Software Offshoring! Explore the Pros & Cons for an Informed Decision

One way to save funds is to hire employees in places where wages are low. This strategy is known as offshoring. Software offshoring is an incredibly effective way to build your business, whether you're looking to implement the latest cloud-based software or outsourcing an existing application or platform.

If you're considering offshoring part or all of your IT operations, here are some things to think about. While it can help reduce costs, there are risks associated with offshoring that enterprises should carefully consider.

So, before you outsource software development work, it's crucial to thoroughly understand all of the pros and cons of the process. 

Here's a query for you: Do you know why companies outsource IT?

Source: Statista- Reasons why companies outsource IT

The first section below highlights some of the significant benefits of software offshoring. In contrast, the second section summarizes some of the drawbacks that companies should keep in mind as they decide whether or not to outsource their technology needs.

Top 5 pros of Software Offshoring 

1. Reduces Development Cost

With software offshoring, you have a budget for development that's only a fraction of what it would be in the house. You can hire engineers with lower wages in countries where talent competition is less fierce.

Companies can hire highly qualified developers for lower costs in countries with lower living standards. For example, you can hire a QA engineer for $16 per hour in India compared to $50 per hour in Germany or $80 per hour in San Francisco.

In-house teams also have to pay office costs, so going to an offshore development center can help reduce your overall spending on development. 

2. Exposure to Greater Expertise

If you outsource development to a country with a more seasoned development team, you'll get exposed to expertise that will improve your design methodology. With time, it could also help your business succeed in international markets.

There is a vast pool of expert developers well-versed in certain technologies due to limited competition. It means companies have access to quality talent at low prices. In fact, as per Deloitte research, 47% of firms outsource IT to handle capacity-related issues.

3. Work 24/7

Another significant benefit of outsourcing to a developing country with a large pool of resources is that your developers can work around the clock without disrupting their schedules—or yours. It leads to quicker turnaround times for projects.

However, if you need urgent support from someone during regular hours, offshoring isn't going to be ideal since there may not always be someone available who can provide support during those times.

And even if there is, you may have to wait until after hours for them to get back to you if they're unavailable due to something else taking priority over helping you out at an inconvenient hour.

4. Greater Focus on Core Business

A company that offshores its software development will improve its bottom line due to higher employee productivity, better quality software, and cost savings. This greater focus on core business will help small to medium-sized companies be more competitive. 

They'll also have access to top talent that they otherwise wouldn't be able to find, giving them an edge over their larger competitors. And with outsourcing comes built-in scalability. Moreover, Deloitte research says that 57% of firms outsource to focus on the core business services.

Suppose your client base grows beyond your original expectations. In that case, you won't have any issues handling their needs because you don't need all of your employees dedicated solely to one client or project—your developers are working on various projects simultaneously. You can also concentrate on marketing while maintaining a quality product.

5. High Flexibility

Unlike traditional outsourcing models, software offshoring gives a company a lot more flexibility. There is a large pool of talent that enterprises can tap into at a low cost. Businesses can hire software engineers from India, for example, educated using state-of-the-art technologies from some of their top schools.

In addition to being incredibly talented, these workers also have work experience in some multinational companies, which has given them exposure to diverse cultures.

It makes it easier for them to adapt to working conditions in other countries and helps businesses with language barriers overcome those hurdles. When you outsource software development projects overseas, timelines become flexible compared to onshore alternatives.

5 Major Cons of Software Offshoring  

1. Reduced control over the project

Offshore development can be risky when you don't have direct control over your developers, or they aren't reporting directly to you. Your project will often go through modifications with little knowledge to you about why developers made certain decisions. 

For example, if an entire month goes by without communication from your developer: your project could fail before it even gets started. This lack of communication also means that if there are severe problems with how your software is designed or built, there isn't anyone readily available to fix them promptly.

2. Technical Communication Issues

One obvious drawback to outsourcing your IT operations is communication. For a firm that employs a large percentage of its staff within a specific city, it's more likely that those employees can pop into each other's offices or meet for lunch at a nearby restaurant.

In contrast, an employee who works remotely from another country is less likely to run into his fellow workers daily, making it more challenging to pick up on office chatter about projects and challenges that need to be addressed.

