Offshore Software Development: Benefits, Steps, And Best Practices

Offshore software development has become popular for businesses to access top-notch talent and save costs on software development projects. With the global technology market growing at an unprecedented rate, it’s no surprise that more and more companies are turning to offshore software development to help them meet their goals. 

According to a recent report by precedenceresearch, the global IT outsourcing market reached $530.1 billion in 2021 and is projected to reach $1065.1 billion by 2030. This trend is expected to continue as more businesses seek to stay competitive in an ever-evolving digital landscape. 

In this blog, we’ll look at offshore software development and explore its benefits and challenges.

What Is Offshore Software Development?

Offshore software development is a strategy used by companies to outsource the development of software projects to a team situated in a foreign country. The primary goal is to take advantage of the cost savings and gain access to a broader range of skilled software engineers that may not be available domestically. 

In this model, a company hires a software development team to create custom applications, mobile apps, or websites. 

One example of offshore software development is a US-based company that hires a software development team from India to build a mobile app. 

The US company might choose an Indian company because the cost of hiring a team in India is lower than in the US. Additionally, India has a large pool of skilled software developers. So, the US company can access a large talent pool and select the best-suited team for the project. 

The Indian team will work on the app development project. They can communicate via video conferencing, email, or other collaboration tools with the US company. The US company may also have a project manager or liaison who is the main point of contact with the offshore team. It’ll ensure that the project is on track and meeting the required specifications. 

Once the software development company develops the app, the team may provide maintenance and support services as required. This type of arrangement can benefit the US company and the offshore team. The US company gets high-quality software development at a lower cost, while the offshore team gets access to new clients and projects.

Differences Between Offshore And Nearshore Software Development

Point of Difference	Offshore Software Development	Nearshore Software Development
Definition	The act of delegating software development to a neighboring country or geographical area.	The practice of outsourcing software development to a nearby country or region.
Geographic Proximity	The team is located far away from the company, typically in a different time zone and possibly a different continent.	The team is located closer to the company, usually in a nearby country or region with a similar time zone.
Cost	Generally lower cost than nearshore or onshore outsourcing, due to lower labor costs in the offshore country.	It can be more expensive than offshore outsourcing but less expensive than onshore outsourcing due to the closer proximity of the team.
Talent pool	Offshore outsourcing enables companies to tap into a wider range of skilled professionals, enabling them to assemble the most suitable team for their projects.	Nearshore outsourcing may have a smaller talent pool than offshore outsourcing, but it still provides access to skilled software developers.
Unique Expertise	Offshore teams may have unique expertise or specialized skills not easily found in the home country or nearshore location, which can provide a competitive advantage for the company.	Nearshore teams may have skillsets and expertise similar to those in the home country, making it easier to transfer knowledge and collaborate effectively.

Benefits Of Offshore Software Engineering

1. Cost Savings

   According to Deloitte, 70% of businesses opted for outsourcing for cost-saving purposes. 

   Outsourcing can provide cost savings in several ways, including: 

   • Lower labor costs in countries with lower wages
   • Reduced overhead costs
   • The ability to scale resources up or down more efficiently

   The savings are even greater when you factor in indirect costs, such as extra support staff, office space, real estate, etc.

2. Access to A Global Talent Pool

   Working with engineers worldwide provides access to the best and brightest minds in the field. It enables the creation of a more innovative and efficient product. Clutch reports that 18% of businesses opt for outsourcing, mainly to seek help from a specialist.

   Moreover, collaborating with a diverse team of engineers fosters learning new perspectives and problem-solving approaches. It can improve one’s development skills and help deliver work of superior quality. 

   With an offshore team, you’ll get access to this deep technical knowledge without paying top dollar for it domestically.

3. Faster Time To Market

   Offshore software development can also help companies speed up their time to market. Outsourcing software development allows companies to leverage the expertise of a team that is focused on software development. 

   A recent study has revealed that the recruitment process for tech positions takes 50% more time than for other job roles. 

   The study indicates that it takes approximately 66 days on average to identify and hire the most suitable candidate for a tech role.

   Imagine a situation where you aspire to expand your business, but a lack of the right people hinders your progress.

