Offshore Software Development: Services, Pros and Cons

Many software companies across North America and Western Europe are starting to evaluate offshore software development and how it can help them to achieve their business goals. For those who consider this approach for the next project, we’re providing a detailed explanation of this outsourcing model. Here you’ll find more about its advantages and disadvantages and a few simple tips that will make a search for a reliable service provider a bit easier.

When starting a new software development project, many companies are used to involving not only their in-house teams or developers in their countries but also ones from all over the world. This kind of cooperation has justified itself and resulted in benefits for both sides. It is clear that outsourcing is an inevitable part of software engineering. Here comes another question what is offshore software development? In short, this term has the same meaning as regular outsourcing but with the indication of the geographical distance between the customer and the provider.

List of the Content

• Difference between offshore, nearshore and onshore
• Reasons for offshore software development
• Offshore software development firms and their typical service
• Pros and cons of this model
• Remote product development and how to do it right
• How to choose the service provider
• Best practices for successful offshore software development
• Conclusion

WHAT IS THE DIFFERENCE BETWEEN OFFSHORE, NEARSHORE, AND ONSHORE

Considering the geographical standpoint, outsourcing can be presented by onshore, nearshore, and offshore development services.

Onshore

When the company decides to hire software developers within their own country, it is onshore outsourcing. They find this option rather convenient and approachable. For instance, the company can choose a provider just from the different regions of their country.

Nearshore

Nearshore service is characterized by a similar time zone. For this reason, providers will be chosen from the neighboring countries. The customers count on cultural similarity and geographic proximity. In particular, Western European countries have nearshore choices among Eastern European ones, such as Poland, Ukraine, etc. The US customers can apply for the providers in the nearest neighbor Mexico. In case they decide to choose other Latin American countries, it will not be called nearshore one. 

Offshore

Therefore offshore software development indicates that the company of providers is located in a foreign country far away from your country. It can be even the different continents; thus, the customers might face the notable time zone difference. Fortunately, nowadays, it is not a problem at all. North American and Western European companies successfully collaborate with providers from all over the world.

In this article, we have prepared an explanation and overview of offshore development services, their advantages and disadvantages, and how to choose a service provider.

REASONS FOR OFFSHORE SOFTWARE DEVELOPMENT

Offshore software development has become an increasingly popular practice among companies of all sizes, and for a good reason. There are several key reasons why companies choose to engage in offshore software development, including:

• One of the primary reasons why businesses choose to engage in offshore software development is to save money on labor costs. Hiring a team of developers in countries with lower labor costs than in the company’s home country can be a cost-effective solution. For example, companies based in North America or Europe can hire developers in countries such as Poland, Ukraine, or Romania, where labor costs are significantly lower.
• Offshore software development provides access to a larger pool of skilled developers. This can be particularly valuable for companies that require specialized skills or experience that are difficult to find in their home country. For example, a company in the United States specializing in developing software for the healthcare industry may struggle to find developers with the necessary expertise. By engaging in offshore software development, the company can tap into a larger pool of developers with the necessary skills and experience.
• Offshore software development allows companies to work on a 24-hour cycle. For example, a company in the United States can hand off a project to an offshore development team in another location at the end of the workday in the United States and wake up to find that the project has advanced overnight. This can significantly speed up the development process and help companies get their products to market more quickly.
• Offshore software development can help companies expand their development capacity without investing additional resources. This can be particularly valuable for small or mid-sized companies that may not have the resources to hire a full-time development team. By engaging in offshore software development, companies can access the resources they need to take on larger projects or develop more complex software solutions.

As a result, offshore software development provides companies access to cost-effective, skilled labor, allows them to work around the clock, and expands their development capacity. By leveraging these benefits, companies can develop high-quality software solutions at a lower cost and greater efficiency.

OFFSHORE SOFTWARE DEVELOPMENT FIRMS: WHO ARE THEY AND WHAT SERVICES THEY TYPICALLY PROVIDE

IT outsourcing is a constantly improving industry. The market is full of various offers. Your main task is to find the most suitable offshore software development company for you and your project. The first criterion to consider is where to find an outsourcing provider. You should keep in mind such factors as geographical proximity, qualification, and language requirements. Due to the geographical location of your provider, it also covers time differences and cultural similarities. It is generally accepted to differentiate service providers into several destinations: Eastern Europe, Latin America, Asia, and the Middle East.

