Offshore Software Development 101: Everything You Need to Know

Categories: Recruitment Advice, Trends and Learning
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In today’s highly competitive business landscape, custom software has become crucial in maintaining an edge over the competition. Because of its significance, the global software market generated over $600 billion in 2022, with the enterprise software segment holding the largest share.

According to Statista, the global software market will likely have an annual growth rate of 5.42%, resulting in a market volume of $858.10 billion by 2028.

However, developing software in-house can often be a costly endeavor, especially for small to mid-sized businesses. This is where offshoring comes into play. Offshore software development can help you leverage global talent and specialized skills while significantly reducing development costs.

This guide will discuss everything you need to know about offshore software development and finding the right offshoring partner for your business. 

What is Offshore Software Development? 

Offshore software development involves hiring a remote team in a different country to develop software tailored for your use. Since the cost of living in known offshore countries tends to be lower, the cost of hiring skilled professionals from these countries may also be lower. 

Through this approach, you can tap into the vast talent pool worldwide with diverse expertise and experience in software development, helping you minimize risks and delays and reduce expenses in the long run. It also allows you to achieve round-the-clock productivity and faster project turnaround times, as teams in different time zones can work on tasks and provide continuous development and support all day. 

Offshore software developers commonly offer app and web development services, quality assurance (QA) testing, development operations (DevOps) support, UI/UX design, cloud computing, and data analytics.

Onshore vs. Offshore Software Development 

Aside from offshoring, there’s also onshore software development. Onshore software development services involve hiring a local team or company within the same country to develop software. 

Onshore software development serves as a viable option if you want to eliminate the challenges that language and cultural barriers pose, allowing for seamless communication and collaboration. Additionally, the proximity of onshore software developers enables you to achieve faster response times, reduce time zone differences, and facilitate more effective project management.

However, onshore software development tends to cost more due to high labor costs and overhead expenses associated with operating within the same country. Moreover, the talent pool may also be highly competitive, which means that the pickings are few and the pay is higher. 

You can opt for offshore software development if you have budget constraints but seek rapid scalability with technology. To learn more, read Onshore vs. Offshore Software Development: How Do They Differ?

Advantages of Offshore Software Development 

asian man developing software

Offshore software development offers a myriad of growth opportunities for your business.

Reduces costs

Offshore software development provides cost advantages compared to in-house or onshore software development teams. Offshore teams are typically based in countries with lower labor costs, allowing you access to highly skilled talents more affordably.

This cost-effectiveness can help you significantly save on salaries, infrastructure, and operational expenses. Hiring an offshore software development team is ideal if you’re a small to mid-sized business owner seeking to take advantage of growth opportunities while saving costs.

Speeds up turnaround times

Hiring an offshore software development team means utilizing a 24/7 development cycle because you work with experts in different time zones. Once your in-house software developers finish work, your offshore team can continue the development process, enabling round-the-clock progress.

This accelerated development timeline leads to quick product releases, fast market entry, and increased competitiveness.

Lets you focus on core business operations

Outsourcing software development offshore allows you to delegate non-core tasks to external experts, giving you more time for core business operations such as strategic planning, marketing, and customer engagement. As a result, you can streamline your software development efforts and enhance overall productivity and efficiency.

To learn more about this, read 7 Business Benefits of Offshore Software Development

Challenges of Offshore Software Development

asian man  sorting out a problem in software development

Managing an offshore software development team won’t always be sunshine and rainbows. Here are some challenges in offshore software development you should be aware of to manage your expectations and fully enjoy the benefits above. 

Communication barriers

You may experience miscommunication with your offshore software development team because they’re in different countries. Language barriers, accent differences, and varying communication styles may hinder effective collaboration and understanding, leading to delays, errors, or misaligned expectations.

You must establish clear and frequent communication channels, leverage technology tools for real-time communication, and encourage open and transparent dialogue to overcome these barriers.

Differences in time zones and work culture

While differing time zones help you to take advantage of faster turnaround times, it can also affect project coordination and communication. For instance, you may have difficulty scheduling meetings and resolving urgent issues due to the limited overlapping working hours.

Moreover, differences in work culture, norms, and practices may impact collaboration and teamwork. You may need to work harder in synchronizing your in-house and offshore teams to solve problems, make decisions, and set priorities effectively.

One way to overcome this challenge is to identify key dates and holidays beforehand to set your timelines and prevent unexpected delays. 

Minimal supervisory oversight

With your offshore software development team working remotely, you may lack visibility and control over the development process, potentially affecting project progress, quality assurance, and adherence to deadlines.

Establish effective project management practices and regularly update progress to mitigate this challenge. It is also essential to accurately define your scope and expectations from the start so your offshore team can act on them even without constant management.

Effective collaboration requires building trust and fostering a solid relationship with the offshore team.

If you want to reduce the risks of managing an offshore team, read 7 Best Practices for Offshore Software Development Success 

Best Practices for Offshore Software Development 

tech company team work

Offshore software development can only be effective if you know how to navigate it and choose the right partner. Here are some effective strategies for managing an offshore software development team and achieving your goals.

Facilitate onboarding and training

An offshore software development team may possess the knowledge and resources to do their jobs, but they are all in vain if they don’t know your goals and standard processes. As such, provide comprehensive onboarding and training where they can learn about your company culture, methods, and tools.

Relay to them your specific, measurable, achievable, relevant, and timely (SMART) goals and timeframes so they know how to meet your expectations. Ensure their project management methods are compatible with yours so you can collaborate seamlessly despite the geographical and time differences.

