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Offshore Software Development. Everything You Need to Know About It And How It Benefits Your Business

Published: 28 Nov 2021
Oleh Tsymbal
Oleh Tsymbal
Founder, Cloud Solutions Architect
Eugenia Vyshnytska
Eugenia Vyshnytska
Marketing Lead

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There is a broad opinion that conducting business domestically implies complete control over it. However, today offshore software development is becoming increasingly prevalent due to industry's rapid growth. According to Statista, the profit from IT outsourcing services will reach $413.72 billion by the end of 2021. Apparently, offshoring for technological and cost reasons is a natural business move.

Although there are numerous disagreements over the hiring process for remote developers, in certain scenarios, outsourcing your business processes may be a more advantageous and preferable option. That is why entrepreneurs in one country seek out opportunities to work with offshore software companies.

What's the difference between outsourcing and offshoring? What are the advantages of offshore IT development, and how do you get started? Have you ever wondered what it's like to outsource software development to an offshore company? Here's everything you need to know to get started with outsourcing the right way.

What Is Offshore Software Development?

Offshoring, in general, refers to companies moving their operations to a partner in another country to save money while maintaining control over all processes. An example would be a US company hiring offshore development services from a partner in Eastern Europe. Offshoring in software development refers to the process of outsourcing tasks to another country where local teams take full responsibility for them. On the other hand, clients have control over the process and can keep an eye on things.

We can state that outsourcing is similar to offshoring. However, outsourcing does not always imply the development of software in another country. Outsourcing can be done within the country by delegating task execution to a contractor. While offshoring refers to the delegation of development processes to a different country. Furthermore, offshoring is the process of hiring a third-party contractor in a region with a different timezone than the company’s headquarters.

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What Is The Difference Between Onshore, Nearshore, And Offshore Software Development?

As well as offshore product development services, you've probably heard of the terms onshore and nearshore. Let's clear things up, so you have a whole picture. The geographical location of the client and the location of their software development partner determines which of these three service models is used.

Onshore development refers to the hiring of software engineers in your own country or region. That means you hire software developers located in your area or nearby. This approach might give you a feeling that you keep everything under control, but everything depends on the region where you live and the team you work with.

Nearshore development is similar to offshore software development, considering you hire developers abroad. Nearshore IT outsourcing happens between countries with similar time zones, like Western Europe and Eastern Europe or the USA and Latin America. It allows you to communicate with engineers more quickly, but it is not always cost-effective.

here-near-faraway

On that account, offshore software development unites clients and providers in distant countries or continents.

The Benefits And Risks Of Offshore Software Development

Software offshoring can be advantageous since it provides access to a large pool of software engineering skills that would otherwise be unavailable. For most businesses, offshore software development outsourcing is an excellent solution for projects that require specific expertise and high-quality deliverables that are hard to find on a local scale. A business owner will hire offshore developers only if they understand they will get more benefits than drawbacks. As a result, we must identify all pros and cons of offshore development.

How You Benefit from Hiring Offshore IT Developers

Access to the best IT professionals

Talent is the most competitive and scarce resource in the IT sector. If you find a reliable company, it will always adhere to top standards to provide a high-quality product. Moreover, a vast majority of offshore companies focus on particular business industries of technologies to deliver the best results and solutions.

Expertise in the Industry

The professional IT companies have years of experience in the sector and have created expert offshore development teams for every technology. This is the level of expertise that can completely alter the course of a project. Furthermore, because the offshore partner has worked on international custom software development projects for various clients, they are familiar with the challenges and comprehend the difficulties.

Workload Optimization

An outsourcing company relieves you of the burden while ensuring quality. Clients do not have to spend time recruiting specialists, purchasing software and hardware, and so on. With development taken care of, your company's time and resources can be directed toward its core business. Offshore software development allows you to concentrate on your core business strategy without the added stress of running and managing a software development office.

Faster Time to Market

Because a high-standard company aims to deliver dependable offshore development services, it works to meet deadlines as closely as possible. An external group can also provide new bits of knowledge to help you enhance your business measurements, allowing you to leverage innovation and development at every stage of the product life cycle. Offshore development teams often create custom solutions for your business and do their best to enhance your in-house talent's capabilities.

