User experience calls the shots in software product development. It has also given birth to new challenges. If we go by Statista‘s list of the hurdles, then poor roadmap tops with 42.39%, followed by unclear direction (34.3%), inadequate tech knowledge (28.52%), and unrealistic deadlines (19.99%) among others. And all these are inspiring businesses to team up with offshore software development companies.
Let’s be clear about why this shift is happening. Problems like these stem primarily from constantly evolving technologies, lack of domain experience, and understaffing. Sometimes, cost emerges as an added burden for early-stage and growth-stage companies. Offshore teams work as one-stop solution providers and due to demographic and sociological reasons, they charge less.
But do they guarantee success?
It depends on how you assess the offshore software development team before you sign the deal with one. As its steppingstone, you can start by understanding the benefits of such a team first.
What is Offshore Software Development?
Offshoring and outsourcing are almost synonyms in software development. Both terms refer to a practice where businesses hire an external team to complete the project work. But offshore teams generally work from a remote location, like from a different continent.
Since 2020, the demand for software developers has doubled, and it has created a huge tech gap in businesses. This has forced businesses to consider outsourcing their tech needs with more urgency. They have started evaluating all three outsourcing options- onshore, nearshore, and offshore.
Difference between Onshore, Nearshore & Offshore Software Development
When businesses in the US plan to onboard an offshore development team, they generally do it from countries like Ukraine, India, the Philippines, Vietnam, Thailand, and others. But offshore teams do not share the same time zone with the company that is outsourcing the task from the US.
Onshore teams work from the same country. They have the advantage of the same time zones, but, in terms of cost, they are often more expensive than offshore or nearshore teams.
Nearshore means teams performing from neighboring countries or continents with similar time zones, for instance, teams from Mexico, Brazil, Argentina, and others. These teams can quote lower development prices because of their inexpensive lifestyle. But sometimes, the quality of talent, limited access to talent pool, and other demographic challenges become their bottlenecks.
Why look for Offshore Software Development Services?
In 2027, as per the study of Grand View Research, the global software outsourcing market will surpass the $937billion valuation mark with a 7.7% CAGR (2020-2027). This shift from having an in-house team to offshoring is not an overnight phenomenon. It started more than two decades back. IT companies in Silicon Valley began outsourcing to countries like India, Belarus, Poland, China, Ukraine, Argentina, Brazil, and others for benefits with potential to overhaul business outcomes and leverage offshore development advantages.
- Cost Savings
Only a couple of years ago companies were apprehensive about adopting disruptive technologies due to the impacts of COVID-19. But offshore software development companies, with their ability to reduce cost worries, changed the equation.
Developing software on-site is costlier than getting the same thing off-site. Mostly, it is because countries from Asia, South America, or East Europe have lower living cost, which in turn, reduces developer charge. Businesses from the developed countries can cut the development cost by 40% to 70% through collaborations with vendors of these regions.
With lower development costs, these companies can also extend your product runway during economic meltdowns.
- Access to a larger talent pool
Many early-stage startups struggle with recruiting the right team. One of the major reasons is the cash crunch. When you have a limited budget and a strict timeline, spending time to build a perfect team can result in loss of business opportunities.
You may interested in: complete guide on software development for startups.
For growth-and-mature-stage companies, the problem is slightly different. They need people to scale fast or add features quickly. But there is a severe shortage of such people in the market. Gartner‘s study, although it was for emerging techs only, backs up this argument. 64% of respondents felt that tech talent shortage stops them from adopting emerging techs like AI and blockchain.
Things are different with offshore software development companies. They come with their own teams of product engineers, product managers, experts, people in R&D, QA specialists, and others.
And if you want to scale, then offshore teams can help you do that better by reducing liabilities of a space for people, upskilling them, and boosting the capabilities of the in-house team.
- Specialized roles
Technologies are evolving fast. More so in the emerging areas of cybersecurity, cloud computing, and AI. But they are also posing challenges for businesses across industries. This rapidly evolving tech space has created a shortage of talent supply and it has made upskilling or hiring a costly affair. Projects with strict deadlines are bearing the maximum brunt as they cannot waste time in resourcing talents.
