How to Offshore Software Development - Best Practices

Offshoring software development allows you to reduce your expenses. But this is a risky business as well. In this article, we will guide you through all the pitfalls to ensure that you take most from offshore software outsourcing

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Why should you consider using offshore software development? It’s all about money. Limited budgets are what usually stops people from starting their own business. Having a brilliant idea is good, but it’s worth nothing unless you have the money and resources to bring it to life.

Digital businesses require large upfront investments, and in most cases, you aren’t even sure whether it will become successful in the future. There are many pitfalls that may bring you to startup failure. Obviously, you want to risk as little money as possible.

In this case, offshore development services can help you reduce your development budget by up to 60%. Want to know more? Then read this article carefully.

Offshore software development services. Let’s explore the concept.

To help you better understand what offshore software development is, we’ll introduce you to another important concept - outsourcing.

Mobile app development outsourcing involves assigning some work to a third party. You can outsource the app design, frontend development, or the creation of the entire application.

The ultimate advantage of this approach is the ability to fill any gaps in expertise. If you are a designer and not a programming pro, an experienced team can take over the app development. If you are a coding guru but don’t know anything about product development as a complex process, business analysis, design, and marketing professionals can help you bring your idea to life.

Even better, this allows you to save a huge chunk of your budget by taking advantage of salary differences.

There are three basic types of outsourcing: onshore, nearshore and offshore. And this is how they differ:

Onshore outsourcing - hiring a third party vendor within your country or your region.

The pros: you speak the same language, there are no time-zone or cultural differences, and you can easily meet in person to discuss the details of your cooperation.

The cons: the rates of your potential partner correspond with the local market and in most cases, you won’t save any money.

Nearshore outsourcing - partnering with a company in a country on the same continent.

The pros: little to no time-zone difference, slight culture gap, short travel time (usually within a few hours), and the ability to contact vendors with lower rates.

The cons: the price difference is usually not as significant as in the case of offshore development, but it is still worth the effort.

Offshore outsourcing - signing a contract with a development team from another continent.

The pros: impressive difference in rates that significantly reduces the development budget.

The cons: significant time-zone and culture differences, which are easily handled with proper management (usually included in the development price) and long travel times, if you decide to meet your team in person.

This infographic illustrates the differences in these concepts. We compare the hourly rates typical for the region.

As you see, offshore programming services are extremely affordable. Now that you know the basics, we can dive into the details!

How can you benefit from offshore development services

The first and clearly the most important advantage of offshore outsourcing is the price!

Ability to reduce development budget

Startups and beginner businesses always have tight budgets. The reason is simple: you have to start with either your own savings or moderate investments from your family and friends. Solid sums from venture funds are often a far-off dream. So, you have to focus on doing as much as possible by spending as little as possible, while not sacrificing on quality.

In this case, outsourcing could be a perfect option for you. It gives you a chance to not just hire offshore developers as a temporary low-cost team, but to build a working relationship that could last years.

Having a tech partner overseas is a competitive advantage.

All R&D activities will cost your company much less than your competitors, meaning that you can scale faster, defining the market rules.

Let us share a cool example from Clockwise Software’s portfolio. Two years ago, we started to cooperate with the Australian early-stage startup Toddy. The product itself is a marketplace that helps parents find trusted babysitters in their neighborhood. A limited budget forced the founder to seek offshore developers with the necessary skills. After the contract was signed, our team took over the frontend development and testing - expertise that the on-site team was lacking. Due to the price difference, the outsourced services cost 64% less than the price of the same services in Australia.

These savings can then be invested in market research, marketing, or development of new functionality.

Inspired by the case? Read the details about how Toddy was developed.

Access to a huge talent pool

When you decide to outsource, you are not limited by geographical restrictions anymore. You are also able to choose a country with a strong technical tradition. For example, in Ukraine, over 40 thousand tech students graduate yearly. Many developers have a degree in maths, engineering, or science, which is a huge benefit.

At the same time, these specialists are not overpriced.

A strong data science engineer in Ukraine sometimes charges less thana  junior frontend developer in the U.S. or Western Europe.

Easy hiring and onboarding

If you’ve ever tried to hire a tech professional, you know that this is a hard and long procedure that can take several months. If you need to hire a team of developers, you can hardly imagine how much time and effort you’ll have to expect. In addition, onboarding takes time as well.

Partnering with an outsource company is much easier. You have a few conversations with representatives from different software development companies, choose one that shares your values and matches your needs, sign the contract - and voila! - you have a development team. You don’t have to source and interview each candidate; the company has already done it for you. Then, onboarding isn’t your pain anymore. Your offshore development team is ready to start solving your problems from day one.

Do you want to start the cooperation with an expert team immediately?

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Scale up or down

Different stages of product creation require different amounts of work. If you hire on-board developers and you sometimes don’t have any work for them, you still have to pay their salary. This doesn’t happen when you cooperate with an offshore team because you only pay for the work done.

Also, if you decide to extend your team, all you have to do is tell your vendor. The offshore outsourcing software development company will quickly find professionals to strengthen your team.

Are there any risks in using offshore software development services?