   For large companies, this is especially important. A large corporation might want to roll out a new feature or product. It may take months for the short-staffed development team to build it. The company would need more staff to keep up with demand.

   Going offshore can reduce development time by wasting less time on hiring. It’s also an excellent way for startups and small businesses to get their products out there and make money.

4. Increased Flexibility

   Offshore software development also provides companies with increased flexibility. 

   Offshore software development teams can work on projects when onshore teams are unavailable. It allows for 24-hour development cycles. This flexibility can speed up project timelines and enable companies to meet tight deadlines.

   Businesses can adjust the size of their development team as per their requirements. It’s helpful for those who encounter fluctuations in demand for their products or services.

5. Improved Focus On Core Business

   Offshore software engineering can improve a company’s focus on its core business. It allows you to delegate software development tasks to an external team, freeing up internal resources to focus on core competencies.

   Outsourcing software development enables you to allocate your internal resources toward their primary business functions, such as sales, marketing, and customer service.

   In the end, outsourcing can lead to increased efficiency and productivity. Internal teams can concentrate on their core responsibilities, while offshore teams handle software development tasks.

How do you choose an offshore software development partner?

Choosing the right offshore software development partner is crucial for the success of any project. Outsourcing software development can save companies time and money. However, selecting the right offshore development partner requires careful consideration of several factors. 

Here are some considerations and questions to ask when choosing an offshore software development partner: 

Considerations For Choosing The Right Offshore Development Company

1. Technical Expertise

   Seek out a partner with a documented history of delivering top-notch software that meets the required standards. It is crucial to ensure that the partner has expertise in the following areas: 

   • Programming languages (Java, Python, PHP, Ruby, and JavaScript)
   • Technology stacks (LAMP (Linux, Apache, MySQL, PHP), MEAN (MongoDB, ExpressJS, AngularJS, NodeJS), and MERN (MongoDB, ExpressJS, ReactJS, NodeJS))
   • Software development methodologies (Scrum, Kanban, and Lean)
   • Quality assurance (Manual and automated testing, security testing, performance testing, and usability testing) 
   • Cloud computing (Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP))

   
   This will ensure the software is developed using the latest technologies and compatible with your IT infrastructure. 

2. Quality of Work

   Quality is a key consideration when selecting an offshore software development partner. Look for a partner with a proven track record of delivering high-quality software that meets the required standards. Look for certifications, awards, and reviews from past clients to gauge their level of expertise and quality of work. 

3. Communication and Collaboration

   Successful offshore software development necessitates frequent communication between the development team and the client. So, search for a partner with exceptional communication abilities and a readiness to collaborate with your team. Choose a partner who can provide regular updates and progress reports and communicate in your preferred language and time zone. 

4. Cultural Fit

   Cultural fit is important in selecting an offshore software development partner. Choose a partner who shares your values, work ethic, and business culture. This ensures the team will work with your in-house team, resulting in a smooth and productive development process. 

5. Cost

   Cost is always a consideration when selecting an offshore software engineering partner. Look for a partner offering competitive pricing while maintaining quality standards. Make certain that there are no undisclosed expenses and that the pricing structure is both transparent and adaptable.

10 Questions You should ask Outsourcing providers

1. What is your experience in developing software in our industry? Do you have prior experience working with businesses like ours?
2. What is your development process, and how do you meet quality standards? 
3. Can you provide references and case studies from past clients? 
4. What are your methods and tools for communicating with clients?
5. Could you provide a breakdown of your pricing model? Are there any undisclosed expenses?
6. How do you ensure the data security and confidentiality of our project? 
7. What is your team structure, and how do you divide project resources? 
8. Do you have any certifications or awards demonstrating your software development expertise? 
9. How do you manage project changes and scope creep? Do you have a protocol for addressing project risks and problems?
10. What measures do you take to ensure the project is completed within the designated timeframe and budget?

Steps For Successful Offshore Software Development Partnership

Offshore software development partnerships can be challenging but beneficial for businesses looking to expand their technical capabilities and reduce costs. Here are some steps for successful offshore software development partnerships: 

1. Define Your Goals And Requirements

   The first step in finding a software engineering partner is to define your goals and requirements. You need to understand the following: 

   • What is the purpose of this project? 
   • What do you expect from it? 
   • What is the timeline? 
   • What are the technical requirements?

