Offshore Software Development: The Pros and Cons of Offshore
When you’re looking to grow your business, one of the first places you might consider outsourcing is software development. The biggest advantage of offshore software development is the ability to save money on labor. But on the downside, it can be difficult to oversee progress. Not to mention that there are cultural differences that need to be considered. Offshore software development has seen a lot of growth in recent years. It’s hard not to understand why. But before deciding for sure, it’s important to weigh the pros and cons of outsourcing software development projects overseas.
What Is Offshore Software Development?
In short, the term refers to assigning parts or the entire process of software development to a company situated in another nation which in most cases has lower wages. To alleviate costs, find specialized professionals, and improve productivity, many firms have embraced offshore software development.
For instance, let us assume that your business is located in the USA. You may wish to recruit a software development team located in countries like Vietnam or India to perform work such as testing or maintenance.
So, why do many companies often outsource software development offshore? There is more to software development than a majority of people think; it’s a broad field on its own. It does not cover just coding but also dealing with customers, figuring out problems and solutions, and altering things as they should be. Even further, an increasing number of companies are relying on software outsourcing for more sophisticated technologies, usually IT automation.
These factors have fueled the growth in offshore software development. It is therefore estimated that the global revenue for offshore software development will grow by 10.13 percent every year from 2024 to 2031.
Why Outsource Software Development Overseas?
Offshore outsourcing is not the only option for software development. Creating an in-house software development team is one of the best ways to improve productivity and keep up with the competition. However, this solution requires an expert team and huge investments in constant training to keep up with the latest tech trends and create a desired digital solution. This sounds impossible to complete for companies with limited budgets. That’s why they switch to offshore outsourcing services.
“Money is the bottom line for most, but for many software development projects, quality is the real focus,” says Dima Khuba, the founder and CEO of SurfTR, an offshore outsourcing agency. “Increasingly, software developers are migrating their workloads from the US to India and other outsourcing locations.”
Khuba refers to data from the World Bank, which shows software development services have been rising in popularity over the past 20 years. More people in developing countries are buying and using computers. Moreover, they have the ability to outsource their software development needs to more affordable international locations. At the same time, US employers are becoming more open to outsourcing software development to countries with skilled labor.
Recommended reading: Outsourcing and Offshoring: A Detailed Definition and Comparison
3 Drawbacks of Offshore Software Development
Offshore software development presents undeniable challenges to businesses. Below are three of its drawbacks you should consider before deciding whether to outsource projects overseas:
1. Different mindset
One of the first things to consider when outsourcing software development is the cultural impact on the project. Is your software developed in a Pacific Asia, entrepreneurial environment or a more restrictive structure? Both types of teams have pros and cons and figuring out which one fits your business best is key.
A Pacific Asia “hard-working” mindset may drive a developer to follow through with something even if they have a huge internal disagreement. Alternatively, a more bureaucratic approach may push developers to take a more conservative approach, for the sake of the project’s success. While teams often include developers or software architects, you might not want to approach developers who come from a “hard-working” culture.
2. Data Security
Every company needs to protect itself from cyber-attacks. The cyber threats are no less pressing for an offshore software development company than they are for any in-house IT department. Outsourcing software development overseas is one way to ensure your organization is not vulnerable to such attacks.
You want a company that has the knowledge and technology to develop software for you, without compromising your security. If you have a small team that can manage the entire software development project, outsourcing can be a great way to achieve a high level of communication. But this method is usually not the right fit for a small business that employs a staff of programmers. As your software team grows, you’ll want to hire an in-house development team.
3. Language Barrier
Although numerous firms seek to cut down expenses through outsourcing software development, it is still a challenge to complete tasks in different countries. You may have to know a couple of different languages if you want to talk to those who are able to program for your company.
That’s not a deal-breaker in particular, but if you are relocating businesses to another country, it is usually better to know how to speak to those staff members who are in charge of actually manufacturing your product or service.
Recommended reading: Top 20 Best IT Outsourcing Companies
3 Benefits of Offshore Software Development
Those drawbacks can prevent your adoption of outsourcing software development overseas. However, if you partner with reliable companies, all these challenges will be resolved. These companies have a universal mindset and use robust project management strategies to overcome cultural and time zone differences. They also employ security best practices to protect your data while communicating well in English to ensure seamless cooperation.
Once these drawbacks are solved, outsourcing software development overseas brings transformative benefits to you. Here are three of them:
1. Lower Costs
As we mentioned throughout this article, various businesses are looking to outsource software development offshore to reduce costs. Why? It’s because when they hire foreign teams, they don’t have to worry much about dealing with local labor laws. Moreover, labor costs in different countries may not be significantly impacted by some factors (e.g., high-income taxes or local property). Therefore, foreign labor costs tend to be lower than those of US counterparts.
In addition, many local software development projects include elaborate artwork that is almost exclusively done overseas. And in most cases, software projects in the U.S. are usually outsourced at a minimum because they involve hardware products that are much more costly to purchase and maintain than the software themselves.
Recommended reading: Software Development Costs: A Detailed Guide to Estimate Your Project
2. Access to Talent Pool and Technologies
Besides lower costs, access to technical talent and advanced technologies is another benefit of outsourcing software development overseas. Such emerging markets as Vietnam, India, and China provide a huge pool of technical professionals who have in-depth expertise in development and design. They leverage advanced technologies and stay updated with the latest tech trends to create more effective business solutions. Those technologies can include artificial intelligence, machine learning, blockchain, and more.
3. Scaling the IT development team
When you have a very small to medium-sized team, and you’re looking to grow, managing your internal development team and finding qualified new hires can be a challenge. It can be especially challenging if you’re in a small or rural area and find it difficult to attract qualified employees. So, what do you do? Consider outsourcing to companies that specialize in software development.
These companies can scale up or down as needed, depending on your needs. They can hire and manage staff. They can handle special projects for you. This allows you to continue doing the heavy lifting, but delegate the more mundane work.
Conclusion
Outsourcing has become a popular option when companies need software development. It is often cheaper than in-house talent, and it usually offers a quick turnaround time. But outsourcing also comes with its fair share of drawbacks. If you’re considering outsourcing your software development needs, take the pros and cons into account before making any final decisions.
If you’re considering outsourcing your software development, look no further than Designveloper. We have successfully completed many projects for years such as LuminPDF, Swell, Walrus Education, etc. Further, with in-depth expertise, we have leveraged over 50 different tech stacks and tools to build tailored software for your unique requirements. Tell us your ideas and we’ll realize them.
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