What is Offshore Development? Why is It Important?

Offshore development can help you save costs and gain an edge in the market. But how do you choose the right offshore partner? Find out in this guide.

Offshore development is a popular and effective way of outsourcing software projects to a remote team in a different country or region. It can offer many benefits for businesses that need specialized skills, high-quality deliverables, and cost savings. However, it also comes with challenges and risks that must be carefully considered and managed. 

In this article, we will explain what offshore development is, its advantages and disadvantages, and how to choose the best offshore software development team for your needs.

What is Offshore Development?

Offshore development is an outsourcing model that has recently gained significant popularity. It involves hiring a software development team from a foreign country that operates at a different timezone than the company’s headquarters. For example, a Western European company might work with a software development team in Southeast Asia. The model gives businesses access to a vast talent pool at a relatively lower cost than hiring an in-house team. 

Offshore development can be helpful in several tasks, from basic coding to product design, developing custom software, software support, and maintenance. The offshore team can work on a project from beginning to end or collaborate with an in-house team. 

The size and complexity of the project determine the number of developers you will work with. For smaller projects, a solo developer may be sufficient. In comparison, a team of professionals will be ideal for larger and complex projects. Overall, offshore development can help businesses save costs, improve efficiency, and deliver quality products.

Do not confuse offshore development with nearshore development—another type of outsourcing model where a business works with a software development team in a nearby country or region with a similar time zone and culture. For example, a company in the United States might partner with an outsourcing software development company in Mexico.

4 Benefits of Offshore Development

This outsourcing model can offer many benefits for businesses that need to outsource their software projects. Some of the main advantages are:

Access to a Large Talent Pool

Offshore development opens up access to a global market of experienced software developers who can bring specialized expertise and high-quality deliverables that might be hard to find locally. You may also benefit from a fresh perspective and innovative ideas by tapping into offshore developers. After all, they come from different backgrounds and cultures.

Cost Saving

Outsourcing your software development to offshore teams can be an effective way to cut down on operational costs. You can save much money by hiring developers from countries with significantly lower rates than yours. 

Moreover, offshore developers work from their own offices or homes. Therefore, you do not have to worry about infrastructure, equipment, taxes, and benefits. Finally, offshore development can streamline your project timelines and reduce delivery times by avoiding local issues and regulations that might cause delays.

Flexibility and Scalability

Another benefit is that it provides you with greater flexibility and scalability in managing your software projects. You can adapt the size and scope of your offshore team to meet your changing needs and priorities. 

Depending on your budget and preferences, you can also choose from different engagement models, like fixed-price, time-and-materials, or dedicated teams. Additionally, offshore development allows you to work around the clock by taking advantage of the time difference between your location and the offshore team’s.

Competitive Edge

Outsourcing your development work to offshore teams can give you a real advantage in their market. You will be able to launch your products more quickly, improve quality standards, and provide more value to your customers. Also, working with local partners who understand the local market can help you expand your reach and presence in new locations.

What are the Risks of Offshore Development?

This outsourcing model has its own challenges and risks. Some of the common issues that businesses face when working with offshore developers are:

Communication Barriers

Effective communication is essential for the success of any project. However, maintaining clear and concise contact with an offshore team can be challenging, especially when there are language and cultural barriers and time zone differences to consider. Misunderstandings, errors, delays, and conflicts can arise due to communication breakdowns, harming the project’s quality and ultimate success.

Lack of Control

When you collaborate with an offshore team, you may face some challenges related to project management, quality assurance, security, and intellectual property rights. Since you cannot oversee every aspect of the work, you have to trust your offshore partner’s professionalism, competence, and reliability. Unfortunately, these qualities are difficult to assess from a distance. 

Additionally, you may encounter legal and regulatory disparities between your country and your offshore partner’s, which could pose some risks or obstacles.

Hidden Costs

Although offshore development offers significant cost savings upfront, there may be several hidden expenses that you should consider and plan for. These can include costs associated with communication tools, travel expenses, fluctuating currency rates, taxes, fees, and penalties. 

Also, hidden expenses can arise from poor-quality work, missed deadlines, rework, or disputes requiring arbitration or litigation. 

In conclusion, accounting for these potential costs is essential to ensure that offshore development remains an efficient and cost-effective option for your business.

How to Choose an Offshore Software Development Team?

Choosing the right offshore software development team is crucial for the success of any project. Therefore, it would be best if you considered several factors when selecting your offshore partner, such as:

Reputation and Experience

When choosing an offshore partner, selecting one with a good reputation and a proven track record of delivering successful software projects for industries similar to yours is crucial. Check their portfolio, testimonials, reviews, and ratings to ensure you pick the right partner. Also, look for certifications, awards, and recognition. 

One example of a premier IT outsourcing company is Golden Owl. We are a leading player in Southeast Asia’s tech industry, with branches in six countries: the UK, Singapore, Vietnam, Australia, the US, and Norway.

Skills and Expertise

You should find an offshore partner with the skills and expertise to match the desired project requirements and expectations. Additionally, a diverse pool of talent offering a wide range of services and solutions is advisable. The partner should also have a strong culture of learning and innovation to keep up with the latest trends and best practices in the software industry. 

For instance, Golden Owl boasts a team of over 500 expert developers proficient in various programming languages and technologies, including Ruby on Rails, Python, JavaScript, React, and Swift.

Communication and Collaboration

Finding an offshore partner with excellent communication and collaboration skills is essential to ensure a smooth workflow. It is also important to find a partner with a compatible communication style and channel. Ideally, you will want a partner with a transparent, agile approach to project management, making it easy to provide feedback, adjust plans, and stay on track. 

Golden Owl uses effective communication tools like Slack, Skype, and Zoom, along with the Scrum methodology, to deliver top-quality software products on time and within budget.

Cost and Value

It would be best to look for an offshore partner that offers a fair and competitive price while delivering a good return on investment. A clear and detailed contract outlining the project scope, timeline, payment terms, and expectations is also essential. The offshore partner should also provide quality, security, and satisfaction guarantees. 

Golden Owl offers different engagement models, including fixed-price, time-and-materials, or dedicated teams, depending on the client’s preferences. We also provide a free consultation and trial period to ensure the client’s satisfaction.

Conclusion

Offshore development can be a cost-effective solution for businesses needing a larger talent pool and save on labor costs. However, it comes with its own set of challenges and risks. Therefore, you need to carefully weigh the pros and cons of offshore development and choose the best partner for your needs. 

One of the best examples of a reliable and professional offshore software development team is Golden Owl. We can help you quickly navigate the digital transformation and achieve your goals by providing comprehensive IT services.