You can minimize these problems by scheduling regular video chats or face-to-face meetings among remote employees, but coordinating such sessions takes extra effort. It often requires individuals to work odd hours in different time zones.

3. Time Zone Differences

Offshore development teams are often located in different parts of the world, presenting several communication challenges. Time differences alone can pose hurdles, mainly if you're working with developers in different time zones or on other continents.

Depending on where your new team members are, they might be awake when you're fast asleep and vice versa. Plus, even though it sounds clichéd, time is money. There's nothing more irritating than having a meeting scheduled with a new employee in two hours and them not being able to talk because of an eight-hour time difference.

Source: Statista- Countries with most time zones

These issues can be a massive headache for any remote business owner. It also creates a lot of added stress—after all, if you have someone working for you who lives halfway around the world, anything that goes wrong can feel like much more than just an annoyance; it could become quite critical to your company's success or failure.

4. Language Barriers

The main issue with outsourcing to a developing country is language. Since many outsourcers work with low-cost call centers, language may not be an issue -- but it can be hard to communicate sometimes. If you're providing specifications and working on designs remotely, for example, you'll need to make sure your translation is accurate and effective; otherwise, your product might come out looking strange. 

With language barriers further complicating things, remote team members must rely heavily on written communication to relay ideas back and forth. Some businesses have successfully integrated phone calls into their regular meeting schedule, but collaboration is still more complicated than it would be if everyone were physically co-located. 

5. Geopolitical Unrest

In recent years, the world has seen numerous geopolitical unrest and hostilities between countries and even within countries. These uprisings, conflicts, and even wars can negatively affect the stability of the country in question and lead to severe consequences for businesses operating within its borders.

Source: Statista-Most Fragile nations in 2021

One of the most critical factors in outsourcing software development to another country is identifying how stable that country or region is politically and economically. Geopolitical unrest has far-reaching effects, including adverse impacts on the software industry, according to Gartner analysts. 

Wrapping Up

To sum it all up, offshoring is undoubtedly not for everyone, but there are several cases where outsourcing can be advantageous. That said, you need to know what you're getting into before committing yourself to offshore development services.

Check out our Frequently Asked Questions section for more info on offshore development, and also consult your accountant about any tax incentives. Don't forget to ask these critical questions about offshoring before signing any contracts! Whatever route you decide to take, best of luck with your business. You'll need it.

FAQs

Question: How do I find the right offshoring partner?

Answer: Finding a suitable outsourcing partner is critical to successful offshoring. First, ask for recommendations from peers and acquaintances in your industry. If you can't find anyone willing to be helpful, try reaching out to professional associations that support firms specializing in offshore operations.

A quick Google search should yield some results; just be sure to check out their legitimacy before moving forward.

Other online resources include sites like Clutch, Top Echelon Experts, and Upwork—though many of these companies charge hourly rates for their services, so it might not be cost-effective if you're trying to do some research on your own.

Question: Do I need to travel overseas to manage my offshore team?

Answer: No, not at all. If you outsource to a team overseas, it's probably a good idea to invest in some cheap software that allows you to monitor progress from home. Although your team will likely have an online presence—like a chat room or project management system—you mustn't neglect face-to-face communication.

Making yourself available for weekly one-on-one meetings is crucial for keeping in touch with your team members and ensuring they are doing what they promised they would do on their last assignment. If necessary, schedule monthly visits to check up on your offshore team in person.

Question: How long does it take to start the project?

Answer: Many people have a central question is how long it will take to get their projects or ideas off the ground. The actual answer depends on multiple facts, including your company's requirements and whether you're outsourcing abroad for higher wages, special talent, or greater efficiency.

In most cases, it should take anywhere from four to 12 weeks to see some tangible results, depending on how much time you need to dedicate and your access to outside resources. 

It can be a short-term business strategy for launching a website or web app quickly, but you'll likely want something more stable to build a long-term business that succeeds without having immediate appeal. A better idea is to sell products that don't require software development, like clothing or services.

Question: What are the leading nations in offshoring services worldwide?

Answer: As per Statista, the leading five offshoring nations include the following:

• India

• China

• Malaysia

• Indonesia

• Brazil

Source: Statista- Leading Countries in Offshoring