With offshore tech partners, getting developers for specific, hyper-specialized skills to excel in operations and innovate is easier. You just have to focus on the tech gaps you want to plug to let your production run smoothly.
- Helps you focus on the business side
For a lot of early-and-growth stage companies, balancing both the business side and tech side is a challenge. It happens because most of the decision-makers are either good at managing business goals or handling tech requirements.
If they lack tech knowledge, then they hesitate more while making tech decisions. Ultimately, the product development process eats up the business development time.
A good offshore software development team takes charge of the tech decisions. By doing so, they free up time for the CEOs, founders, and others, which they can utilize to focus on core business.
- Risk transferring
There are three types of risk associated with software product development- technical risk, schedule risk, and resource risk. Technical risks are a result of product complexities. Schedule risks happen when there is a delay in timeline. Resource risks stem from lack of expertise and resources.
With offshore tech partners, averting risks like these is easy. When decision-makers onboard teams, they should transfer these risks to teams and let them worry about how they secure the product roadmap. Product owners can always leverage team’s commitment to maintaining timelines, ensuring product quality with great code, and ensuring scalability. Getting resources based on need is also their job, and it will save both time and money for the companies.
- Time zone differences and 24/7 development
Offshoring mostly happens in Asian and Eastern European countries. With the US, they share a 10-12hours of time difference. Such a time difference can inspire round-the-clock activities leading to faster completion of projects, increased productivity, and shorter development cycles.
Also, for any customer-centric organization, 24/7 work is a boon. This system lets the client teams enjoy quicker turnaround time and enrich customer experience with better client support.
- Increased flexibility
No one expected COVID-19 to happen. Only a few knew about the chances of an economic slump of 2008-09. In 2003, people were unaware of the current rage, transmedia storytelling. Events like these always catch you off-guard and they call for a drastic change in the product roadmap.
Offshore teams allow you flexibility with team ramp-ups when companies hit their peak and provide services that can meet the immediate market demands. This way companies can only pay for services they availed, which reduces cost burden.
Offshore Software Development Challenges
There’s no doubt that hiring an offshore company to handle tech needs is a risky decision. It’s mainly because of the drawbacks these companies may have.
- Language and cultural barriers
Most of the client teams are from the US. But most of the offshoring teams are from India, the Philippines, Argentina, Brazil, Ukraine, Poland, and other countries where English is not the main mode of communication. This can lead to misaligned product vision and a higher number of iterations, which in turn, can trigger missed deadlines. Sometimes, these differences can spark some ethical questions as well.
Also, culturally these countries are quite different from each other. This means that the work culture would be different, along with the official holidays.
- Time zone differences can lead to communication difficulties
Yes, time zone has both positives and negatives. With an offshore tech team, communications mostly happen using some forms of messenger services, emails, video calls, and virtual meetings. But these talks lack the impact of an immediate chat because of the time difference. At the same time, they may not be able to deliver directions properly.
One way to beat this is setting agendas before a meeting and keeping the discussion to the point. The other way is using platforms like Jira, Slack, or Trello that give better visibility into the flow of the work. This route works well when companies adopt a ‘push’ method where people proactively upload their work status than the ‘pull’ method where managers try to gather information about task status.
- Lack of control over the development process
In 2013, the US government decided to launch healthcare.gov to facilitate purchase of health insurance under the Affordable Care Act. They hired multiple contractors and agencies. But due to lack of control over the quality, the site failed miserably.
Getting good code quality is also a challenge if product owners don’t have control over what the offshore tech team is churning. This happens, especially when the partnering team hires a lot of inexperienced developers. Also, physical distance between the client team and the offshore tech partner is one of the major reasons and it further gets aggravated with irregular communication and poor ownership. Tech teams that try to pass on the blame to others add fuel to fire.
On the surface, these look like insurmountable problems. But an offshore software development partner that prioritizes understanding product vision and is capable enough to lead the tech development can resolve this issue quickly.
- Intellectual property concerns
Security breaches can wreak havoc. Cisco-Huawei Controversy is a perfect example. In 2003, Cisco Systems Inc. sued Huawei Technologies Co. Ltd. for using their code, which happened due to a leak from a third-party vendor that was working with Cisco.
