Offshore Software Development - An Ultimate Guide 2023 - Logicsofts

Offshore Software Development – An Ultimate Guide 2023

9th February 2023

Wouldn’t it be amazing to develop and maintain your software at a fraction of the original cost with a much better talent pool? Offshore software development offers all the perks of having a talented team of developers minus the drawbacks of resource management.

Irrespective of the type of software you’re building – web applications, portals, chatbots, website or AI-backed solutions – having an offshore center for the development would solve most challenges.

In this blog, let’s explore everything there’s to know about offshore software development, its benefits, disadvantages, best practices and various options.

Table of Contents

1. What Is Software Development Outsourcing?
2. What Is Offshore Software Development?
3. Difference Between Onshore and Offshore Software Development
4. Reasons to Consider Offshore Software Development
5. Services Offered by Offshore Software Development Companies
6. Do You Require Offshore Software Development?
7. Advantages of Offshore Software Development Company
8. Best Practices for Offshore Software Development to Reach Your Goals
9. Latest Trends in Offshore Software Development
10. How to Hire & Manage Offshore Developers?
11. What Are Some Best Locations to Outsource Offshore Software Development?
12. How Much Does It Cost to Outsource Software Development?
13. Offshoring Software Development – A Moral Complication?
14. Why Choose Logicosofts As Your Offshore Software Development Partner?
15. Wrapping Up

What Is Software Development Outsourcing?

When we talk about outsourcing software development, we mean to hire an external service provider specialized in that particular service and give the reigns of the development over to them.

This provider will fulfill your requirements in developing and managing new software, sans the responsibilities of maintaining a team and providing the tech resources.,

What Is Offshore Software Development?

offshore software development

Offshore software development is exactly as it reads – development of the software by the offshore team.

In this case, the company will open up a branch at an offshore location or hire a team from a different part of the world to work on the project. This team will also be the company’s employees, similar to the main office team.

Alternatively, you can also hire an offshore software development company to act as an extended part of your team. This team will work exclusively on your project, much like your in-house team, and will have all the resources needed for developing the software.

There are several reasons why companies are now looking for options for offshore software development.

Difference Between Onshore and Offshore Software Development

The onshore companies have in-house staff and the founders working out of an office in the same country the company is registered in.

On the other hand, offshore companies will have teams and offices in a different country than they are registered in. This offshore location may or may not be where they conduct business.

What Is Better: Onshore or Offshore?

This is a common question that many companies have. There are both pros and cons to having an onshore or offshore company.

Pros of Onshore

  • The proximity to the clients and the same timezone are the main advantages.
  • You don’t have to worry about the common communication language.
  • You can easily resolve issues when your domestic company is registered in the same country as it is operating in.

Pros of Offshore

  • You will spend a lot less than hiring from your country.
  • You can discover new talents and find good resources to meet your requirements.
  • You don’t have to limit yourself to the domestic labour market and explore new possibilities.

4 Reasons to Consider Offshore Software Development

While both onshore and offshore software development companies have their perks, many companies choose offshore due to these reasons.

1. Fill in Your Talent Gaps

The talent shortage is a real issue that’s becoming a concern for many companies. With location constraints and the competition, it can be hard to rope in the right talent at a decent pay affordable to the company.

In fact, 43% of companies are currently experiencing skill gaps, according to a recent report by McKinsey in 2020. 22% of them expect a skill gap within the next two years and another 22% expect in the next 3 to 5 years.

Among the skill gaps that have the greatest need to be addressed soon, IT, mobile and/or web design and management seems to be at the 2nd spot with 26% of the people choosing it.

In such times, the lack of relevant talent can threaten the development of innovative ideas and the inclusion of new technologies. This is when having an offshore center at locations where there’s a good talent pool can salvage the issue of skill shortage.

2. Lower Your Development Costs

For all those wondering, ‘why is there an offshore development?’ The answer lies in a single word: budget.

When you want to get the best of the talent ready to work with decent pay, you need to look outside your country. There are many talented skills in developing countries you can hire without spending a lot of money.

