Offshore software development outsourcing is a form of authorization in which you hire a foreign company for your software development projects. These offshore companies provide high-quality custom software development services at a lower cost.
In this article, we will cover what outsourcing software development offshore is and how it can benefit your company. We will also tell you how to choose the right offshore outsourcing partner and give you some simple tips to help you.
This article contains:
- What is offshore outsourcing software development?
- 8 main benefits of outsourcing software development abroad
- How to choose an offshore software development outsourcing company
- 5 simple tips to get the most out of your foreign team
What is outsourcing software development abroad?
Outsourcing software development offshore is hiring a development company in another country to handle your software development needs.
But before we get into that, let’s briefly discuss three different outsourcing models:
- Onshore outsourcing : hire a company in your country or region.
- Nearshore software outsourcing: hiring a software company in a nearby area, often in the same time zone.
- Offshore outsourcing: hiring a company in a remote country, usually in a different time zone.
Some companies may use a combination of all three software development outsourcing models based on their needs.
In offshore software development outsourcing, you hire a foreign company for the entire development process or specific tasks like testing and maintenance. For example, if your company is in the US, you can hire an Indian company to develop the software.
But why are companies involved in outsourcing offshore?
8 main benefits of outsourcing software development abroad
Here are eight reasons why companies outsource their software development tasks to offshore entities:
1. Low development cost
Deloitte ‘s 2020 Global Outsourcing Survey , 70% of respondents cited cost reduction as the primary reason for outsourcing.
Lower outsourcing costs are tied to the location chosen for your offshore development company.
The cost of living in the most popular outsourcing locations is significantly lower than in Western Europe or the United States. For example, the cost of living in London is about 82% higher than in Ho Chi Minh, Vietnam.
If your London-based company is moving its IT development to Ho Chi Minh, your Vietnam developer will likely charge $25 an hour. On the other hand, a UK developer can charge $50-60 per hour at a similar rate.
2. Access to top IT talent
IT talent is one of the most valuable and sought-after resources in the world. As such, you may notice a lack of expertise in a development service near you.
If you want to invest in bold ideas and new technologies, then hiring skilled developers from around the world is a step in the right direction. You can hire developers with the high education, talent and experience needed to thrive in this competitive industry.
Additionally, companies often look to outsource their software needs due to availability.
For example, Vietnamese universities produce about hundreds of thousands of graduate engineers each year. This means high availability of skilled software developers for companies.
3. Opportunity to expand business scale
Retaining existing employees, training new employees, strengthening customer relationships are essential aspects of growing your core business. However, when you’re worried about your software development, these things can take a backseat.
By outsourcing these software requirements to another company, you are sharing the workload. This allows your offshore development team to focus on software while you focus on scaling your organization.
Another advantage of outsourcing software development is exposure to the global market. Your offshore software development team can help you understand changing trends and risks that you may not be aware of.
They can even point you in the right direction for other outsourcing locations, allowing you to expand quickly and sustainably.
4. Faster delivery
The IT industry is constantly innovating at breakneck speed. By the time you’ve become familiar with a product or technique, it may be outdated.
In such a time-sensitive market, you have to get your product to market before your competitors. And hiring a team that focuses exclusively on your software development can help.
Based on their location, your offshore development team can continue working when you leave.
For example, a US-based company with overseas Vietnamese team can maintain a 24-hour workflow due to time zone difference. The offshore team works during the day while the offshore team works at night.
This ongoing workflow and expertise keeps your internal team on their toes, leading to increased overall productivity.
5. High quality products
Foreign software companies are well versed in every aspect of their expertise and stay up to date with all developments. These skilled developers understand that their knowledge and experience sets them apart from dozens of other candidates.
Additionally, foreign companies understand that their future projects depend on meeting every customer’s needs and delivering on time. So the results you get are of high quality and meet international standards.
6. Reduce personnel costs
Hiring a software developer is a time consuming process.
Let’s say you managed to hire a team in record time. There are still training costs, paying for resources like new hardware and software tools, and keeping the internal team running during lulls.
On the other hand, you outsource to an offshore company and you have an entire dedicated team of experienced offshore software developers at your fingertips.
You don’t have to spend valuable resources on recruiting and managing people. Foreign suppliers will take care of all procedures.
7. Solve complex projects
An offshore software development team specializes in different fields and will develop high-quality products that can evolve with the times and are resilient to security risks.
However, you will need to do your research and determine your needs.
Some of the most popular offshore software development services are:
- Ancillary development.
- Mobile application development.
- Web development.
- Blockchain development.
- AI development and integration.
- Develop and maintain e-commerce.
- Data security service.
8. Terminal Services
When you launch a cutting-edge software product, you’re bound to encounter some problems — no matter how close the developer is to you.
Continuous maintenance, debugging, integration, and upgrades are an integral part of technological advancement. With a team of full-time offshore experts, you receive top-notch software development services around the clock to help you compete in this market.
These quick and effective problem-solving abilities not only keep you in the game, but also create a loyal consumer base that trusts your products.