Data, algorithms, code, and business secrets, anything that adds value to business should be protected. The first step should be having an audit for all the digital assets to ensure everything is reported, secured, and monitored. The next step should confirm that the offshore partners adhere to necessary norms. A wrong step can lead to reputational damage, financial worries, and legal troubles.
Choosing an Offshore Software Development Partner
Skype, a communication platform, when they started out, they decided to hire an offshore software development partner, which proved to be a great decision. The team was great in terms of the internet and latest communication technologies and, in no time, they delivered a prototype.
But onboarding a tech team requires a thorough analysis of the company and the offshore software development benefits it provides.
- Consider the partner’s experience and expertise
Experience counts. Hiring an offshore development company with expertise in the required field reduces tech worries. Such teams can easily own the product and make the needed changes as and when required. If they are experienced, they can add value to the product by sharing their domain knowledge with the product owners. This will help develop better product roadmaps.
- Review their security protocols
Security is always a major concern. It would be better if you learn about the protocols of the offshore team beforehand and then sign the deal.
The review can reveal potential vulnerabilities and risks. If your domain has regulations, then the assessment can help you understand how compliant the company is. Apart from these, by adhering to the required regulations, offshore software development companies can protect you from customer loss in case of any breach.
- Understand their range of services
A case like healthcare.gov happens when clients go to multiple vendors for different skillsets. Different teams follow different methodologies. Getting them on the same page is difficult. As its outcome, timelines get affected, production gets pushed, and businesses incur huge loss.
But releasing products can become easier with an offshore partner that provides services for all your requirements and is capable enough to handle sudden changes in the product roadmap. It also reduces distraction and simplifies product management processes.
- Look for a partner with a strong project management process
A strong project management process improves quality, increases productivity, and ensures customer satisfaction. It starts with identifying the user story and communication. The offshore development team aligns developers, QAs, experts, and all with the product vision and makes them aware of their roles, responsibilities, and project timelines. These steps reduce misunderstandings and iterations, and improve customer engagement. Then the team develops a framework for planning, executing, and monitoring the project’s progress, which improves quality.
For a seamless workflow, the team breaks down the task into smaller jobs. It helps to identify bottlenecks and minimizes delays.
- Consider communication and collaboration tools
Communication with an offshore software development company sometimes become a challenge when offshore developers are not proficient in English or the language you prefer to speak. If you hand-pick your team from the talent pool of the offshore team, then you will benefit more.
Collaboration tools ensure better communication between teams working from distant locations. They also play a crucial role in knowledge sharing, tracking performance, assigning tasks, ensuring better project management, and in various team building activities.
- Comfort level with CI/CD
Continuous Integration/Continuous Delivery (CI/CD) ensures high quality, delivery on time, and helps to meet the client’s expectations. By integrating and testing code, it checks for bugs and identifies defects to deliver quality software. Offshore teams can streamline the development and deployment process with it and guarantee faster time-to-market.
Clients often hesitate to hire an offshore tech team due to different time zones. But if your vendor is adept at using CI/CD, then time will not trouble you much as with CI/CD, code changes get automatically integrated and tested. In fact, this automation reduces human error and ensures consistent and reliable performance.
Offshore Software Development Team Best Practices
Sometimes, goals change, or products pivot. For instance, YouTube started in 2005 as a dating platform. Then the company opened the platform for anyone who wanted to share a video. Such a drastic change may call for rework and that is understandable. But businesses cannot do it every time due to a misalignment in the product vision with the software development team. They must follow some offshore software development best practices.
- Define your mission and vision
They must clearly define their visions and what they want to achieve as a company to their tech partner before they set the balls rolling. Often teams just think of the specs they need to resolve, and, in the process, they miss the bigger picture. Once they are aligned with the long-term plans, they can take ownership and put the product owners at ease.
Also, sharing the vision and mission will help companies to connect with the offshore software development center. The more they feel at one with the in-house team, the better they will perform.
- Set priorities
While explaining the roles and responsibilities to the new team, set clear-cut instructions regarding priorities. In moments of crisis or time-crunch, if they spend more time on wrong requirements then you have to bear the brunt.
Well-defined roles and responsibilities create a sense of ownership. Once the dev team is aware of what is expected from them, they can plan their tasks better by creating smaller goals and monitoring quality and deadlines.