Compared to hiring in-house employees at your current office location, you can lower your development costs significantly by hiring from such talented groups at offshore locations.

Let’s consider the salary of a developer in India vs. the developed countries. More than 50% of the Indian developers are working on a yearly salary of less than $10,000, according to a report published in Towards Data Science. This is approximately 10 times less than developers in the US and 6 times lesser than the UK and German developers.

Such a vast difference in the salary expectancy can lower the development costs by over 50%.

3. Achieve Exponential Growth

We never know when the demand strikes and when you need to manage immense workflow. If you have a small in-house team, then it can overwhelm your employees when workflow increases by folds. And it can also be challenging to hire a completely new team, train them and prepare them to handle your demands.

Having a hands-on offshore team ready to meet your increasing demands will help you achieve exponential growth and get ahead of your competition.

4. Flexible Team Hiring Model

There can be some reasons that hold you back from creating a cross-functional team or hiring candidates with various expertise. But with the salary expectancy making things affordable at offshore locations, you can build a flexible team of talented developers, designers, managers and experts to take charge of your project and work with your in-house team.

You can offer as much freedom as you like for the offshore team to expand and expand based on your increasing requirements and help scale your company quickly.

Services Offered by Offshore Software Development Companies

offshore software developer

When it comes to the software development services offered by offshore companies, the options are many. Here are some of the top services you can choose from:

Do You Require Offshore Software Development?

If you aren’t sure that your company needs offshore services for software development or support, then these questions will help you clear it up.

Why Do Companies Do Outsourcing?

Typically, there are three reasons when companies opt for offshore software development.

  • When there’s a need for expertise that your in-house team cannot fill
  • When you’re looking to cut down the operational costs and increase the profits
  • When you feel that the developers in your locality are expensive and wish to find good developers at less rates

Who Should Use Offshore Software Development?

Offshore software development is best for service-based businesses that are ever-expanding and cannot predict the scale at which their people requirements are. So, when you hire an offshore team, you can quickly take on new opportunities whenever you can without worrying about your team’s technology, skillset or the resources you have.

If you have a huge project to develop or any existing software that’s becoming hard to maintain, then you can hire an offshore team to share the workload with your in-house team. Or, you can give the complete responsibility of the software over to the offshore team too.

Who Shouldn’t Go for Offshore Software Development?

If you’re having a one-off project requirement and don’t see any option for the long term, then having a permanent offshore team isn’t necessary.

In such cases, you can hire an outsourcing company that offers the same services within your budget and get a dedicated team to work for you until project completion.

Advantages of Offshore Software Development Company

Choosing to go offshore is definitely a big move for any company. However, the benefits of going offshore are so much that many are embracing it quickly and recommending it too! Here are the advantages of offshore software development.

1. Scale Quickly

Many are torn between hiring the talent first and then scaling or scale first and hire later. There are lots of disadvantages when you go the latter way.

Your current employees may feel overburdened with work when you cannot find the required talent to fill your current scaling needs. This can lower their performance and, therefore, the software.

Instead, you can quickly scale at will without worrying about hiring new talent when you have an offshore team. You can ask the outsourced partner to bring in new team members with diverse expertise to match your expansion.

2. Find Niche Experts

As technology keeps expanding, there are many new things to learn and expertise in. It is becoming increasingly difficult to find the right talent and form the right team to cater to the project.

With offshore development, you aren’t restricted to only your city or country to find the talent. You can hire a team of your choice from anywhere you meet your talent needs, budget and project scope and get the work started immediately.

3. Focus on the Core Job

Having your hands in many jars will scatter your attention from the core job, which could prove disastrous. The best way to concentrate on the things that matter the most for your business is to delegate.

You can delegate the tasks to the offshore team and focus on your clients, the direction of progress of your business and your main business goals and strategies.

5 Best Practices for Offshore Software Development to Reach Your Goals

offshore software development outsourcing

Your offshore team will usually be out of your sight and only connected online. So, how can you make it work?

When you want to successfully manage your offshore team and make the best out of the situation, you need to follow some best practices.

