What is Offshore Software Development? Benefits, Challenges & More

Offshore outsourcing is the general outsourcing model we all commonly know as “outsourcing”, and it’s one of the most common outsourcing models worldwide.

Today, we will discuss offshore software development outsourcing in detail, including tips, benefits, and the challenges of working with this particular outsourcing model.

Definition of Offshore Software Development

In the offshore outsourcing model, a business organization recruits a third-party vendor to conduct operations outside the country. Offshore outsourcing companies provide service from low-cost regions worldwide, allowing a business to tap into the higher potential market with reduced costs.

Common Offshore Outsourcing Services

1. IT/ Cloud Services

Offshoring the services is a great idea if your business has a constant online presence. Offshore, web, and app development are the most common outsourced services.

2. Customer Support Services

When running an e-commerce business, you need customer support. By leveraging offshoring, you can have a customer support team that is available 24/7 to offer help to all your clients and app users.

3. Knowledge Process Outsourcing (KPO)

KPO involves outsourcing core business requirements to a vendor, like data analytics, financial research, market research, etc… It’s a high-end service requiring constant processing of large volumes of information.

Since setting up such a complex infrastructure in-house is highly expensive, it’s better to outsource this to an offshore partner.

5 Tips For Making Offshore Software Development More Effective

1. Ensure Your Goals Align With Your Stakeholders

Discuss your project with all your internal and external stakeholders before you start outsourcing. Requirements of internal and external stakeholders may differ at times, and it’s up to you to reach a proper conclusion so the final development meets everyone’s demands.

2. Overcommunicate If Needed

When offshoring, you don’t have direct insight into the development process. Communicate as much as possible. Select your choice of communication method, and frequently make discussions and updates on your instructions.

3. Build Trust With Complete Transparency

Trust is a great pillar of offshoring. When outsourcing, you must trust the business method of your vendor. That way, you can entrust the entire process to the team and reap the benefits afterward.

4. Understand And Adapt To Cultural Changes

A vendor should always understand and adapt to your business’s cultural changes. Similarly, you should understand that the standard practices of the vendors are updating and ever-changing as well.

It’s up to both parties to adapt to these changes to build and continue an ever-lasting business relationship.

5. Keep The Goals Realistic

Not all vendors can work under pressure, and sometimes, chasing after arbitrary deadlines can be a detriment to success. Set realistic goals through achievable target plans.

Benefits of Offshore Software Development Outsourcing

1. The Labor Cost Is Relatively Low

Offshoring allows you to tap into a vast market where you can come across professional experts living in regions where the cost of living is relatively low. You can hire experts in a pricing contract that is cheaper for you but is well-compensating for the team members.

You can complete a project with lower labor and resource costs.

2. You Get A Motivated Team of Professionals

Offshoring vendors provide team members based on contracts, and the contracts often carry incentives the client offers if the team delivers before the deadline.

As a result, each team member is highly motivated to complete the work before the deadline mentioned in the contract. To uphold the agency’s efficiency, they also prefer reaching completion status before the deadline.

3. The Team Is Fast And Efficient

In a well-reputed offshore agency, each team member has multiple years of working hands-on on different projects. They are professionals who don’t need additional training unless the project is too sophisticated.

Having a team by your side who know exactly what they’re doing results in overall team efficiency. The outsourced team is sure to deliver faster results and better products.

4. The Objectives Have Fewer Regulations

There are a ton of paperwork and legal obligations that you have to go through during regular internal hiring. Companies often look for a solution where they can move quicker while getting their product ready to keep up with a highly competitive market.

Of course, offshoring relieves you of most of the regulation hassles and allows you to get to work faster.

5. Helps You Focus On Your Core Business Objectives

When you don’t have enough internal resources, they can easily get divided between your company’s internal management and product development. Sometimes, people with different skill sets have to fill in for positions they know nothing about.

That’s where offshoring comes in. You can leave it to the professionals to complete your product while your internal team focuses on core business objectives like marketing and sales.

6. You Get To Choose From  A Higher Number of Professionals

When choosing your team members for offshore outsourcing, you have a whole world of options. The talent pool is much wider, and any team member can be from any part of the world who is the best in their relative fields.

You can create your team of highly-trained professionals in their fields and get it done at only a fraction of the cost.

7. You Have A Team To Provide 24/7 Customer Support

With the internet becoming commonplace, everyone is getting increasingly used to having access to products and services all the time. In such cases, you need an active team to provide 24/7 support.

The best way is to hire an offshore provider in the opposite part of the world. By capitalizing on employees in different time zones, you can effectively provide round-the-clock support.

8. The Government Policies Are Usually In Your Favor

Many foreign governments offer special tax exemptions and incentives to businesses that invest in their economy by providing employment, one of the methods being offshoring. This is a great way to gain profits and improve your business’s bottom line.

Since foreign governments offer tax incentives, it makes it easier for companies to relocate to an offshoring location in a country of their choosing.

9. Offers Better Scalability

Hiring an in-house team member and training them to be effective for your project can take a lot of time and effort, which hinders team scalability.

With offshoring, you can simply bring in a different expert if you need their help with your project. Meaning that upscaling is very easy when you’re working with offshoring.

10. Offers Better Economic Efficiency During Tough Times

If you want to expand your business globally, you would have to go around the globe for an international expansion. It is time-consuming and, of course, highly expensive. Instead, you can easily partner with multiple clients in different locations and take a cost-saving approach.

Challenges That Come With Offshore Development

1. Your Data Security Risk Increases

Data security is one of the biggest issues in the modern world, and when you’re handing over your entire project to a third-party offshore vendor, the risk increases even more.

It’s not just your application’s source code at risk, either. You must keep customer information completely classified and limit access to the data so the partnering vendor can’t access the data in any way.

2. Time Zone Differences Can Be A Problem For Deadline-Based Projects

With time zone differences, communication can get frequently delayed since not everyone is online at the same hours. Delays in communication can result in implementation delays in the product, and it can become a serious issue when your team has a strict deadline to reach.

3. Foreign Regulations May Cost You Extra

While many foreign nations can offer you benefits for investing in their economy, foreign regulations can cost you extra to operate your business in their nation.

Foreign legal infrastructures also provide a certain level of security for the IP rights of stakeholders. Find out if the vendor you’re trying to partner with had any contract breaches in the past.

If you fail to do so, there’s a high chance of losing your intellectual property to the company, which is also a monetary loss.

4. Language Barriers And Cultural Difference Can Be A Big Obstacle

Different countries have different cultures and languages, and that is pretty obvious. However, these can be an issue that will hinder work progress altogether.

Different languages mean you can’t always expect complete fluency in English or your native language, which creates a language barrier and slows down communication.

Then there’s work culture, which differs from region to region. What’s normal to you may come as a shock to your newly partnered teammates. It can lead to disagreements, necessary changes, and, of course, project delays.

5. Lack of Overall Trust And Control

When offshoring a product, it’s being developed out of your site in a different location. For the lack of direct insight, you lack governance and control over your project.

Though the vendor will regularly ask you for instructions by setting up meetings and discussions, there’s still a significant delay in implementing last-minute changes and immediate patches or updates.

To Wrap It All Up

While the challenges can be quite offputting, offshore outsourcing is still a widely utilized method by companies worldwide, regardless of the scale of the business.

Are you looking for a trusted software development partner for your next project? Impala Intech houses a robust team of professionals, and our offshoring services are sure to make you leave a positive review at the end of your project. So why not get started with us right away?

FAQ