Offshore Software Development: A Complete Guide

Software development projects are costly and complex. 

On top of that, they’re often not completed on time or as budgeted. 

Therefore, more than ever – and more businesses than ever – are now turning to software development outsourcing as it provides a faster way of doing things while saving valuable resources such as capital and talent (of which there’s always an ongoing shortage). 

This guide will provide a roadmap for selecting an outsourced model and the best overseas company for your needs.

Our guide will show you:

• Why offshore software development is right for you
• How offshore development can be customized based on your specific needs
• The importance of defining expectations and identifying potential obstacles upfront
• The pros and cons of different models, including freelancers/indirect vendors vs. direct vendors/service providers vs. managed service providers.

So let’s get started!

Offshore Software Development – An Overview

The globalization of the software industry has led to a trend in offshore development, and most companies are hiring software developers abroad to complete their product development needs. 

Significantly useful for startups, offshoring is more cost-effective than other software development options. It also provides flexibility in scheduling that you don’t get with other development methods. 

When done correctly, offshore software development can be a great way to get high-quality code developed quickly and efficiently. However, there are also some potential risks associated with this approach that businesses need to be aware of before jumping in.

Let’s take a closer look at offshore software development, how it works, and some of the pros and cons associated with this model.

The Different Types of Software Development Models

You can choose from several offshore software development models. Each model has advantages and disadvantages, so selecting the right one for your project is essential.  

Here’s a quick overview of the most popular offshore software development models:

1. The Fixed Price Model

The fixed price model is a pricing agreement where you agree to pay a set price for the completion of a project. This model is typically used for smaller projects with well-defined scopes and requirements. 

The main advantage of this model is that it provides cost certainty – the buyer knows exactly how much they’ll be paying for the project upfront. However, it can be difficult to accurately estimate the project’s actual costs, leading to problems down the road.

2. The Time & Materials Model

In this model, you are charged by the hours spent on an assignment and the materials used.

One advantage of this method is that it’s flexible. If requirements or tasks change midway through a project – you only pay for what has been completed at that point. On the other hand, because there are no guarantees about how many hours will be required to finish the job, this may cost more in the long run.

The time and material model is the most common charging model in the software development industry.

3. The Hybrid Model

This pricing model can be advantageous for both the buyer and seller. 

You, as a buyer, have more flexibility in terms of the services you want to purchase and a better idea of the project’s actual cost. This pricing model offers more certainty for the offshore agency, as some aspects of the project are known in advance. 

It is important to note that this pricing model can be more challenging to manage, as both fixed price and time & materials need to be considered.

4. The Managed Services Model

Under this model, you pay a fixed monthly amount for managing and maintaining your project—often larger projects with complex scopes and requirements of this offshoring model.  

The main advantage of this model is that it offers a predictable monthly cost. However, it can be more expensive in the long run as you’re paying for the management and maintenance even when the project is not being actively worked on. 

Offshore software development can be a great way to get your project off the ground quickly and efficiently. However, selecting a suitable model for your project is vital to avoid any problems.

Also Read: Types of IT Outsourcing Models: How to Choose the Best One?

Who Should Use Offshore Software Development?

Offshoring is often an excellent choice for:

• Startups with limited budgets
• Businesses that need extra support from the IT industry
• Businesses that need to bring in a new product quickly

According to a study by Deloitte (in 2020), 70% of companies outsource their software development projects to save money.

Other notable reasons why tech companies choose to outsource include:

• 31% outsource to improve service quality

• 28% select offshoring for talented professionals

• 37% prefer to outsource to increase the amount of work

Another survey shows that about 78% of businesses across the globe are satisfied with their outsourcing partner.

The key here is knowing what you need before you reach out to an outsourcing agency so your expectations are aligned with the capabilities of an offshore firm. 

Going offshore may not be the best option if you just want help with a specific task, such as website design or programming languages. However, if you need to work on something that requires complex programming skills or vast experience in social media marketing, it may make sense to reach out and explore your options.

Software Development Services That Can Be Outsourced

When deciding what type of work to outsource, it’s essential to consider the core competencies of your in-house team and what type of work would be most beneficial to outsource.

