Offshore Software Development: Worth It Or Not?
IT outsourcing is all about choosing a mature service provider that will meet your market needs. Then, here comes the moving question – “How to offshore software development right?” or “Which vendor should I outsource my development project to?”. Luckily, there are tested and proven benchmarks for finding a decent IT provider that we will share with you in this series of articles.
Contents:
What is offshore software development?
Nearshore, Offshore & Onshore software development: what’s the difference?
Pros of working with an offshore development team
Risks you may face while outsourcing offshore software development services
How to avoid failure while outsourcing offshore software development?
What is offshore software development?
Put simply, offshore software development is outsourcing tasks to a third-party software company or developer(s) that are located in a foreign country. Services alike typically include web development, mobile application development, UI/UX design, software QA, etc.
If you aim to entrust the entire project to a third-party, it is reasonable to look for a full-cycle software development company rather than a freelancer. Why? A freelancer may be highly qualified in one or a few areas, though if your goal is to create a web/mobile application, you would definitely need an experienced software developer, QA engineer, UI/UX designer, and a product manager (at best).
Nevertheless, an offshore software outsourcing can be done in different ways:
- To an individual freelancer that performs specific tasks in your project;
- To an offshore development firm or an agency that partly covers your software project;
- To a dedicated team of developers that is fully responsible for creating, testing, launching, and managing your product.
In our guide, we are focusing on outsourcing software projects to a software development company with full responsibilities to your end product.
Nearshore, Offshore & Onshore software development: what’s the difference?
Before we get to the best practices of offshore software development, it’s good to define the difference between the nearshore, offshore and onshore outsourcing.
And while you might be dreaming about shores and beaches, there is an actual meaning of each of these terms. To save you some clicks and time to ‘google’, we will explain this difference below.
In essence, the word ‘shore’ relates to outsourcing services from abroad. From a geographical standpoint, outsourcing can be made by onshore, nearshore and offshore services.
Onshore software outsourcing
Source: Synergy Way ©
If a company hires a software development firm that is placed in its own country, it is called an onshore software development outsourcing. Essentially, it’s the “closest to office” option, which means you will speak the same language and have no time zones and cultural differences.
Well, comfortable, but costly.
Whilst nearshore and offshore outsourcing rates are lower, onshore software development will have an eye-watering price tag.
Nearshore software outsourcing
Source: Synergy Way ©
Nearshore outsourcing is characterized by a similar time zone. Hence, nearshore software development vendors are chosen from nearby countries with similar time zones or ones with minimal differences.
The main advantage of nearshore cooperation is cultural likeness and geographic proximity.
Particularly, EU countries have a blossoming nearshore choice among countries like Ukraine, Poland, Belarus, etc. Meanwhile, the US companies working with IT providers from Mexico will call it nearshore, yet – offshore in the case of any other Latin American country.
Offshore software outsourcing
Source: Synergy Way ©
Offshore software development determines that the IT providers’ company is located in a foreign country, in a different time zone, away from the customer’s country and performs the work remotely or virtually.
Therefore, this collaborative model mostly depends on the location of companies you are partnering with. Although companies might face a notable time zone difference, nowadays, with communication platforms and technology growth, businesses receive a lot of solutions and tools to manage the remote work. Numerous US and EU companies successfully cooperate with providers from all over the world.
Offshore software development market offers the cheapest rates per hour (2-3 times less than the onshore software development companies), hence making this cooperation model more affordable than onshore/nearshore.
Pros of working with an offshore development team
Yet the decision to work with an in-house software development team or to hire an offshore partner is not easy, you may want to consider all the pros and cons of offshoring software development. What’s so attractive about this business model?
The benefits of working with an offshore team aren’t just cost-saving…
1. Offshore software development services are commonly faster and more efficient if hiring a team. Instead of auditing every applicant, negotiating terms and rates, you are handling the entire project with a company’s manager. With a dedicated team, you will have qualified people working round-the-clock to deliver a high-quality product. As soon as you get the work done faster, you can hit the market sooner!