Unfortunately, yes. Just as there are risks when you buy something online. But this doesn’t stop you from online shopping, does it?

There are a few risky points you should be aware of. However, all of them can be eliminated, and we’ll tell you how!

A vendor can steal your idea

This is probably the worst thing that can happen when choosing offshore app development.

When discussing the project requirements, you have to share the details of your idea so that your potential tech team understands the scope of the work. A few months after this talk you may find out that this company has released their own product based on your idea. That’s painful. Three letters can prevent such a situation: NDA, or non-disclosure agreement.

Sign an NDA as early as possible to ensure that the development company won’t be able to use any of your ideas or the data you share during an introductory call.

In addition, an NDA will help you protect your user data and other vulnerable information during the development process.

An offshore software company may not be competent enough

This happens occasionally, but you can play it safe and start a pilot project for a few weeks. This brief cooperation will reveal the strengths and weaknesses of the potential offshore team. You’ll get an overview of what working with this vendor looks like and understand whether you’ll like to continue this experience.

Starting a small project like creating a feature or fixing a crucial bug doesn’t oblige you to keep working with the contractor. This gives you a chance to avoid toxic cooperation and find another partner if necessary.

A slower and more complicated development process

There are a few reasons to fear this. First of all, there is a significant time-zone difference. In some cases, your contractors are turning off their computers when you wake up. Any chats or calls with them should be scheduled in advance and it takes place outside of working hours for both parties. Also, when the tech team needs your approval for an action, they often have to pause work and wait until the next day for your answer.

The time-zone difference may be a problem in the case of bad project management.

Most professional teams that work with American markets adjust their working hours to be able to communicate with the client directly. A qualified PM schedules a range of calls to make sure that the team and client are on the same wave.

Culture differences

The final but not smallest risk in offshore programming is connected with cultural differences. Outsourcing your product creation to an offshore software outsourcing company with a completely different culture may surprise you. And this surprise is not always positive, causing misunderstandings, missed deadlines and much irritation.

Huge culture gaps are usually connected with religion. So, if you don’t want to risk it, avoid offshore companies from Asian countries such as India, Pakistan, or Indonesia. However, you won’t experience any significant cultural gap when choosing a vendor in Eastern Europe.

As you see, the benefits of offshore software outsourcing are significant. Potential risks can be eliminated with smart planning and project management.

How to choose an offshore software development company?

Now that you understand the pros and cons of software development outsourcing, the main question in your head should be “How the heck do I find the right offshore company?” Good news, we have this topic covered!

To choose your development partner, start by creating a list of software companies you would consider to be a potential partner. Here are some good strategies:

  • Search engines
    Start with simple queries like “top web development companies in Ukraine,” “top logistics software companies in Eastern Europe,” “offshore development companies in Europe,” etc. You will find a bunch of lists, which are usually created by companies that want to promote their custom software development services. You should not trust everything written in these posts, but you’ll definitely want to add some of the mentioned companies to your list.

  • Industry related blogs
    Reliable companies usually invest in running their own expert blog. This is their way of sharing knowledge and improving the industry. It is a good idea to look for useful blog posts on your topic. Are you interested in the marketplace development trends of 2019 or IoT for business? If you find the content valuable, keep exploring the company’s website. You are likely to find a partner with the needed expertise in your domain.

  • Software development directories
    Clutch and GoodFirms are two of the most popular directories listing software development companies. The main advantage of these platforms is the true reviews that only authorized clients can leave. As a result, you have access to a handful of honest testimonials for each company and can better imagine how your cooperation with these firms may look. Does a company profile attract you? Add the vendor to your list.

  • References
    Talk to your friends and colleagues, and contact other startup founders to ask for references. In most cases, they will willingly share the name of the company they cooperate with. In addition, you can get a first-hand evaluation of the vendor and the overall offshore development process.

So, you have a list of software development companies that could become your technology partner. It’s time to get to know them better. Contact them via email or Linkedin (the contact information is available on the websites of these offshore companies) and schedule a call with the company CEO or a sales manager.

The first call will reveal weaknesses in the team. In most cases, you will be ready to abandon a few companies from your list.

If you aren’t ready to prefer one and only one vendor, initiate mini-projects with your finalists. Start a short contract to build a feature, fix a few bugs or any other job that needs to be done within your project. Don’t forget about the NDA. Signing this document can prevent data leakage and idea stealing.

The working process will reveal the clear winner. You should pay attention not just to the quality of the work the team delivers. Reliability, good manners, and a healthy atmosphere are just as important, especially if you are looking for a long partnership.

Offshore pros and cons

Conclusion

There are many myths surrounding offshore app development. Hopefully, we managed to dispell at least some of them.

This approach has a variety of advantages that can take your digital business sky-high. Knowing the pitfalls can help you successfully avoid them and take only the best that outsourcing has to offer.

Still not sure whether offshore is the best strategy for you? Let us be your guide! The Clockwise Software team is always ready to answer your questions or start a pilot project without any obligations. We deliver exclusive quality and offer tailored processes.

Ready to start a pilot project to try out the benefits of offshore software development?

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