Web and mobile app development are two of the most outsourced tasks that require specialized skills and knowledge, which can be challenging to find in-house. Additionally, these types of projects often have tight deadlines, so it can be helpful to have an external team working on them.

Some of the most commonly outsourced software development services are as follows:

• Web app development
• Mobile app development
• Custom Software Development
• Enterprise Software Development
• Cloud Computing Services
• Automation 
• QA services
• Cybersecurity services

When deciding what type of software development work to outsource, it’s important to consider the core competencies of your in-house team and what type of work would be most beneficial to outsource.

Benefits of Offshore Software Development

Offshore software development has become increasingly popular because it offers many advantages. Let’s explore a few of the major ones.

Access To The Global Talent Pool

Since the world is now more connected than ever, businesses can tap into a global talent pool by partnering with offshore software development firms. The ease of doing business with the best developers in the world, no matter where they are located, has helped many startups attain their business goals.

Offshore software development firms feature a vast network of contacts and resources that they can draw upon to find the right candidate for your project – something that most businesses can’t replicate on their own.

Lower Development Cost

Building and maintaining a full in-house development team requires spending money on hiring resources, purchasing licensed software and equipment, paying salaries, insurance, and several maintenance charges. 

Partnering with a custom software development company in another location, on the other hand, allows you to take advantage of their lower operating costs. 

You can invest the saved money into other areas of your operations. 

Extra Time for Your Core Business Activities

In offshore development, you transfer a large part of the responsibility to your offshoring partner, which keeps you from spending energy digging into the development process. The time and energy you save can be dedicated to the other crucial aspects of your business to achieve your professional goals.

Flexibility And Scalability

When you outsource your software development requirements to an offshore service provider, you gain the ability to scale your operations up or down whenever needed without incurring the significant costs associated with hiring new in-house staff. 

Additionally, you’ll have access to a larger pool of talent, which gives you the flexibility to respond to changing market conditions or business needs quickly.

Improved Disaster Recovery Planning

Offshoring can help improve your organization’s disaster recovery planning. 

By hiring a team of developers in a different location, you can ensure that your critical applications and data are still accessible during a natural disaster or other catastrophic events. It automatically secures your data from damages caused by natural or other disasters.

The Challenges Of Offshore Development

Outsourcing your software development overseas can offer significant cost savings over hiring domestically. However, there are also particular challenges associated with offshore software development, such as:

• Time zone differences
• Cultural differences
• Language barriers
• Quality control
• Security
• Cost overruns

We want you to know these challenges, so they don’t surprise you during your offshoring project. It is crucial to work out expectations upfront so that both parties know what to expect from the other side.

Time Zone Difference: We’ve been involved in many projects dealing with time zone differences. It’s sometimes tricky when you’re trying to collaborate across different parts of the world, but it can be done!

One important thing is keeping consistent working hours, so everyone is simultaneously available to communicate and get things done efficiently.

Another thing is ensuring everyone understands the expectations end product, so there aren’t any misunderstandings down the road. It’s essential to set clear goals and ensure everyone agrees on them beforehand, so there aren’t any surprises later on.

And finally, if you’re having trouble getting in touch with someone or getting a response back, don’t hesitate to send another email or make a call—it might take a bit longer, but it’ll be worth it in the end!

Cultural Difference: There is always a risk that cultural differences may cause problems during the software development process. This can be due to a number of factors, such as

• Different work ethics
• Communication styles
• Expectations

You can talk about your expectations upfront during discussions of moving the work overseas than have employees feel like there has been something culturally misunderstood.

Language Difference: Many startups face language and communication-related issues when offshoring software development. When dealing with a team in another country, it’s important to know if they read, write and speak your language.

India, the Philippines, and Ukraine are some major outsourcing hubs where more professionals are fluent in English. Ensuring that you and your offshore partner speak the same language can help with miscommunications due to accents or cultural differences.

Quality Control: The quality of the software delivered by an offshore team may be lower than expected due to language barriers or a lack of understanding of the client’s business and requirements. Thus, choosing the right partner requires special attention.