The Cost of Development

The key benefit of offshore is that clients get high-quality software at a reduced cost because hourly rates are usually lower in offshoring countries. Moreover, you don’t need to put resources on IT infrastructure or time recruiting, training, and preparing employees if you outsource your software development.

Nonetheless, some risks are also hiding there.

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Offshore Development Risks. Defining the Issues and Finding Solutions

When it comes to offshore software outsourcing, there are a few things to keep in mind. However, we want to reassure you that every risk has a viable remedy.

Timezone Difference

When a company is located on another continent, it might seem complicated for a client to contact them due to the substantial time difference. However, this shouldn't be a significant issue because reputable development firms will always find the best time to connect with clients. Moreover, the software is being developed while clients are sleeping — not bad, huh?

Useful hint: to avoid the problems caused by different time zones, we recommend you form a team that quickly identifies the golden mean when scheduling meetings. As a consequence, you'll be able to come to an agreement on a time that works for both of you.

Language Barriers

As most offshore outsourcing software development organizations are based overseas, English isn't the first language for many of them. This aspect may result in a communication breakdown due to a linguistic barrier. But there is a way out.

Useful hint: when looking for an offshore software development company, request that an HR manager gives you a complete picture of the team's English proficiency. Select a team with an Intermediate or Upper-Intermediate level of English or higher.

Less Control than Expected

Controlling a project from afar isn't always straightforward. Often, clients are unable to manage every detail, and if something goes wrong, it may take longer to fix it. On the other hand, reliable businesses keep in touch with their customers to keep them informed of any changes.

Unfortunately, some companies lack the maturity to provide offshore development services. They have low hourly rates, which appears to be advantageous at first. However, the client is left with a low-quality product in the end.

Useful hint: when selecting an offshore software development company, be cautious and specific. Hire a team with positive reviews, a high record of success, and a strong portfolio. It helps you save time and money.

Your Project Can be Stolen

This is most likely the worst-case scenario for offshoring. To construct the general scope of work, you explain the project needs and offer the details of your idea. And then, it occurs to you that your vendor has released a product based on your concept.

Useful hint: By signing an NDA (non-disclosure agreement), you can avert such a catastrophe. You may assure that the development company won't be able to exploit any of your ideas or data for the business's purposes by signing an NDA as soon as possible.

We can assist you in discovering Ukraine as your offshoring destination for software development! Contact us

Cooperation Models Of Offshoring Development

There are four primary models you should choose from before you sign a contract with an offshore web development company (or a development team).

Fixed Price

This model implies paying a fixed cost for offshore software development services after a detailed estimate. The work is then started. If you later decide to add new functionality to your app, the company will need to create a new detailed assessment, and you will have to pay an additional fee for a new contract. This model is appropriate for simple projects with predictable and well-studied functionality, limited deadlines, and budgets.

Time and Material

According to this model, clients pay for the amount of time spent on development. In contrast to the fixed price model, you can add new features and make other changes, but the exact final price will not be known until the development is completed. If you don't have a clear picture of the project or predict changes in its aims, time and material can be a good approach. Also, it's suitable for companies that aren't concerned with meeting deadlines.

Outstaffing

Clients do not always require a full-fledged development team. They have in-house developers, but the project needs to hire a couple of additional professionals, such as a NodeJS developer, a senior DevOps, etc. Clients can also hire offshore developers on a remote basis. This could be an excellent option if you don't have a team yet but are short on time, and the project cost isn't the most significant consumer for you.

Dedicated Team

The client hires a team to create a project for them, and that team will only work on that project. The client is not involved in the recruitment process because the offshore development firm assigns developers, UI/UX designers, and QA engineers on its own. Communication with a team is performed between the project manager and the client. Companies that want high-quality code at a reasonable price and wish to connect with developers from the start may benefit from a dedicated team. It's a great way to get started on new projects or add new functionality to existing ones.

It can be challenging to make the right choice due to the abundance of cooperation models. Ask experts — contact RabbitPeepers managers.

Pros and Cons of Cooperation Models

You must clearly understand the requirements of your project and make final decisions based on how much flexibility and the quality of your relationships with the contractor you require for your project. Compare the main difference between each model.

