Offshore Development: The Definitive Guide

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August 24 2021

It would be a huge understatement to say that the internet and software boom has changed the landscape of the business sector. As the world is aggressively adopting technology to function, the need for reliable, cost-effective, and customized website and software development is also on a rapid rise.
 
However, the increasing cost of operations, lack of adequate talent, and mounting competition in web and software development have forced businesses to think out-of-the-box to meet these challenges.
 
Then came offshore development. And it has literally changed the way businesses approached software development and executed projects.
 
Fast-forward to now, a large majority of companies extensively use offshore development as their primary means to develop software applications and websites.
 
As the major attraction of offshore development is its cost-effective model, India leads the chart with the most number of offshore development companies. The abundance of skilled labor and talent made it all the more attractive for businesses. Along with this, offshoring development has proven to be an effective way of overcoming the global tech talent shortage.
 
Of course, outsourcing has become a strategic move for businesses to address the costs of development and lack of talent. But it falters as most businesses do not have adequate control over the projects.
 
This is where offshore development comes to play and quickly took the business world as the most preferred approach of outsourcing.
 
This begs the question that has been lingering in your mind for a while, right?
 
So, what is actually offshore software development, by the way? Let’s get into the details.
 
What is Offshore Development?
 
Outsourcing has transformed service delivery in the technology-driven world in more ways than one from the very core.
 
It is forecast that in 2021, the revenue in the IT outsourcing market is projected to reach more than USD 359,462 million.
 
IT Outsourcing Market
 
And offshore development is a part of it. In simple terms, offshore development happens when a company hires a new, dedicated team for software development in a different country. And the center where the new team is located is called the offshore development center.
 
For many, it might be the same as outsourcing. However, outsourcing can be of three types:
 

  • Onshore Outsourcing

  • Nearshore Outsourcing

  • Offshore Outsourcing

 
Offshore development is a subset of outsourcing and it has distinct features that make it different from the rest of the types of outsourcing. Although many vendors and clients use the terms outsourcing and offshoring interchangeably, they both have their own distinctive personalities.
 
Hence, it is important for businesses to understand this so as to avoid ambiguity and miscommunication. If you consider some of the biggest technology conglomerates like Google, Microsoft, and Apple, they all have their restive R&D Centers located in Bangalore, India.
 
They have been successfully operating the same with such exceptional benefits as low cost of operations, incredible talent, and scalability.
This bodes well with their economic goals of running the organization, as well.
 
How Does Offshore Software Development Model Work?
 
With more and more IT functions being outsourced around the world, the importance of offshore software development is on the rise. Almost all technology companies tend to offshore their projects and depending on the size, you can either go with a contractor model or a customer model.
 
Take a look at this figure:
 
Outsourced IT Functions
 
While offshore software development is unique in itself, there are two models of operations depending upon what the clients want.
 
If you are a small company and want to execute a particular project economically, you can go for the Contractor ODC Model.
 
Contractor Offshore Development Center Model
 
Here, the client shares custom requirements with the contractor or the offshore development center, and the center or the contractor hires a team based on the specific requirements.
 
The new team will be responsible for almost everything related to the project from the management of the team, technical operations, system design, analytics, and updating the software.
 
They would also be required to develop new codes as required, as well.
 
Most small businesses use this model as it gives them more opportunities and possibilities to play with while being extremely flexible.
 
Customer Offshore Development Center Model
 
In this model, too, a custom team is selected based on the requirements of the client. However, most major tasks are still taken care of by the client’s central office.
 
It can range from requirement analysis, product research, and managing the team. The chief task of the offshore software development team will be coding.
 
This is the model that works for bigger companies as they are capable of handling a range of tasks related to any project execution.
 
At Fullestop, we work as per the requirements of the clients to work within the constraints of any of these models to bring maximum value and efficiency to the projects that our clients undertake.
 
Growing Importance of Offshoring and Why You Should Consider It
 
As the world is getting dominated by technology and software programs, businesses are forced to create software programs for innumerable reasons.
 
You want an app for booking flights, hotels, and even medical consulting. You want an app to trade shares and buy stocks. You want an app to entertain yourself. Now you can watch the latest Hollywood movie from the comforts of your living room anywhere in the world, thanks to an extensive platform, which is a software application.
 
As the information technology market is continually growing, IT opportunities are also on the rise. This is underlined by the fact that the revenue of the global IT market is estimated to grow to USD 748 billion in 2020, which is 100 billion USD more than the revenue of the market in 2014.
 
Global IT Market
 
So there is no escaping the software craze in the world. And it is only getting bigger. And those businesses who took advantage of the earlier cues are now well off.
 
And it is time that you did that, too, if you have not already. It is always better to be late than never.
 
So, let’s try to understand the benefits of offshore software development, here.
 
Access to Excellent, Economic IT Talent Pool
 
One of the major challenges that most CIOs face now is the shortage of IT talent. And offshore software development is the perfect solution for that.
 