It can be difficult to ensure that the software being developed meets your quality standards when you are not on-site and can monitor the work closely. There are a few ways to overcome this challenge: 

• Set clear expectations
• Have regular check-ins with the development team

Security: Another big concern with offshore software development is security. Offshore teams may not have the same security protocols as your in-house team, which could put your sensitive data at risk.

The challenges of security in offshore software development are numerous and varied. Perhaps the most significant challenge is that developers in different countries may have different levels of understanding of security issues and concerns – leading to a wide variety of security vulnerabilities being present in the final product.

Some of the significant challenges that you may face while offshoring your project include:

• Maintaining control over your data and intellectual property
• Entrusting sensitive information to another organization
• Managing cross-border compliance

Cost Overrun: Offshoring software development can sometimes be more expensive than expected due to a number of factors, including poor project management and unforeseen technical difficulties.

Software development projects, especially startups, often have tight budgets and timelines, and delays or unexpected costs can cause serious problems. A few ways to help avoid cost overruns in offshore software development are:

• Have a clear understanding of the project requirements from the start
• Regularly communicate with the offshore team to stay on track
• Be aware of the potential for scope creep and other risks that could cause delays or additional costs

These tips can help avoid cost overruns and keep your offshore software development project on track and within budget.

Also Read: Want to Reduce Software Development Costs Without Losing Quality? Here You Go!

Step-By-Step Guide To Offshore Software Development

Offshore software development can be a smart way to get the high-quality software development services you need at a lower cost. But it’s not always easy to know how to get started. Further in this guide, we provide you with a step-by-step guide to offshore software development to ensure you get the best possible results for your business.

We’ll explore everything from choosing the right service provider to managing the project effectively. By the end of this section, you’ll know exactly how to get started with offshore software development and maximize its benefits for your business. So let’s get started!

Know Your Target Audience

The first step in any successful offshore software development project is researching your target audience. Though it seems like a no-brainer, you may be surprised how many companies fail to adequately research their target market before starting a project.

Before you can develop a software solution for your target market, you need to understand who they are, their needs, and what motivates them. Only you should proceed to develop a solution that meets their needs and helps them achieve their goals.

There are many ways to research your target audience.

You can start by reading trade publications and industry reports. You can also talk to experts in your field and get their insights into your target market. And, of course, you can always conduct your primary research by surveying or interviewing potential customers.

No matter how you research your target audience, the important thing is that you take the time to do it right. A well-researched target audience will help ensure your offshore software development project is successful.

Pay Attention to Regulations

In recent years, there has been an increase in the number of companies looking to offshore software development. While offshoring can be a great way to save money and access expert talent, it’s important to pay attention to regulations.

There are a few key things to keep in mind when offshore software development:

1. Make sure you comply with all local laws and regulations, including data privacy and employment laws.
2. Be transparent with your team about your work and what is expected of them to avoid misunderstandings.
3. Have a clear contract that outlines the roles and responsibilities of both parties involved and protects you in case there are any issues with the project
4. Pay attention to cultural differences between your and offshore development teams to avoid communication breakdowns or missteps.

By following these simple tips, you can ensure a successful offshore software development project while staying compliant with all applicable laws and regulations.

Create a list of Business Needs and Goals

The first step to successful offshore software development is identifying the business needs and goals of the project. This includes understanding the objectives of the project, the target market, and the competition. Once these factors are understood, it’s important to develop realistic expectations for the project, ensuring everyone involved is on the same page and working towards a common goal.

Choose the Best Offshore Development Company

There are many factors to consider when choosing an offshore software development vendor. Here are a few key considerations:

1. Location: The offshore company’s location is important for two reasons:

1. Choose a vendor in a country with a stable political and economic environment, as it minimizes the risk of your project being disrupted by external factors beyond your control.

2. Choose a location that makes sense for your particular project. 

If you’re developing a mobile app, choosing a vendor in a country with a large population of mobile users might make sense.

Read Also: Best Countries for Offshore Software Development Services in 2022: A Quick Overview

2. Cost: Offshore software development can be very cost-effective, but it’s important to get quotes from multiple vendors before deciding. Be sure to compare the hourly rate and the cost of living in the country where the vendor is located. Sometimes, it might make more sense to pay slightly more per hour for a vendor located in a country with lower overall costs.