  1. Interact regularly with your offshore developers. Get introduced to the new team members, including those at the bottom of the corporate chain.
  2. Promote agile practices that quicken the time to market, stays in touch with the customers and guides the team to learn better from each other.
  3. Conduct regular meetings with the offshore team. Talk about the progress, the bottlenecks and any other resource requirements to improve their efficiency. Make sure to talk to the leads as well as the developers to get a complete lay of the land.
  4. Use project management tools like Trello, Asana, Jira or any others that will help you to keep track of the progress.
  5. Encourage your in-house team to interact, work and stay in touch with your offshore team.

The technology is growing at a rapid pace and with it the field of software development. With the new technologies coming up, it is necessary to prepare for what is to come to meet the customer needs. Lots of new trends in software development has been revolutionizing the field like:

Cloud Services

Gartner predicts that the public cloud service revenue will grow to $364,062 million by the year 2023, up from $242,697 million in 2019.

Cloud services have made it possible to make offshore offshore software development a reality. By embracing cloud computing technology, you can expand the possibilities of your software, applications, and solutions.

Artificial Intelligence

Artificial Intelligence (AI) has been improving the quality of the development process in many ways. From smart market insights to quick QA and testing, AI can help developers speed the time to market and create software that customers love.

Data Security

There’s a huge stress on data security with the rise in hacking, phishing and ransomware events. As a company having an offshore team, it’s essential to implement strong firewalls and regular security checks to remain within the security regulations and keep the prying eyes away.

Blockchain Technology

The recent rise of bitcoin to $47k shows how much the world is serious about cryptocurrency. Blockchain has been one of the most novel trends in technology for the last few years. Due to its high-security features and quick transactions, many are looking at it as a business model.

There is also a high demand for software developers who are proficient in blockchain and is a good technology to keep an eye out for.

How to Hire & Manage Offshore Developers?

Now that you have an idea of how offshore software development works, let’s answer some of the common questions on hiring and working with offshore developers.

How Do You Hire Offshore Software Developers?

It isn’t as complex as many think.

  • First, you need to assess your talent needs and your budget.
  • You can look at the top countries in which many companies offer offshore software development.
  • Match a few companies with your requirements, schedule free consultation calls and get your questions answered.
  • After assessing and talking with a few companies, you can run a pilot test with your preferred company before hiring them for more work.

How Do Offshore Developers Work?

Usually, the offshore software developers are quite flexible in the way of working and communication channels. So you get to decide how the project should be conducted, how often you need updates and how to keep within the timeline.

Offshore developers will work within the team in an offshore location. You will be given a dedicated team with members of different expertise based on your project requirements. Most often, they work together out of an office. You will be assigned a team lead who will be your point of contact person.

You can schedule regular weekly video calls, progress reports and updates you will need. You can also set up revision and discussion sessions to look at the project completed till date and offer your suggestions.

What Are Some Best Ways to Manage Offshore Software Development Team?

When you have a team working across the ocean, it’s natural to feel disconnected at first. The key lies in managing the offshore team effectively and keeping in touch for the best outputs. Here are a few things you can try.

  • Conduct icebreaker online sessions with the offshore team and bring in your in-house team on that from time to time.
  • Visit your offshore team when you get a chance and interact with the team leads, managers and developers to get an idea of what they feel.
  • Create effective communication channels through calls, emails and messages to stay on top of the project. Use online collaboration tools to reduce human errors.
  • Appreciate and foster unity when the cultural gap is big. Respect the offshore team culture and when a conflict arises, bring back the focus to the main goal.
  • Motivate the offshore teams with incentives, surprise events and inspirational talks and sessions.

What Are Some Best Locations to Outsource Offshore Software Development?

offshore software developers

There are lots of countries that have offshore software development companies. Among those, here are a top few.

1. India

India is at the top of the preferred list of countries for IT outsourcing for many companies. In fact, many top global companies like Apple, Microsoft and PayPal have a huge offshore center in India.