At least, for now.
 
Conventional wisdom says that talent is the most important aspect of delivering any project—small or big.
 
Without the right talent to take care of the project and spin it forward, it would be impossible for any business to move forward, either. And finding the right, skilled talent is getting tougher with each passing day.
 
This is where offshore software development can open up new pastures for talent and that too, at exceptional costs.
 
And, it is the Western companies that opt for offshore software development as the talent in their home countries can be extremely expensive. Hence, they choose to open their offshore development centers in Latin America, Asia, or Africa, where talent comes at highly affordable rates.
 
It is because of this that you can see many offshore software development centers for Western businesses such as Google, Microsoft, Apple, Netflix, and Sony in developing countries.
 
In a nutshell, you get the best, qualified talent. And you get them at unbelievably economical rates. We think that’s a winning combination as it gets. That’s also one of the specialties of Fullestop–one of the most reliable offshore web development companies. We have the best teams and talent at affordable rates.
 
Reduced Cost of Operations
 
Another obvious advantage of choosing offshore software development is its low cost. All businesses struggle with mounting costs of operations. And they are looking for ways to reduce them since costs have a direct impact on their profitability.
 
Offshore development is one of the best ways to bring the costs of operations considerably down.
 
This comes off from the first point that we discussed. It is easier to get incredible talent at economic rates with offshore development. Further, the operation costs of managing an offshore software development center are also less.
 
Most of the time, the centers are located in developing countries that have lower tax rates and the advantages of foreign exchange also can play a huge role.
 
In addition, most countries that attract offshore development centers also have various schemes to bring jobs to the country with unique tax cuts foreign business incentives.
 
All these can make offshoring an important strategic move for a business from a purely economic point of view.
 
Focus on Your Business More
 
Most businesses thrive by executing projects, a lot of them. And when you have a dedicated team to take care of the projects that are already undertaken, and when they do a nice job, you can focus on your core business, run it better.
 
Work and get more projects and make intelligent business decisions.
 
Since the offshore software development team is dedicated to undertake and complete projects, they can do that quickly without having to worry about running the company, marketing the business, getting more clients, or paying taxes.
 
All they need to do is to conform to your project specifications and requirements and deliver the project.
 
With lesser interference, they can finish their job quickly.
 
Domain Expertise
 
Although you may be working in a particular field for a long time and are good at the same, you may not have all the expertise you need.
 
With an offshore development center, you can address this pretty effectively.
 
When you hire a team for a particular project, you want people with specific skill sets required for the project. This results in you building an excellent team that has all the expertise and insights that you need to effectively execute the project.
 
It is not possible for businesses to have all the expertise it needs every day. And offshore software development is the best answer to that challenge.
 
Better Scalability
 
Another advantage with offshore development is the option to scale up or scale down the team as you need.
 
When you have the option to hire in-house to augment your team for better performance, the responsibility to ensure a good investment of your time and the resources might not let you be truly committed to the team’s requirements.
 
When you hire, it is often for a long time. And that does not always work the best way for your business if you only need the talent for a particular project only.
 
Offshore software development is the solution to this confusion.
 
Most offshore development centers have the talent that most clients require, and hiring the people to execute a project is easier for them as more projects such as yours might be coming for them.
 
Or, they may already be working on similar projects with the talent that you want.
 
Better and Shorter Lunch Times
 
Nothing puts as much pressure on a business as stretched project delivery dates do. Missing deadlines for launches can be frustrating for everyone—the management, the investors, the team, and even the customers. With an excellent offshore software development team, one can always take care of that.
 
If the project is not progressing as expected, then you can expand the team to get it done faster. Another thing with rushed production is compromised quality. When businesses rush their projects, quality stands to be compromised the most. And this is something that has the potential for huge future repercussions for the brand and the product’s image.
 
All these can be addressed only with an offshore development company and its services.
 
How to Find a Company for Offshore Work?
 
Offshore Development Company
 
If you have decided to go for offshore software development, the first challenge that you need to face is to choose an offshore software development company.
 
But, how does one do that?
 
While searching Google for top offshore software development companies in India or anywhere in the world can be helpful, it is important that you have a strategy to follow.
 
Since the decision is going to have a lasting impression on your business, approaching the same intelligently is the key.
 
You need to get as many details as possible about a potential company before choosing them. Although there are many ways to do that, the following will help you the most:
 
Tech Company Directories
 
One of the easiest ways to find excellent offshore development companies is to look in diverse tech company directories. Most of such directories as Clutch, G2, Upcity, ITFirms, and Good Firms will have tech companies listed with their profiles and ratings. This will give you ample details to evaluate the options and check with them to see if it works for you.
 
Freelance Websites
 
If you are a small company and the project is limited in its scope, then the best way to find an offshore software development company is to search on freelance websites. There are many such sites as Truelancer, Upwork, and Chegg along with others. All you need to do is to post your project requirements and skill specifications so that businesses can contact you to take the project further.
 
