
As for the location factor, the costs of hiring a programmer will be directly linked to the cost of living. According to our research, the hourly programmer rate is lower in Europe, Africa, and South America compared to Canada and the USA.
- Level of seniority
In today’s job environment, years of experience are making a difference in compensation. Naturally, senior developers price their services significantly higher than fresheners, because of their hold on related technology and soft skills.
- The complexity of your project
If you need a multi-functional project with a great number of commands, be ready to pay a hefty sum. The logic here is simple: the more complex your solution is, the more people will need to work on it and invest more hours into its development.
- Time frame
If you need the product faster to the market, this means either a larger team or more work hours. In any case, you’ll have to fork out in the conditions of pending tasks.
Now let’s run the numbers and estimate how much it will cost you to outsource your software development in each of the popular destinations mentioned above:
- The price tag for offshore programming in Asia is evidently low to medium. Thus, Indian coders charge from $2 to $18 per hour based on their experience, whereas Philipino specialists request around $3-$11 for the same work.
- Similarly, in Western Europe, the rates can differ by country. The average hourly rate of a software engineer in Ukraine makes up from $5 to $27 per hour. At the same time, Polish-based software personnel get $9-$29 per hour to get the same work done.
- In Latin America, the median developer rate equals $4-$17 for hourly service. The leading software outsourcing country there – Brazil – raises the bar slightly higher than Mexico.
Recommended reading: Software Development Hourly Rate: World-Wide Comparison
How To Manage Offshore Software Development Process?
Once you have successfully signed an outsourcing contract with your vendor, it’s time to start building your offshore team. Mind that offshore software outsourcing is a two-way street. While your tech partner takes over the burdens of recruitment and administration, you should pay attention to managing your offshore team.
That is why we have collected helpful tips on how to set up a seamless collaboration with a remote team and how to work with offshore software development in general.
- Share the vision and mission of your company
The first step towards a productive collaboration with your offshore developers is to clearly communicate the brand vision and mission.
Welcome your new employees to your company with a brief meeting explaining the objectives, goals, and needs of your business. This information will bridge the gap between you and your contractor, thus making your remote team more involved in the development process.
- Balance cultural differences
Despite globalization, your in-house and remote teams will inevitably experience some cultural differences. The key here is to acknowledge and appreciate diverse cultures, while gently breaking the ice.
The best way to reduce the tension is to communicate on a regular basis, conduct alignment meetings, and create an atmosphere of shared culture.
- Communicate regularly
Constant and effective communication is what makes the difference between success and failure. Regular contact with both teams helps you stay updated about the project process. Whether there are any challenges, questions, issues, they can be easily solved if everyone is on the same page.
We always take advantage of the numerous collaboration tools like Jira and Slack to facilitate communication and keep team management on point.
Recommended reading: How To Manage A Remote Team?
Offshore software outsourcing has always been a code word for cost reduction. Not only that but these days it’s turned into a legitimate way to access a larger pool of software development talent and scale up sustainably.
If you need to augment your tech operations with niche skills, Devox Software is the right outsourcing partner that takes care of administrative tasks.