Type of Cooperation ModelProsCons
Fixed Price* fixed cost for offshore software development services after a detailed estimate;
* allows customers to pay the pre-agreed price;
* suitable for projects with limited deadlines and budgets;
* the absence of additional supervision due to the strictly defined details.
* poor project flexibility;
* changes can be done only after estimation;
* possibility of miscommunication;
* bad for long-term projects.
Time and Material* makes the development process gradual and continuous;
* allows different types of payment (hourly, weekly, biweekly);
* involves regular payments for completed work;
* transparency allows monitoring the progress of the development flow.
* the exact final price is unknown until the development is finished;
* uncertain deadlines;
* management of every step of the development process.
Outstaffing* ability to hire required professionals for the project but not the whole team;
* offshore software developers can be hired on a remote basis.
* long search and recruiting process;
* be ready to spend some time on the onboarding of the outstaffed developer.
Dedicated Team* a team works only on the client’s project;
* offshore development firm assigns the design and development teams on its own.
* the client is not involved in the recruitment process;
* communication with the team is performed between the project manager and the client.

If you have any questions, our reliable development company will give you a hint — contact us right now. Our managers will get in touch with you as soon as possible and help you choose the most suitable model for your project.

When to Hire Offshore Developers

There are many situations in which offshoring becomes the most viable option.

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Do You Have a Lack of IT Talent? On a global scale, talented offshore developers are in short supply. To address this issue, IT firms use remote methodologies.

Do You Need Specialized Roles? Many projects require either super-specialized technical roles or temporary positions that are unappealing to top-tier developers.

Do You Need Delegation? Companies that collaborate with offshore development services save energy, time, and money when it comes to forming development teams. Depending on the project's needs, you may need to hire more people or cut back on resources.

Do You Have Complex Projects? Tackling a complex project requires a lot of know-how and technical expertise. Without those, it is all too easy to hit speed bumps and waste time.

Do You Struggle with Tight Deadlines? Obtaining the appropriate results at the appropriate time can mean the difference between success and failure. When needed, offshore developers can scale your capabilities.

**Do You Require Support and Consulting?**Software outsourcing companies offer consulting and support services for existing or ongoing projects that have stalled.

Do you Look for Cost-efficiency? IT development firms completely eliminate the costs of hiring in-house personnel while providing comparable or better benefits.

Suppose you have answered yes to most of these questions, you definitely have to consider hiring an offshore developer. Our business development managers will happily consult you on how to do it most effectively.

What to Consider When You Choose an Offshore Software Outsourcing Company

When selecting a top software company, keep these key points in mind. And, in order to avoid failures, you must take some critical steps.

Fluent Communication and Workflow

Fluent communication and workflow is the most significant step to offshoring. Your software outsourcing partner should be fluent in English. Furthermore, their work process should be consistent with yours throughout the development cycle. Spend some time researching information about offshore development services, how they are implemented, and how the communication process works.

Location and Culture Neutral Team

A considerable time zone difference can impair the development workflow due to the geographic distance between you and your offshore software development vendor. You may also encounter cultural and linguistic hurdles, but all of these issues are easily resolved if properly managed.

In this sense, the outsourcing model is mostly determined by your location and the location of the company with whom you partner. If you're from the United States, outsourcing to Ukraine will benefit you as your team will be approximately 7 hours ahead. If the organization has a vital question that requires your reaction and consent, product development may be delayed from time to time. At RabbitPeepers, we schedule all meetings in advance to improve communication efficiency and minimize time lags.

Ukraine's legislation has been rapidly evolving in recent years as a result of continuing tax reform, labor law reform, business law reform, and other initiatives.

The Ukrainian Government has developed and implemented a special legal framework for the IT industry, called Diia.City that involves exceptional taxation model, flexible employment conditions and a special procedure to interact with regulators. Moreover, the Ukrainian government has taken proactive steps towards simplification of services export from Ukraine. With the adoption of the Law of Ukraine On Amendments to Certain Laws of Ukraine on Elimination of Administrative Barriers to Export of Services, it has become easier to maintain business operations with clients abroad.

That's why Ukraine is a safe and reputable country for outsourcing your software product development.

Standardized Security Protocols

Cybersecurity is more critical than ever in today's increasingly tech-driven environment. Make sure that the IT company you choose has up-to-date security methods in place to protect all data and software items.

Top Talent Software Engineers

Offshore software development outsourcing provides you with access to top-tier IT talent. The objective of an offshoring company is to collect the top software engineers in the region and use their talents to create the best product possible for you.