Choosing the destination is only the first step on the way to your final goal. You should be aware of what offshore development services the companies typically provide. They can be both responsible for the whole project and deal with defined tasks. Outsourcing companies specialize in a vast number of services like UI/UX design, web development, mobile app engineering, etc. Your company will deal with devs who are talented and highly qualified, and aware of numerous cutting-edge technologies. Every outsourcing software company is interested in providing the best services due to market competition. The customer can choose from available collaboration models, including project-based contracts, dedicated teams, and offshore software development centers. So let’s check each available collaboration model.

Project-based offshore development model

When your current project requires extra hands, or you are looking for an offshore development team to complete a certain task, a project-based collaboration model will be a great choice. Usually, it is a one-time collaboration for fulfilling outlined requirements. The option is represented by time and material and fixed-price outsourcing contracts. Time and material contract certainly defines all required services. All expenses are estimated in man-hours. That’s why any further assistance or collaboration is a matter of other contracts. A fixed-price contract is a reasonable option for per-project-oriented tasks. You pay a fixed price for the whole project, and it will not rely upon how many hours or resources the offshore software company is going to spend on it. From your side, this collaboration model requires you to be really specific and provide all detailed specifications. Applying this model to your project, you should not forget about setting the project duration period, usually no longer than a 6-month period.

Dedicated development team

Provided that the company needs to enlarge its staff through the team of remote developers who will work alongside the in-house team. The only difference here is they will be geographically located in the other part of the world. The customers prefer this collaboration model due to the talented pool of available offshore software developers, and expenses decrease as well. The providers help you both to deal with routine tasks and reach new goals while you always are managing the project and in control of the required expenses. When looking for dedicated and long-term support, the remote team will be a rewarding option for your company.

Offshore development center

In other words, this term means the branch of the company located in a different country managed by another company onsite. This model is rather popular for business startups and enterprise companies. The tasks of those centers will be quite integrated and extended. Their teams will be responsible for various and numerous important services like engineering, creation, and testing, making solutions, and managing different projects, customer, and technical support. Opening that kind of center for your company, you get access to the new skilled workforce while saving infrastructure costs and enlarging your business possibilities.

OFFSHORE SOFTWARE DEVELOPMENT ADVANTAGES AND DISADVANTAGES

Many companies find outsourcing quite necessary for running their businesses. Lately, a lot of developed countries have faced a workforce shortage. Sometimes it is hard to find qualified workers who are aware of a certain number of technologies and ready to start the project real quickly. Consequently, offshore development services have become an important part of the general work process. Let’s go through the list of advantages and disadvantages you can face.

Offshore software development advantages

• Cost cut down – It is known that you can reduce expenses by hiring remote programmers. Their salaries will be lower than the in-house developers. And at the same time, you don’t spend money on facilities, utilities, and equipment.
• Talented and skilled specialists – Different countries have a wide talent pool of professionals. They are the graduates of tech universities that constantly improve their tech skills and take part in various IT conferences and competitions.
• The balanced approach of management – The customer is in control of managing their project developers. You can always choose how many and what developers you need. However, it will not be time-consuming as the offshore software company is always there for you.
• Know-how – The majority of offshore development companies specialize in particular technologies. They keep on improving employers’ skills. Regular training and gaining new experience are held on a regular basis. As long as you look for experts, offshore programming will definitely have the payoff.

Offshore software development disadvantages

• Communication issues – Sometimes, communication may slow down due to time zone differences. Actually, it is about dealing with the issues timely, but in other cases, there are many modern ways of communication, like video calls, email correspondence, or even instant messaging. It will just require a little bit more organization and coordination
• Cultural difference – It is recommended to consider this criterion because of the cultural barriers and different work ethics. The USA, Canada, and Australia find the Eastern European mindset pretty similar, whereas some companies have failed the communication establishment in Asia and the Middle East. Eastern mindset is quite different from the European one.