2. Faster time-to-market. The offshore business model is often stable and reliable if you choose the right partner (patience, we’ll guide you on how to find an IT vendor a little later). A stacked and experienced team for the full life-cycle of your project nearly means completing a project on time. Instead of dealing with multiple employees, you won’t be involved in the internal operations, managing teams, looking for talents.
3. It is cost-effective. Software development agencies located in the countries of Western Europe or the USA charge a few times higher fees than offshore countries like Ukraine, Belarus, and Poland.
Source: Synergy Way ©
4. The operation costs are lower. You don’t need to provide the equipment (laptops, PCs, etc.) as well as to pay the expenses for the working space.
5. The workforce quality is on the same level as with the in-house team. Eastern European countries are a pool of talented IT folks at a reasonable price.
6. Scalability – it’s easy to scale up and down. Software development is sometimes very hectic – you may need many people to get things done during a busy time, yet only a few employees (limited resources) during some of the development/testing phases. That’s the right time to scale down your workforce and then get people working on your project back when needed without spending days out of your busy schedule for interviewing and hiring new staff.
7. More time to focus on other vital business activities. Instead of worrying about management and human resources (which is quite time-consuming), entrepreneurs have more time to focus on the business and go-to-market strategy. Freeing up time allows business owners to strengthen power in investments and work towards sustainable business growth.
Let’s go through the list of risks you may also face while hiring an offshore software outsourcing company.
Risks you may face while outsourcing offshore software development services
Taking into account all the benefits of offshore development services, this cooperation model seems a reasonable and beneficial solution for any kind of business. Though, there are certain risks you should be aware of before delegating your project to an offshore team.
1. Communication may have certain issues. As mentioned, due to the working hours and time zone differences, your communication level may slow down. When you work with colleagues sitting next to you, it’s much easier to resolve the constantly popping up tasks and issues.
The slowliest scenario that can happen is when your offshore programmers are waiting with questions and the development process stops for that reason. To avoid issues alike, set up a definite calls/chats working schedule and review the process constantly.
2. Cultural differences and gaps. Traditions, work ethics, and habits may differ from country to country. What’s offensive in America would never be admitted at Eastern European countries. This may lead to undesirable situations, so from a cultural standpoint, you should be very attentive and careful to each other with the vendor. Mutual understanding (along with language barriers) and business ethics play an essential role in business relationships.
3. Risk of bad quality work. Incompetence leads to dramatic outsourcing failures. Don’t neglect to look for a potential partner’s portfolio. If your focus lays only at the cost reduction, there’s quite a big chance of hiring a team with no skills or proper attitude to work.
5. Missed deadlines. The main reasons for missed deadlines are overestimated timelines (when inexperienced software consulting companies try to impress you with super short deadlines) and poor project management methodology.
How to avoid failure at offshore software development outsourcing?
To prevent any of these scenarios don’t fall into unrealistic short deadlines. When several offshore software development companies estimate to complete your project in one year, and one in 5-6 months – the probability not to get it complete with the last vendor even in 2 years is really high.
Study reviews and request your potential vendor to complete a test task. Due to the negative reviews (if there are any) you will get an insight into the basic issues you risk to run with the potential IT partner. Meanwhile, a trial run will let you evaluate the project management methodology, business ethics, and attitude, as well as the level of offshore developers’ proficiency.
Study the marketplace and the industry you are particularly working with, learn about competition and technologies that are being used for software alike.
Feel free to ask as many questions as you have about the technology stack, project management tools, and cooperation/communication methods. Include information about risk assessment and missed deadlines penalties into the contract with your IT vendor.
Look for the IT vendor that shares your business values. Ukraine’s software outsourcing companies feature similar levels of expertise as e.g. Indian or Mexican developers, nonetheless, value Western business relationships.
Have a project in mind? Contact us to get a free software development estimation.
Despite the fact that hiring an offshore team might seem challenging when you are armed with risks and benefits involved finding a good IT partner is not that hard. Want to learn how to offshore software development right? Stay tuned to read our new article about the Best offshore software development practices to apply for a successful collaboration.