If you believe an offshore software development team is exactly what your business needs, let’s see how you can choose one:
1. Define your goals
Before considering outsourcing any part of the development process, you need to have a clear idea of your company’s overall needs and goals.
Remember, your remote team will look to you for guidance.
It won’t help your collaboration if you’re uncertain about the details of the software project and your expectations from your external development team.
Make a decision about which aspect of your business you want to outsource. Also, ask yourself questions like:
- What is the end goal?
- What are your requirements during development?
- What are your time constraints?
- How will you collaborate with your foreign supplier?
2. Set a budget
After deciding what your expectations are, you can allocate a budget for the software development process.
Your budget will depend on factors such as:
- Location of foreign software development company.
- Software project complexity.
- Previous remote team experience.
- Product development team size.
- Estimated time to market.
- Existing software engineering capital.
This budget should also consider the investment you can make over the entire development process, the return you expect, and how willing you are to adjust your budget for additional outsourcing costs.
This is an important step, as your budget will often determine where you decide to move your software development project abroad.
3. Find out available locations
Depending on where you choose to outsource, you can cut the cost of your software development project by a reasonable fraction.
Many factors can play a role in this decision:
- Total software outsourcing costs.
- Experience of overseas development center.
- Time and culture differences between local and foreign developer offices.
- English skills of the software development team.
- Diversify the investment portfolio of the overseas development center.
For example, Vietnam offers some of the best value for money offshore software development services in the world. But if you live in the UK and the time difference is too much for you, you can choose to outsource to Eastern European countries like Ukraine, Poland, Belarus or Romania.
Each location comes with its own risks and benefits. Your research and requirements will help you decide which to shortlist.
4. Work hard
Due diligence is a basic requirement.
In the case of outsourcing software development, this includes:
- Research established suppliers.
- Review references and testimonials.
- Talk to your offshore development center about their portfolio.
- Consider the software development company’s range of knowledge, skills, and expertise.
- Review the outsourcing company’s and country’s privacy policies.
After all this, you have finally decided on the location and outsourcing company that best suits your needs.
Let’s explore how you can make sure everything goes smoothly and according to your expectations.
1. Communication is key
For a remote team, progress reports and regular communication can help you keep track of how things are progressing.
You can do this through Google Meet, Skype, Zoom, Slack, regular email updates, etc. This will help you get established and work towards cultivating long-term relationships with foreign developers for future projects.
The more you communicate about the company’s future path and direction, the more likely it is that the offshore team will work with you rather than for you.
2. Maintain proper documentation
A streamlined contract keeps both you and your offshore development company accountable and responsible for decisions and processes throughout the entire project.
Ensure that all details of the software development project, deadlines, payment structure, and project specifications are clearly outlined in the contract.
Documents also provide a layer of security for your collaboration.
Protect yourself from intellectual property theft by getting your outsourced partner to sign an NDA (Non-Disclosure Agreement) as soon as possible.
3. Treat your Offshore Team like your Internal Team
You may never meet your foreign development team in person, but they are still your staff and colleagues.
When you treat team members abroad with respect, you’ll get the same in return. This is especially important if there are cultural differences, as misunderstandings can often arise due to cultural and language barriers.
In these situations, it’s best to have something in common that you can default to. This common ground will also go far in establishing a fruitful long-term relationship with your foreign supplier.
Another way you can show your appreciation is to reward foreign software developers with bounties and bonuses on long-term projects.
4. Provide manageable milestones
Most people respond best to specific and challenging goals. This also improves overall performance in group settings.
But how do you convert this to remote work?
You apply a development model that mimics these properties.
One of the most commonly used methods for software development, Agile, is a perfect fit as it focuses on dividing a software project into several phases.
Agile projects are 28% more successful than traditional projects.
Simply put, whenever your software development team passes a phase or achieves a goal, this helps them focus on the larger project. So breaking down goals helps both you and your remote team visualize your goals.
5. Manage Team Productivity with Productivity Management Software
When it comes to keeping track of what your employees are doing, outsourcing software development presents a number of problems.
For example, how do you ensure that your offshore developer is working the required hours on your software project?
You can solve these problems with productivity management software.
This type of software typically allows you to:
- Track time spent on each task and project.
- Note when overseas members arrive on time, are partially absent, absent, or late.
- Make sure the team is actively working during business hours.
- Analyze the overall productivity of the outsourcing company through detailed reports.
- Pay foreign software developers directly through built-in payroll management features.
Outsourcing your software development abroad can be a beneficial and cost-effective way to help grow your business.
Use the information above to make an informed decision about whether outsourcing software offshore is right for you.
And if you do, make sure you do your due diligence and take advantage of productivity management software that makes offshore outsourcing a breeze!
Nissim de Babani
Nissim is the VP of Marketing and Co-Founder of Global Citizens Technologies, an outsourcing company based in Ho Chi Minh City, Vietnam. He believes in connecting cultures and technologies and spent most of his adult life in Canada, Israel and Vietnam to realize this vision. He has more than 15 years of business experience in these areas. He is an entrepreneur and investor, and his passion is business development in the tech startup environment. He can’t start his day without a cup of mint tea and he loves spending time traveling with his kids.