Enabling faster approvals from your side is also crucial. Things stuck at your end may hamper the project cycle. You can involve project managers to get things moving.
- Establish clear communication channels and protocols
Developers deliver wrong specs when they fail to understand the exact needs. Such cases happen due to either language barriers, time zone differences, or some communication gap between the team and product owners or managers.
To prevent miscommunications, you must set some protocols that will resolve issues quickly and effectively. Also, agree upon clear communication channels that will help you track progress and reduce iterations. These are some tangible results. If you plan to go long-term with the team, the clear communication channels and protocols will help you build trust.
You must understand that this team is not your in-house team. Hence, micromanagement is impossible as it will delay the entire product development process. But if you have an effective communication channel to track the process, then you can contact your team only when it is absolutely necessary.
- Set realistic project goals
In the US, 43% of companies outsource their software requirements and 57% of them have increased the scope of their partnership. The numbers are increasing. Offshore teams bring a lot to the table like technical expertise, talents, specific skillsets, and other aspects. But they have their limitations too. Sometimes, to draw a larger margin between project deadlines, companies set unrealistic timelines, which affect productivity and quality.
For a productive partnership, businesses must understand their work methods first and set realistic goals accordingly. In fact, one effective way of doing this is having joint brainstorming sessions, as it can help in planning tasks in a better way.
- Security should be a priority
In a PwC survey, 31% of the respondents have mentioned that they have experienced some security issues when they outsourced their software requirements. But such worries can be averted by following certain steps. To start with, sign a strict NDA with your offshore developing team. Then review their networking monitoring systems. Ensure you have authorized access in place for systems and project data. And don’t give any access to off-site client data critical to your business.
- Security should be a priority
In a PwC survey, 31% of the respondents had mentioned that they had experienced some security issues when they outsourced their software requirements. But such worries can be averted by following certain steps. To start with, companies should sign a strict NDA with the offshore developing team. Then they should review their networking monitoring systems and ensure they have authorized access in place for systems and project data. Companies should not give any access to off-site client data critical to their business.
- Adopt Agile methods
The agile software development process relies on short, repeated cycles of operations. Adopting it ensures better productivity and reliability. But with offshore teams, sometimes, this method becomes a challenge due to communication issues.
With good teamwork and communication channels, these problems can be side-lined. Also, offshoring has a benefit. Due to the difference in the timeline, in-house teams and offshore teams can work round-the-clock to deliver tasks faster. For instance, when the in-house team is at home after work, the work clock starts ticking for the offshore team, and they can take things forward.
- Ensure an effective knowledge transfer process
Even the best product engineers cannot deliver from day 1 without spending some time getting to know the system- the technologies involved and the product. But if he or she takes too much time, then that can delay the software development process.
Tech companies can minimize the impact of this challenge if they set up a proper knowledge-sharing platform. Effective onboarding of new members requires a thorough understanding of the project’s objectives, expectations, and the organization’s culture and work processes. A knowledge transfer platform should ensure it and also provide training on the company’s software development practices, tech stacks, and methodologies.
You may interested in: Steps to Hire an Offshore Software Development team
What advantages Talentica offers as an offshore partner?
In the last 20 years, Talentica Software has collaborated with over 180 tech companies to build multiple tech products. While doing so, we have developed a process to meet the specific needs of each of the product development stage.
The Talentica Way is all about balancing people and processes as per the priorities of stages of product development. It’s a customized approach where our product engineers understand the user story and product vision first to develop a plan for maximum impact.
And it is powered by our differentiators-
- Top talent- We hire product engineers with the attitude to solve problems and analytical minds from top Indian engineering institutes.
- Innovation focus- We go beyond what is asked and innovate to solve unique problems and build differentiators for our customers.
- Technical expertise- Our product engineers can build complex and scalable products. Also, we are early adopters of emerging technologies.
- Product mindset- We focus on business outcomes, reduce cycle time, improve feature adoption and have adopted the Build-Measure-Learn method to enrich customer experience.
Talk to our experts to understand how our offshore development teams can help you with your product development.
A good offshore software development team that is aligned with the product vision and works as the extended part of the in-house team can easily meet the tech needs. But collaborating with the right one may take some digging. To do it right, tech companies must make themselves aware of all the pros and cons.