Additionally, treat your offshore development team as an extension of your in-house team instead of a third-party contractor. They should be assimilated with your corporate culture, protocols, and processes.

Establish clear communication channels and protocols

Set up effective communication channels such as video conferencing, instant messaging, and project management tools to seamlessly collaborate with your offshore team. If your budget allows, give them an internet allowance, as nearly 50% of remote workers believe a stable and fast internet connection improves their remote working experience. 

Moreover, define communication protocols, including regular meetings and status updates, to ensure smooth collaboration and alignment.

Define a clear and detailed scope of work

You can’t expect your offshore software development team to meet or surpass your goals and expectations if you give them vague instructions. Therefore, clearly outline your project’s objectives, requirements, and deliverables to avoid ambiguity and misinterpretation.

For instance, creating a medium-sized app typically takes four to six months to finish and costs $70,000 (₱3.8 million) to $100,000 (₱5.6 million). You may spend more time and money if you encounter delays or let scope creep get the better of you. Be specific and honest to help your offshore team understand expectations and work towards common goals.

Consider visiting the offshore team in person

Whenever feasible, visit your offshore software development team to observe them in real-time and foster a stronger partnership. It’s also a great way to learn more about their country’s culture, lifestyle, and work traditions so you can accommodate their needs.

Additionally, visiting allows you to align expectations, address potential challenges, and foster a more personal relationship with the team. It enables real-time discussions and problem-solving, minimizing miscommunication and misunderstandings caused by geographical and cultural differences.

Protect your intellectual property

Intellectual property (IP) is vital in software development as it protects your innovation, provides a competitive advantage, and allows you to monetize your creation. Without proper protection, you risk unauthorized disclosure or misuse of your software, leading to financial losses, reputational damage, and compromised market position.

As such, sign non-disclosure agreements (NDAs) with your offshore software development team and establish legal frameworks to safeguard your proprietary information and trade secrets. Moreover, study the IP laws of your home country and offshore destination, as there may be differences in IP protection levels. Consult with IP experts to ensure you comply with regulations.

Manage cultural differences and communication barriers

Not all countries have the same work ethics and communication methods. Learn how to adapt your work style to your offshore software development team’s and be aware of cultural nuances to cultivate an inclusive partnership.

For instance, your offshore team may interpret certain words and gestures differently. While you might perceive a thumbs-up as a positive sign of approval or agreement, individuals from Islamic and Asian countries may see it as an insult due to their cultural norms and customs.

Encourage open dialogue, promote cultural understanding, and address any communication barriers proactively to ensure seamless collaboration.

Thoroughly research and vet potential offshore partners

Your project’s success heavily relies on your offshore software development team’s capabilities and expertise, so conducting thorough due diligence is critical when selecting an offshore partner. Evaluate their expertise, experience, reputation, and client testimonials to ensure they align with your project requirements and values.

Vet their cultural and time zone differences, security and data protection measures, and associated costs to ensure you get a good return on investment and meet your software development goals ahead of or on time.

Must-Have Characteristics of an Offshore Software Development Partner

software development team leader mentoring newbie

Choosing an offshore software development partner requires careful consideration of many factors, such as these. 

Great value for money

Look for an offshore software development partner that offers cost-effective solutions without compromising quality. They should have competitive pricing structures that align with industry standards and provide transparent cost breakdowns. Evaluate their hourly rates, project-based pricing, or retainer agreements to balance affordability and your desired level of expertise.

High English proficiency

Effective communication is crucial for successful collaboration in offshore software development. As such, find a partner with high English proficiency to facilitate clear and efficient communication. This proficiency ensures smooth exchanges of project requirements, feedback, and ideas, minimizing misunderstandings and potential delays.

One country you can rely on for English-proficient offshore workers is the Philippines. Many Filipinos can speak the language fluently and have high literacy rates, making them capable of comprehending your software development needs without language barriers.

Culturally compatibility

Find a culturally compatible partner that understands and respects your work culture, values, and business practices. This compatibility can enhance the partnership’s communication, teamwork, and problem-solving abilities. It can also foster a productive, harmonious working relationship aligning with your organizational values and goals.

Due to its unique history, the Philippines has a blend of Eastern and Western cultures, making it a perfect fit for companies from different countries.

Great track record in the industry

Seek an offshore software development partner with a proven track record of success in your industry. They should showcase a portfolio of successful projects and client testimonials demonstrating their expertise, reliability, and ability to deliver high-quality solutions.

Assess their past work, client references, and case studies to gain insights into their capabilities and level of professionalism.

Founded in 2010, Manila Recruitment has established itself as a reliable and trustworthy collaborator in the offshore software development industry. This track record instills confidence in every partner they’ve served.

Skilled and specialized talent pool

A reliable offshore partner should have a skilled and specialized talent pool. They should possess a diverse team of experienced software developers, designers, testers, project managers, and other professionals with the necessary technical expertise. 

It is crucial to assess the partner’s recruitment and talent acquisition processes, their focus on continuous learning and skill development, and their ability to match talent with specific project requirements.

Build Your Ideal Offshore Software Development Team Today

Working with an offshore software development team offers unique growth opportunities for your business. It can help you reduce costs, speed up your software development processes, and focus on other core business functions. However, investing in it also presents many challenges.

Use the pointers above to know when and how to invest in offshore software development. The right partner can drive your business forward and make you stand out from your competitors.

If you need help finding remote and offshore workers, look for a reliable and established recruitment firm in the Philippines like Manila Recruitment. We have internationally certified recruiters who can implement the best sourcing strategies to find the right people for your organization.

Contact us today to learn how we can help you build your ideal offshore software development team. 

Lawrence Barrett