According to Kearney’s report in 2019, India is at the top of the Global Services Location Index (GSLI) overall country rankings. This Index is based on the financial attractiveness, people skills and availability, and business environment of each country. India seems to fare exceptionally well in the ‘financial attractiveness’ segment and comes a close second in ‘people skills and availability’ and ‘digital resonance.’

With highly talented developers proficient in English, the Indians seem a natural choice to outsource software development.

2. China

If you’re wondering which country is topping in the segments of ‘people skills and availability’ and ‘digital resonance,’ then look no more than China. With a huge population of resources and hardworking people, China is at the second position in the Kearney Index list.

3. Eastern Europe

Apart from the Asian countries, if you’re looking to outsource to a European country, some Eastern European countries offer good talent at affordable rates. Ukraine and Romania are the top countries to outsource in Eastern Europe for small scale projects.

4. Mexico

Some companies from the US may want a team that’s closer. In such cases, you can look at the developers in Mexico, although it is actually nearshoring.

‘What is the difference between nearshore and offshore?’ you ask. Well, nearshoring is when you’re outsourcing to a team that’s very near to the country your company is registered in and with similar time zones. In offshoring, you will outsource to a team that is in a different time zone from you.

How Much Does It Cost to Outsource Software Development?

The cost for outsourcing differs based on the country the team is in. An outsourced team in Mexico can cost more than a team in India. Here’s a breakdown of the outsourcing costs for software development from the top few countries.

  • The average earning of an Indian software developer per year is at $12,160 approx.
  • The average earning of a Ukrainian software developer per year is at $950 approx.
  • The average earning of a US software developer per year is at $71,980 approx.
  • The average earning of a Chinese software developer per year is at $1,780 approx.

Offshoring Software Development – A Moral Complication?

Contrary to the popular opinion that offshoring deprives the local people of their jobs, it’s actually quite the opposite.

Many companies are looking for an offshore team for software development majorly because of the lack of talent pool in their domestic location. So, when you are hiring a team outside your country, it doesn’t mean that you deny the opportunity to a local employee. It just means that you cannot find the right candidate from within your area.

Offshoring to another country doesn’t lead to the loss of jobs in your current country. Instead, it benefits the economy indirectly when your company grows and scales quickly due to offshore resources.

And you don’t have to feel concerned about paying less wages to the offshore team from developing countries. The cost of living in developing countries is far lesser than the developed countries like the US and the UK. Therefore, you’re actually helping the huge population in such countries with well-paid salaries.

Why Choose Logicosofts As Your Offshore Software Development Partner?

You now know the advantages of choosing offshore software development and how to manage an offshore team.

So if you are looking to hire an offshore software development team, then Logicsofts is your best choice.

  • Our software developers have 10+ years of working experience in the field of software development.
  • Our offshore development team has worked with several clients from the UK, US, Canada, Western Europe and Australia.
  • We have a wide berth of experts in different programming languages, development platforms, tools, plugins and applications.
  • Our team has handled projects of huge scope and have delivered the project iterations promptly and stayed well within the timeline.
  • We work with agile methodology when required and can accelerate the speed to market based on the demands.
  • Our software developers are proficient in English and will keep our clients regularly updated about the progress.

We can give you more such reasons why we should be your offshore software development partner. But, we can do one better!

You can call us at 0207 993 5898 and speak to one of our specialists about your requirements and we will take you through our process and ideas for developing your software.

Wrapping Up

Scaling your company is an enormous task that requires external support and reliable partners. Hiring an offshore software development team will solve the major issues like lack of talent, expensive salary requirements and need for new tech resources. You can speed up your company’s progress with the offshore software developers to take care of the tech side.

Some of our related blogs that might be of your interest:

Outsource Software Development
Outsource Web Development
Web Developer vs Software Developer

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Author : Abhay

Abhay is a Digital Marketing Guru and an accomplished entrepreneur with an experience of a decade working with various businesses varying from startups to established brands. He co-founded many companies like Logicsofts, PrintYo, CrazyRise and more. He is passionate about SEO and Online Data Analytics, which plays a vital role in any business to grow and mutate as per the data results.
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