OFFSHORE SOFTWARE PRODUCT DEVELOPMENT AND HOW TO DO IT RIGHT

Taking into account all the advantages of offshore development services, this kind of outsourcing is a reasonable and beneficial solution for your company. You will make your expectations real as long as you organize the cooperation in the right way. The providers are always interested in establishing professional and productive relations. The first step to fulfill is a clear definition of your final goals. Sometimes the companies forget about this step and count on others. Of course, the remote team will do their best to find a solution for you. However, proper goals notably increase productivity. Nobody knows better than you what the final result should be. Secondly, it is vital to ensure communication between the two sides. The customer should remember that concrete directions and guidance are the necessary components of collaboration. The language barrier might be a big obstacle here. When you do not communicate with your provider, your collaboration will never be as efficient as it can be. Therefore consider those offshore development companies with whom you can find a common language. Regular email correspondence, phone, and video calls enable great communication even overseas. On the one hand, some companies might believe that in-house teams deal with these tasks much better. Moreover, good communication seems to improve faster within your own company. On the other hand, the offshore software development company provides specialized expertise, while your own team can lack a certain specialist. They have gained experience and can get the project finished faster. You do not need to look for a new specialist on the team or teach your employees, especially when it is a one-time task. Certainly, you save not only time but resources you spend on reaching your goals. At the same time, you can expand your business by setting up your own team.

HOW TO CHOOSE AN OFFSHORE SOFTWARE DEVELOPMENT FIRM

For the most part, the future provider will influence your result and success. Take it seriously and consider all the details, requirements, and final goals. The main target of the provider is to fulfill projects in the most efficient way. The outsourcing market has various choices, while competition helps to improve the quality of services. Anyway, the sufficient work of the provider is equivalently supported by the customer’s abilities to set up the collaboration process. Keep in mind all mentioned above factors and use the list of required actions to facilitate your choice:

1. Know your goals – You should outline them first, and make the choice of what technologies you are interested in and what results your company expects.
2. Find the established provider – Look for an experienced offshore software development company. They should not specialize in all technologies at once; however, their developers must be professional in the chosen branch.
3. Review references – Check ranking aggregators such as Clutch.co and visit the company’s website to look at the information on the previous projects and contact the company’s representatives.
4. Choose the right offshore development model – As mentioned above, you can choose among project-based contracts, dedicated teams, and development centers. It will just depend on your requirements.
5. Protect your data – It is really necessary when the provider has access to the customers’ information. Any outsourcing contract should contain a non-disclosure agreement and regulate how the IP is managed to prevent any data leaks.
6. Ensure regular connection – Keep in touch with your provider, give guidance, and control the developing process. Communication is a fundamental element of success.

On the whole, the customers should be as well organized as their providers, share the same ideas, find a common language, and be open to collaboration. The process of its establishment will define the final results.

BEST PRACTICES FOR SUCCESSFUL OFFSHORE SOFTWARE DEVELOPMENT

Offshore software development can provide many benefits to companies, including cost savings, access to skilled labor, and expanded capacity. However, in order to ensure success, businesses have to follow some good practices, including:

• Proper planning is critical to the success of offshore software development. Before engaging an offshore development team, the client’s side should clearly define project requirements, timelines, and deliverables. It ensures that both parties are on the same page, working toward the same goals.
• Communication is key to successful offshore software development. It is important to establish clear channels of communication with their offshore development team, including regular check-ins, project updates, and status reports. Additionally, companies should encourage collaboration between their in-house and offshore development teams to ensure that everyone works together effectively.
• Cultural differences can present unique challenges in offshore software development. It’s required to make an effort to understand and respect the cultural differences of their offshore development team. This can include providing cultural training, encouraging open dialogue, and being sensitive to differences in communication styles.
• Quality assurance is critical to the success of offshore software development. It focuses on establishing clear quality assurance processes and procedures to ensure that the developed software meets its standards. This can include regular code reviews, testing, and quality control checks.

With these practices, businesses can mitigate the risks and challenges associated with offshore software development and ensure that projects are completed on time, on budget, and to their satisfaction.

CONCLUSION

The modern software market has a number of options for developing your business. Provided that you have an overview of offshore software development and its advantages, the choice is up to you. Without a doubt, it is an undeniable element of the software engineering process these days. It has revealed the newly available resources for handling the tasks in the most efficient way. You will cooperate with highly qualified and talented workers from all over the world. They are open to learning and improving their skills and full of ideas that will help your business prosper.