Offshore Software Development: Global Solution for Success

Hive team posted on December 12, 2023

The global managed services market, valued at $275.5 billion in 2023, is anticipated to surpass $372.6 billion by 2028, underscoring the increasing demand for offshore software development in the foreseeable future. However, against the backdrop of the ongoing economic recession, businesses find themselves dealing with a growing number of challenges and risks. Faced with such circumstances, business leaders are compelled to strategize around cost mitigation and prioritize profitability, prompting a reliance on offshore software development as a viable solution.

For businesses trying to prepare for the uncertainties of 2024, offshore software development emerges as a promising avenue to persevere and advance their business endeavors despite the economic fluctuations. In this article we are going to provide insights into offshore software development, exploring its merits and drawbacks, and identifying key strategies for choosing an offshore software development company.

Table of Content

• What is Offshore Software Development?
• When to Hire Offshore Developers
• The Difference Between Onshore, Nearshore, and Offshore Software Development
• How to Choose an Offshore Software Outsourcing Company
• How To Find an Offshore Software Development Team in 6 Steps
• FAQ
• Offshore Software Development with Hive

What is Offshore Software Development?

Offshore software development involves outsourcing some or all of a company's software development tasks to developers situated in a different country, typically a geographically distant one. In this process, companies may engage individual freelance developers or enlist the services of an entire development team through a dedicated company.

Offshore software development entities typically boast teams comprising software engineers and developers capable of functioning as an extension of a business. Whether for a specific project or as a lasting partnership, offshore software development offers an efficient means of rapidly scaling operations without the necessity of recruiting and training in-house employees.

Benefits of offshore software development

The choice between in-house software development and engaging an offshore development partner can be a tough decision for any business. However, the compelling benefits make offshoring mobile app development an enticing business proposition. Let us look at some of the most important benefits of offshore partnerships.

1. Cost savings

Hiring and maintaining an in-house IT team proficient in the latest technologies, like Flutter or .Net development, is both challenging and expensive. Opting for offshore software development eliminates the need for investing in IT infrastructure and the time-consuming processes of recruiting, hiring, and training employees.

2. Access to a diverse talent pool

Offshore web development provides access to a vast reservoir of skilled and experienced software engineers well-versed in developing software applications that meet the highest standards. The offshore partner's prior involvement in international custom software development projects for diverse clients equips them with an understanding of the associated challenges. That is why it is recommended to select a partner who has sufficient experience, but more on that later.

3. Accelerated time-to-market

Dedicating specialized teams to each project ensures the presence of qualified professionals working to deliver high-quality software at all times. This not only expedites project completion but also ensures a quicker market entry for your product. Additionally, an external team can contribute fresh ideas, enhancing your business processes and allowing you to harness innovation and creativity throughout the software development lifecycle.

4. Increased focus on core business activities

Offshore software development frees up your time and resources from the intricate and time-consuming aspects of software development, enabling a heightened focus on core business strategies. This approach empowers your organization to concentrate on fundamental practices without the added burden of overseeing a software development department.

5. Facilitating business growth

Offshore software development extends the same access to a skilled workforce to companies of all sizes, reducing costs and development timelines. Freed-up time and resources can be strategically used to leverage core strengths and operations, fostering sustained business growth.

Risks of offshore software development

Naturally, a partnership with an offshore software development company is not a silver bullet and there are certain risks a business should consider before signing up for such a model of outsourcing. Here are some of the potential disadvantages of offshore software development and the measures a business can take to mitigate those risks:

• Communication challenges

  One of the significant risks associated with offshore software development stems from communication barriers. Differences in language, time zones, and cultural nuances can contribute to misunderstandings and miscommunications, potentially resulting in delays, rework, or even project failure.

  Solution: Set up clear communication channels from the start, including regular status updates, project management tools, and video conferencing. Foster open and transparent communication between your in-house team and the offshore development teams, quickly addressing any issues or concerns. Consider investing in language or cultural awareness training to bridge communication gaps effectively. However, as a rule of thumb, most offshore software developers have a decent command of English, even though their level of language proficiency may vary depending on the country.

• Quality concerns

  Quality issues pose another risk in offshore software development. Without robust quality control measures, the final product may not align with your requirements, leading to costly rework, delays, and reputational losses.

  Solution: Prioritize quality assurance throughout the development process. Ensure your development team adheres to a rigorous testing and quality assurance process to guarantee the final product meets your specifications. Promote early and frequent testing, addressing any issues immediately. Consider investing in third-party testing or quality control services for an additional layer of confidence.

• Data security challenges

  Data security concerns represent a potential risk in offshore software development, particularly if sensitive or confidential information is involved. The remote nature of the development team may heighten the risk of data breaches or security vulnerabilities.