   Write down all your thoughts, ideas, and questions. This will help you better understand what kind of software development partner you need, what they can offer, and how much it costs. This will ensure that both parties understand the project’s scope, timeline, and deliverables. 

2. Choose The Right Offshore Development Partner

   After you have defined your goals and requirements, it’s time to choose the right offshore software engineering partner. This can be done by analyzing their portfolio, previous projects, and references. Also, consider factors such as communication skills, time zone compatibility, and cultural fit. 

   A good partner will be able to show you their previous work so that you can see what kind of quality and style they deliver. 

3. Establish Communication Channels

   Communication is key when working with an offshore team because it allows both parties to: 

   • Share ideas
   • Ask questions
   • Make changes as needed without having to wait for each other’s response.
     
     

   Thus, it’s important that both parties feel comfortable communicating with each other throughout the entire project. It helps overcome any challenges together. This should include regular check-ins, video calls, and email correspondence. 

4. Set Expectations For Quality

   Establishing clear expectations early in the process will help ensure that both sides are on the same page in terms of quality. If you want high-quality code, be clear with your offshore partner about the level of quality you expect. 

   Include testing and quality assurance processes in your expectations to ensure that the software meets your standards. This can assist in avoiding misinterpretations later in the project.

5. Establish Project Management Processes

   Project management is critical for offshore software development. The software development team needs to be transparent about their progress, and the project manager should be able to keep track of all deliverables.

   With a well-defined process, you can track your progress and communicate with the development team anytime. 

   Using a bug-tracking system, you can also ensure the developers are on track and meeting deadlines. This will help you identify bugs early in the process so that they can be fixed before they affect user experience or functionality.

   For example, if you are looking for a full-stack developer who can handle everything from UI design to back-end programming, having someone with experience in both areas would be beneficial. This way, if there is a problem with one aspect of the application, you know exactly who to go to for help.

6. Ensure Data Security

    You must send all your code, documents, and other confidential information to the partner company. So, you must ensure that they’ll keep it confidential.

   Your offshore software engineering partner must have robust data security measures to protect your intellectual property and sensitive data. 

   All communication channels should be encrypted with secure protocols like HTTPS, SSH, and SFTP. This will prevent unauthorized access to shared data between your team and your partner’s team. 

   To ensure data security, you must set up secure access points and monitor their use closely. You must also ensure that your employees and partners understand the importance of encryption and other security measures.

7. Embrace Cultural Differences

   When working with an offshore developer, it’s important to understand that they might have different work ethics and communication styles than your team. This means you must be patient and flexible when dealing with them.

   You want to ensure your partner understands what is important to you and offers solutions that fit your business culture.

   So, how would you create to ensure you embrace cultural differences?

   • Be flexible with work hours to accommodate time zone differences 
   • Understanding cultural nuances in communication 
   • Respect different ways of working
   • Emphasize diversity and inclusiveness
     
     

8. Foster A Collaborative Environment

   Foster a collaborative environment where both parties feel comfortable sharing ideas, asking questions, and providing feedback. 

   You should understand what the vendor will and won’t do, as well as how they’ll work on your behalf. Likewise, the vendor should know what they’re expected to deliver and when they should expect feedback or updates from their client.

   But, it can be difficult for them to collaborate without proper communication tools and processes.

   It is advisable to establish explicit guidelines for how your engineers should communicate with each other. It’ll help them work together. Ultimately, this leads to better outcomes and a stronger working relationship. 

   By following these steps, you can establish a successful offshore software Development partnership that can benefit your business for years.

Best Practices For Offshore Software Development

1. Agile Methodology

   Consider using an agile methodology for software development. Agile methodologies promote flexibility, collaboration, and iterative development, which are essential for successful offshore software engineering.

   The Agile manifesto describes the values that guide agile projects:

   • Individuals and interactions over processes and tools;
   • Working software over comprehensive documentation
   • Customer collaboration over contract negotiation;
   • Responding to change over following a plan.
     
     

2. Cultural Differences

   Culture is not about language and food. Culture is about how people think, behave, and communicate. When you hire people from another country, you will work with them daily. You need to know what their expectations are and what motivates them. 