Quality Experience

Always check your potential IT partner's references, past clients, and completed projects. This information will provide you with some insight into the IT company's performance, workflow style, and software product quality. And don’t be afraid to ask questions.

Full Range of Services

What you require today may not be what you require tomorrow. The best outsourcing companies that specialize in a variety of fields will be able to handle your project in a comprehensive and highly experienced manner. Make sure your partners are technologically advanced, and they always follow new existing trends. It has a direct impact on the quality of software being developed and makes a future product competitive.

Don't Focus on the Lowest Price

Offshoring software development implies lower costs, but you do not have to limit your search to low-cost services. Some companies may charge a higher fee, but they have more skills and experience to help you with your project. Furthermore, the human factor cannot be overlooked — look for a communicative company capable of developing positive relationships with clients.

offshore-12-reasong

Choosing the best partner is a responsible task. In case you want to know more about RabbitPeepers, read our detailed guide about our team and how we work — it will help you make the right decision.

Steps to Take Before Working with an Offshore Development Company

Doing your research before offshoring can help you reduce risks and maximize the outcomes of your software outsourcing project.

Define your Goals

Offshoring services boost your company’s capabilities to reach its goals. Having a clear idea of what you’re aiming for and the expected results in a given time frame will make it easier to plan a custom technology solution that matches your needs.

Set Priorities

While offshore development companies will help you build a detailed roadmap of your project, at first, it is up to you to state what matters most for your company and your clients. Make a list of what should be the development priorities in the short and long term.

Define your Vision

You bring the idea, and your development partner turns it into real software. The clearer the picture of your vision is, the faster your project will come out of the wireframing and sketching stage. Remember, you are not building a product — you’re building an experience.

List your Needs and Expectations

Every project requires a different technology stack and different engineers with expertise in a wide array of fields. Check other service models and technologies to get a feel of how they could fit in your project.

Note Everything Down

Proper documentation speeds up any process and makes everything much more transparent. Your offshore team will help you choose the best solution to achieve your goals on time and cost-efficiently based on your needs.

Communication is the Key to Success

While working with offshore software outsourcing companies comes with many benefits, the success of any project depends primarily on one major factor: communication. Setting an efficient workflow with your development team will determine how fast your project progresses, as well as the quality of the final product.

Your IT partner will always be interested in establishing a productive and professional with you. Use that to your advantage by asking as many questions as possible and giving the most honest feedback. Even if your project wasn’t all that defined initially, these directions would build the concrete foundation upon which offshore developers can work and bring valuable results to the table.

And keep that feedback cycle going throughout the entire development process! Whatever communication channel you and your IT partner use to collaborate (email, phone, video calls, web platforms, etc.), go back to it periodically to make the most out of your software development journey.

Is your company interested in software outsourcing to Ukraine? Contact us for more information and guidance.

Offshore Development Advantages Offered by RabbitPeepers

RabbitPeepers is an East European professional offshore software outsourcing company from Ukraine. We have experience in software development for startups and small businesses, helping to reach their objectives and bringing ambitious ideas to reality.

Our IT services and custom software solutions allow companies enhance workflow efficiency, address business challenges, and gain competitive advantages.

We provide a wide range of benefits to our clients.

  • An experienced team that can quickly adjust to new requirements and changes.
  • Non-disclosure agreements (NDAs) executed according to clients' specifications.
  • Product quality assurance and control performed at all phases of the development process.
  • Extensive software development experience in a variety of industries.
  • Innovative development methods and cutting-edge tech stack.
  • Post-release support and maintenance service.

If you want to save money and get fantastic results, hire our offshore IT professional team to create a whole new product that is adaptable and successful on the market.

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Is Offshore Software Development Suitable for your Company?

Offshore software development outsourcing is recommended, but it is always necessary to understand the project at hand before making this decision. Consider delivery dates as well as how the software outsourcing company will improve efficiency in this process. Analyze your current resources as well, paying close attention to any skills gaps and capacity limits in your in-house team.

Consider the following factors while selecting an offshore software outsourcing company:

  • Choosing the most appropriate outsourcing model for your requirements
  • Clearly stating expectations
  • Maintaining clear and open lines of communication
  • Creating a comprehensive post-development plan

If you need expert consultation, contact managers from RabbitPeepers. Start your path in the world of offshore software development with us!

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