  Solution: Implement stringent data security protocols from the outset. Ensure your development team follows industry-standard security practices such as encryption, firewalls, and access controls. Restrict access to sensitive information and implement robust data protection policies. Consider third-party security audits or penetration testing to identify and address potential vulnerabilities.

• Intellectual property risks

  Intellectual property risks are another consideration in offshore software development. Without proper legal safeguards, there may be a risk of intellectual property theft or infringement, leading to severe financial and legal consequences.

  Solution: Establish robust legal protections from the beginning. Collaborate with a qualified legal professional to create contracts and agreements safeguarding your intellectual property rights, including copyrights, trademarks, and patents. Utilize non-disclosure agreements (NDA) or other legal instruments to protect confidential information. Implement strict access controls and monitoring procedures to prevent unauthorized use of intellectual property.

• Time and cost overruns

  Software development projects are susceptible to time and cost overruns without adequate project management and oversight. Without proper monitoring, the project may exceed its timeline or budget, resulting in frustration, delays, and potential project failure.

  Solution: Implement rigorous project management and oversight procedures. Clearly define project milestones and deadlines, regularly track progress to ensure adherence to the timeline, and establish a robust change management process to manage unexpected changes. Consider utilizing agile development methodologies for flexibility, collaboration, and continuous improvement. Engage an experienced project manager with a proven track record of delivering projects on time and within budget.

When to Hire Offshore Developers

Determining the suitable moment to engage an offshore software development company depends upon the unique needs of a particular business. Some businesses, especially those with sufficient in-house talent might not even need offshore web development services. Other businesses would rely heavily on offshore partnerships. Let us take a quick look at some of the basic prerequisites for hiring an external team.

• Your projects require specialized expertise not available in-house.
• Your team is in dire need of swift expansion of its technical capabilities.
• You aim to incorporate new features into your software without interrupting the ongoing tasks of your in-house developers.
• Your budget constraints necessitate a cost-effective solution, prompting the consideration of hiring teams from regions like Eastern Europe, where high-quality resources are accessible at a lower cost.

Let’s say you do not find those reasons relevant specifically to your business. What are the other types of software outsourcing and what can they offer that might suit your situation? Other types of outsourcing might suit your needs.

The Difference Between Onshore, Nearshore, and Offshore Software Development

Nearshore, onshore, and offshore development represent three distinct strategies for outsourcing software development tasks. Each approach comes with its set of advantages and challenges, with the selection depending on factors like project specifications, cost optimization needs, cultural alignment, and legal considerations.

• Project requirements: Examine the required level of communication and collaboration. If real-time interaction holds significant importance, onshore or nearshore development might be more appropriate. The alignment in time zones and the ease of travel can facilitate prompt communication and closer collaboration.
• Cost: Evaluate the potential cost advantages of offshore development in comparison to onshore or nearshore options. Consider the lower labor costs but also weigh them against potential challenges such as time zone differences and language barriers.
• Cultural compatibility: Assess the cultural affinity of the potential development location. A shared culture can foster better understanding and alignment, positively impacting collaboration.
• Language proficiency: Take into account the language proficiency of the potential development location. Effective communication is paramount for successful outsourcing, and language proficiency is a crucial factor.
• Legal environment: Evaluate the legal environment of the potential development location. Adherence to local regulations and standards may be more straightforward in onshore locations, while offshore locations may necessitate additional due diligence to ensure compliance.

Gaining insight into the disparities among nearshore, onshore, and offshore development empowers businesses to make well-informed decisions and pinpoint the most fitting development location for their projects. Whichever option you pick, you need to conduct thorough research first and identify all the pros and cons of each strategy. Once you do, there remains a question of how to choose an offshore software development company you can trust with your project.

How to Choose an Offshore Software Outsourcing Company

Finding a suitable partner for your software development project might be challenging, yet it is absolutely critical to pay due attention to that matter. Consider these four essential criteria that every potential partner should meet to be a trustworthy partner for your project.

A large tech talent pool

The primary reason for companies to choose offshore mobile app development often stems from the scarcity of tech talent in their region, which is especially relevant for tech leaders in US, European, or Australia-based organizations. The tech talent shortage and the need to augment talent in Western countries prompts businesses to seek collaborations with offshore partners boasting access to extensive pools of highly skilled professionals globally. When selecting an offshore software development company, assess the size and origin of the company's talent pool.

Seamless flexibility and scalability

Forming a lasting partnership with an offshore software development company entails prioritizing future goals, particularly when integrating a dedicated development team that can be scaled up as needed. Given that offshore contracts often span multiple years, your partner must understand your immediate and future business requirements over extended periods. Ensure that your partner adheres to standards of agility and adaptability.