   Be mindful of the cultural variations that might impact communication and collaboration. Invest time in learning about the cultural practices of the offshore team to establish a mutual understanding.

3. Risk Management

   Incorporating risk management is a crucial aspect of every software development process. It has two essential components:

   • Identifying and assessing risks – This involves identifying the problems that could happen. You must consider the likelihood of problems occurring and evaluate how bad they would be if they did occur.
     
     
   • Managing risks – This involves developing strategies for dealing with those problems when you can’t avoid them. Also, you need to make sure that your team knows what to do in case the worst happens.

Choose SolGuruz As Your Offshore Software Development Partner

SolGuruz is the best offshore software development partner that offers a wide range of services in software development. We specialize in providing offshore software development solutions to businesses that need to outsource their development needs. 

One of the main advantages of working with SolGuruz is their ability to provide high-quality services at a lower cost. By partnering with us, businesses can take advantage of their skilled workforce and benefit from reduced development costs. This makes it an ideal choice for businesses that want to reduce their development expenses without sacrificing quality. 

SolGuruz has a team of experienced developers who have worked on various projects. We have expertise in handling projects of different sizes and complexities, from simple web applications to large-scale enterprise systems. 

SolGuruz offers a complete package for offshore software development needs, with a skilled workforce, cost-effective solutions, and expertise in various programming languages and technologies. 

Wrapping Up:

Offshore software development has become a popular and viable option for businesses seeking to develop high-quality software at a lower cost. It allows companies to leverage the expertise and resources of offshore development teams, often located in countries with lower labor costs, to create innovative solutions for their customers. 

However, there are also some obvious challenges associated with offshore software development. Effective project management, communication techniques, and collaboration tools can surmount these obstacles.

Overall, offshore software development can benefit businesses, including reduced costs, access to global talent pools, and faster time-to-market. With meticulous planning and execution, it can become a potent tool for enterprises striving to maintain their competitive edge in today’s rapidly evolving digital landscape.

FAQs

What is offshore software?

Offshore software refers to software developed by a team located in a different country than the client's location. This is often done for lower costs and access to pools of specialized talent.

Is offshore software engineering beneficial for an organization?

Offshore software development can benefit organizations as it offers cost savings, access to specialized talent, and can help speed up the development process. Nonetheless, it can also pose difficulties like differences in culture, language barriers, and disparities in time zones.

How do I choose an offshore software company?

When choosing an offshore software company, it's essential to consider factors such as experience, expertise, quality, communication, and cultural fit. It's important to research potential partners thoroughly, check their references and portfolios, and communicate your needs and expectations. Having regular meetings can help build trust and establish a good working relationship.

Why do companies offshore?

Companies offshore for various reasons, including cost savings, access to specialized talent, and the ability to scale their teams quickly. Offshoring permits companies to concentrate on their core competencies while outsourcing non-core duties to specialized providers. This enables them to allocate resources more efficiently and stay competitive in a global market.

How do I choose the right offshore software development partner for my business?

Choosing the right offshore software development partner for your business involves evaluating their experience, expertise, communication skills, and cultural fit. You should also consider factors such as their development processes, project management methodology, and the technologies they use. Establishing clear communication channels, setting expectations, and maintaining regular contact can help ensure a successful partnership.

What is the cost of offshore software development, and how does it compare to nearshore and onshore development?

The cost of offshore software development varies depending on the location, with rates ranging from $25 to $80 per hour. Nearshore development costs more, with rates ranging from $40 to $150 per hour or even more, while onshore development is the most expensive, with rates ranging from $75 to $250 per hour.

How do offshore software development teams ensure effective communication and collaboration with clients in different time zones and locations?

Offshore software development teams may use collaboration tools to establish unambiguous communication channels and establish expectations for frequent communication. Project management methodologies such as Agile can also facilitate effective communication and collaboration.

What are some of the challenges and risks associated with offshore software development, and how can they be mitigated?

Some challenges and risks associated with offshore software development include language barriers, cultural differences, time zone differences, and data security risks. These risks can be mitigated by choosing a reputable offshore software partner, establishing clear communication and expectations, and ensuring proper security protocols are in place. Having face-to-face meetings can also help build trust and mitigate risks.