3. Capabilities: Make sure that the vendor you choose has the necessary skills and experience to complete your project successfully. Ask if they have experience with similar projects, and check out online reviews from their previous clients.

4. Communication: Good communication is crucial for any software development project, but it’s even more critical when working with an offshore team. Make sure to choose a company that has established lines of communication and is responsive to your needs.

5. Processes: Ask the offshore service provider about their development process, and make sure that it’s compatible with your project management processes. For example, if you’re using agile methodology, ensure that the vendor is experienced in agile development.

6. Project management: Make sure your offshore partner has a project manager responsible for communication and coordination between your team and the offshore development team. The project manager should have experience working with similar projects and be able to provide regular updates on the project’s progress.

7. Security: Security is always a concern when working with an offshore software development vendor. Be sure to ask about the vendor’s security procedures and ensure they’re comfortable sharing sensitive information with you.

8. Contract: Be sure to sign a contract with the offshore software development vendor that outlines the scope of work, deliverables, timelines, and payment terms. This will help to avoid any misunderstandings or disagreements down the road.

It’s important to do your research and choose a reputable company. We have outlined the essential steps to take when considering offshore software development.

When looking for an offshore software development company, consider their experience, portfolio, and reviews. Be sure to get a detailed proposal from the company before making any decisions.

Once you’ve chosen a company, communicate your project requirements and have a contract outlining the scope of work and payment terms.

Offshore software development can be an excellent option for businesses seeking to save money and get the job done quickly. By following these steps, you can be sure you’re making the best decision for your business.

Here is our infographic that sums up this offshore software development guide.

What To Look For In An Offshore Software Development Company

If you’re looking for the best Offshore Software Development company, you should keep a few things in mind. Make sure to do your research and ask around for recommendations. Once you’ve found a few companies that seem promising, take the time to read their reviews and learn more about their services. With a little bit of effort, you should be able to find the perfect company to help you with your software development needs.

A few key things to consider when choosing an offshore software development company. Here are some of the most important factors to consider:

1. Location: Ideally, you should choose a company in a country with a stable political climate and good infrastructure. Doing so can ensure that your project stays on track and is not impacted by external factors beyond your control.
2. Cost: Offshore software development can be a great way to save money on your project. However, ensuring you’re getting value for your money is important. Be sure to compare quotes from multiple companies before making your final decision.
3. Capabilities: Not all offshore software development companies are equally efficient and professional. Make sure to research and choose a company with the skills and experience necessary to complete your project successfully.
4. Communication: Good communication is crucial for any software development project, but it’s even more important when working with an offshore team. Make sure to choose a company that has established lines of communication and is responsive to your needs.
5. References: One of the best ways to evaluate an offshore software development company is to speak with some of their previous clients. Ask for references and case studies from companies that have worked with the team you’re considering hiring. Get insights into their process, quality of work, and overall satisfaction levels.

Why Choose PixelCrayons For Offshore Software Development?

We are an award-winning and trusted ISO-certified company that lets you hire developers in India as per the industry type of your organization. Established in 2004, our leading white-label software development company has serviced 6800+ customers from 38+ countries. It is known for its agile/DevOps development process, SLA-driven approach, and on-time project delivery.

We have been keeping abreast with the latest technology advancements to ensure our customers get only the latest software solutions to meet their business needs. 

You can hire software developers from us to work on the following technologies:

We cover all aspects of software development, including web & mobile app development, SaaS-based software products, ready-made software solutions, and dedicated development teams. You can learn more about our previous works here.

Conclusion

Among the three different types of outsourcing—offshore, onshore, and nearshore— offshore outsourcing grants you access to a large talent pool while opening up new facets of user experience and freeing time for other needs. It carries its fair share of challenges, but these can easily be avoided with the correct approach (mentioned in this guide). 

We hope this guide has given you a detailed overview of offshore development. And if you’re willing to give your project an edge and allow yourself to focus on other aspects of your business while still getting the work done – you can reach out to us.

Related Stories

How to Choose a Software Modernization Partner: A Guide for Enterprises

Planning Your Perfect Web Application: A Step-by-Step Guide

White Label Vs Private Label – What’s the difference?