Robust data security

Privacy and security concerns are common among tech leaders considering offshore collaborations. Entrusting a team located thousands of kilometers away with sensitive data necessitates strict adherence to the latest policies and procedures governing data management. For instance, a company accredited with ISO/IEC 27001 certification signifies a robust information security management system following global best practices.

Rigorous quality assurance

Prioritizing quality assurance in an offshore software development partner entails having an engineering team capable of effectively addressing communication challenges and technical issues. This involves establishing efficient procedures for monitoring and resolving bugs, as well as scheduling regular detailed performance reports. Such practices ensure a smoother development process, swift issue resolution, and the delivery of higher-quality software.

How To Find an Offshore Software Development Team in 6 Steps

Finding a reliable offshore software development company can be a complex endeavor, but with the right groundwork, it becomes a manageable process. It is recommended to employ a structured approach that takes all of your business needs into consideration and focuses on the continuity of processes. Here's a comprehensive guide on what steps to take:

Define your goals

Before reaching out to potential offshore software development companies, a precise understanding of your needs and goals is essential. Are you seeking an outsourced team to construct an app from the ground up? Or perhaps you need assistance in enhancing the UX of an existing application? Clearly outlining your requirements ensures a more targeted search for a suitable partner.

Choose the right partner

Identifying a potential partner with the right experience, skill sets, and capacity to handle your project is the next step. Equally important is ensuring the vendor comprehends your business, aligning their efforts with your goals during the software development process. To select the best offshore software development partner, consider:

• Checking the company’s profiles on ranking websites such as Clutch.
• Reviewing client testimonials.
• Examining their portfolio and expertise.

For instance, Hive, a professional offshore software development company, specializes in various domains such as Fintech, Retail, Healthcare, and more with a strong portfolio of case studies spanning technology solutions across numerous domains. The focus is on delivering business value and addressing user needs while continuously evolving and suggesting improvements.

Choose a suitable cooperation model

Most offshore software developers offer different collaboration options:

• Time and material: Offers flexibility for projects with changing requirements.
• Fixed price: Suited for short-term projects with clearly defined requirements.
• Dedicated team: Provides stability and control, ideal for long-term projects

Each model has its pros and cons, and choosing the right one depends on the nature and scope of your project.

Set up effective communication

Effective communication is pivotal for seamless collaboration. Utilizing tools such as Slack, Jira, Zoom, Figma, and other productivity apps facilitates close collaboration between your team and the offshore developers. At Hive, these tools are integral to ensure efficient and transparent communication.

Provide feedback and be a team

Regular check-ins and progress reports are essential to keep the outsourced developers on track. Analyze their progress, ensure alignment with your objectives, and provide actionable feedback when necessary. The key to successful offshoring lies in fostering a collaborative and teamwork-oriented relationship between your team and the outsourced developers. Working in sync, and treating them as an integral part of your team, ensures a cohesive and productive partnership.

FAQ

How to manage your offshore developers?

Manage your offshore developers by establishing clear communication channels, utilizing collaboration tools, and fostering a collaborative team culture. Regularly check in on progress, provide feedback, and ensure alignment with project goals to ensure successful collaboration.

Who should hire offshore developers?

Companies facing a shortage of local tech talent, seeking cost-effective solutions, or aiming to scale their development capabilities quickly should consider hiring offshore developers. Offshore development is beneficial for businesses of various sizes and industries looking to leverage global talent and reduce costs.

Is offshore software development the right move for your company?

Offshore web development is a suitable option for companies looking to access a broader talent pool, reduce development costs, and scale their projects efficiently. However, it requires careful consideration of factors such as project complexity, communication needs, and cultural compatibility to determine if it aligns with your company's goals and requirements.

How much does offshore software development cost?

The cost of offshore software development varies based on factors such as the complexity of the project, the location of the offshore team, and the skill level required. On average, offshore development can be more cost-effective than in-house development, with rates often lower in regions like Eastern Europe.

Offshore Software Development with Hive

Working with an offshore software development company stands as a viable and advantageous option for businesses aiming for operational efficiency, cost reduction, and access to specialized skills. However, the success of offshoring requires meticulous attention to selecting the right offshore partner, maintaining effective communication, proper project management, and risk mitigation. With a profound understanding of the intricacies of software development offshoring, Hive is a reliable technology partner capable of delivering value to your business in diverse scenarios. Supported by extensive technical knowledge, a flexible approach, and a strong commitment to our clients, the Hive team ensures top-tier development quality, resulting in outstanding product quality and a positive impact on business.

By adhering to the recommended best practices outlined in this guide, companies can navigate the offshoring journey and achieve their desired outcomes. Ultimately, offshoring software development serves as a powerful tool for organizations to uphold competitiveness and foster innovation while staying cost-efficient and flexible.