LinkedIn Network
 
While it may not be the best network out there to hire an offshore software development center, it will have contacts that will lead you to one. Being the biggest professional networking platform, LinkedIn will have tech leaders and managers on it that you can interact with to meet your hiring goals.
 
You can find Fullestop on all these platforms and more.
 
Factors to Consider While Choosing a Destination for Your Project
 
Choosing Destination for Offshore Project
 
Choosing a destination for your offshore software development can be a challenging prospect. You will need to consider a slew of factors before locking onto a destination. With software application development being the most offshored IT function, the market for the same is as expansive as ever. While each destination has its own advantage, choosing one that can bring you benefits the most and work in the long-term is the best option.
Consider this chart here:
 
Leading Offshoring Countries
 
And if you are in the dark about the same, here is a list of elements that you should consider while deciding where to go with your offshore development.
 
Business Rates and Expenses
 
The chief reason to opt for offshore software development is to reduce the cost of operations and fasten the delivery. Hence, while searching for destinations to choose, consider the business rates and allied expenses of setting up the center. Choose a destination that gives you a considerable cost advantage over your own country and other destinations.
 
Ease of Communication
 
Although the team is going to be working mostly independently, they will still be managed and led by you. Therefore, it is important to make sure that you are able to communicate effectively with the team at the offshore software development center. If you are unable to establish an effective communication channel with the center, there is no point in having even the best of talents.
 
Competition
 
You need to also consider the degree of competition in the destination that you are going to choose. If the competition is too high, then it would be better for you to move your offshore software development center to a new location or choose a different ODC destination altogether.
 
Availability of Talent
 
Having an adequate talent that can meet your expectations is a huge factor when making the decision to offshore to a suitable destination. In fact, one of the advantages of going for offshore development is to find the right talent.
 
Growth Prospects
 
Every business wants to grow. In fact, one of the reasons to go for offshore development is the desire of the business to grow. Hence, when you consider an offshore destination, it must also allow you to expand the same in the future.
 
When is Offshoring a Project Right for Your Business?
 
As the world of business is transforming and technology is playing an extensive role in the same, no brand can isolate itself from it. Businesses are leveraging the possibilities of technology to bolster their competitive advantage and operational efficiency.
 
In this transformational phase, software development is the one that spearheads the dynamics.
 
Hence, businesses are relying more on offshore development to meet the increasing demand for better quality, cost-efficiency, and talent.
 
With the IT services spending is on the rise, there is no doubt that businesses will continue to opt for offshore development services:
 
Global Offshore Revenue
 
Even then, businesses are also in the dark to understand when they need to go for offshore software development.
 
Here are some tips:
 

  • Consider going for offshore software development when you want to drive maximum value for the investment for the project.

  • Choose to work with an offshore software development center if you have a tighter budget that you do not want to stretch.

  • Working with an offshore software development team is the best option if you want to complete a project in a very short timeframe.

  • Leveraging the help of an offshore development company is also the best option if you wish to use only the best talent in the market for the project.

  • If you want the best technical support and infrastructure to develop your software, an offshore software development company can help you.
    When you already have a lot of tasks on your plate and do not want to be overburdened with another offshore software development is the go-to option.

  • Offshoring is the best option for you if you need to deliver the project with impeccable quality without being interrupted by any internal or external factors that might affect the quality of delivery.

 
Risks of Using an Overseas Developer and How to Mitigate These Risks
 
Like any other thing in the world, even offshore software development has its limitations. It can be dangerously serious if you are not prepared for it, or have not taken adequate steps to eliminate the same right in the beginning.
 
Following are some of the most common limitations of offshore software development:
 

  • Potential compromises on IP Rights and privacy risks

  • Communication concerns due to language barriers

  • Severe lack of agile practices for software development

 
However, each of them can be managed with upfront communication by the client and the vendor.
 

  • Placing adequate security protocols and data security systems can be the best way to ensure there is no breach of intellectual property.

  • When it comes to communication barriers, the client has to make it abundantly clear to the offshore development about communication and the discipline that has to be maintained with it.

  • While there are businesses that may not follow agile development practices, a majority of businesses in India now follow agile practices.

 
Fullestop has long been following agile development practices with all of its project development processes.
 
The key to addressing these challenges is establishing your expectations in the early stages of communication itself. Once it is established, these risks would be easier to manage and address. Or they would not even come around.
 
Conclusion
 
If you are a leader who wants to grow your business and bolster its bottom lines, offshore software development is one of the best ways to go.
Of course, this is a risk, but the advantages of offshore development are too great to ignore. While offshore software development can be a great opportunity to beat the competition and deliver better services all the while preparing the business for technological advances.
 
Fullestop has been delivering some of the most value-adding and technology-driven offshore development services to clients from around the world.
With cutting-edge technologies, proficient professionals, agile development process, and top-notch quality systems such as ISO, and CMMI Level-03 and the NASSCOM membership, Fullestop is fortified to become the best offshore software development company for you.

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