Offshore Software Development Services – A Complete Guide for Startups

Introduction

Each business is unique in its functioning, aspects, performance, objectives, and goals. With this individuality comes business-specific challenges which demand tailored software, applications, and websites to handle the competitive needs of the 21st-century business. Plenty of off-the-shelf software are nowadays available but mostly they aren’t sufficient to meet the explicit operational specifications of the business.

This problem becomes even trickier to tackle for entrepreneurs and beginners who have just started their business and don’t have many resources to hire a full-time in-house tech expert. For them, the best option is to outsource software to an IT development company which has a team of expert developers who are skilled to cater needs of different businesses and industries.

Developers well understand the personalized needs of the customers and know how to incorporate them and provide a custom-built software. From complex software for large businesses to basic websites for newbies, the developers know how to satisfy all. Transferring software development to a third-party relieves much burden from the clients and they can focus more on the creative fields of their businesses.

Variants of outsourcing with reference to the geographical location of the vendor are the following:

Offshore outsourcing – When the office or location of your remote developer / developing company is far away from your native company and there’s substantial time zone difference then its referred as offshore outsourcing.

Nearshore outsourcing – It means that the geographical location of the software developer/development company you have outsourced is pretty close to your current location and there is a negligible time zone difference.

Onshore outsourcing – When the outsourcing company/developer is in the same country, in which you are then it’s called onshore outsourcing.

These terminologies are just to clear the concept, whereas generally the term “offshore outsourcing” is used for all sorts of development and work done by third-party.

Explore Why People prefer Software Development Outsourcing across different Time Zones?

Guidelines for startups

1) Do your homework before hiring an offshore development team

Choosing the right IT outsourcing company is not like grocery shopping where you randomly pick anything that’s easily available; it requires proper research, knowledge, and evaluation of the offshore developers and offshore development companies considering the fact that thousands of freelancers are out there and each one claiming to be the best.

Before you select any of them for your valuable IT project, take your time and evaluate the shortlisted developers/development companies; check their market value, go through the individual rankings of developers, reviews written on their profile, dig into the delivered projects’ or portfolio history of your vendors and check clients’ remarks on their social media pages.

Gather information about their skill set and how much they’re efficient in incorporating state-of-the-art technology and tools. Such little research will give you a deep insight about how the IT development company or the team of developers will work, their attitude towards their clients and how effective their solutions are; these will guide you to take the right decision.

2) Learn about the remote cooperation models

Several remote cooperation models are in practice in the tech market nowadays, but the most common ones are, project outsourcing, dedicated team, and extended team. Before you pick the one for your project, first analyze the cost structure of each model and examine which model’s cost – to – quality ratio is appropriate for your business. Don’t get away with the stereotype that high price guarantees high quality; some models only charge you for the hours a developer spent while some even make you pay for the idle time of their developers. So, do your homework before taking a decision.

Project outsourcing – The most common and the most popular cooperation model is the project outsourcing; it’s a turnkey solution where the company, to which the project is outsourced, is solely responsible for software development. The client company doesn’t need to hire in-house tech expertise for managing the development process because the outsourcing company will be taking care of all the features of the software development.

Dedicated team – Usually offshore development companies’ offer dedicated team services alongside project outsourcing. Dedicated team model is beneficial for those clients that are interested in long-term project cooperation because of the extensive workload. Here the vendor company is responsible for managing the technical staff which is required to complete the project and ensure 24/7 work cycle.

Extended team – Extended team is just a refined form of the dedicated team model. In this, the vendor company hires exclusive employees for your project according to your specific requirements and demands. Unlike dedicated team, extended team members aren’t the employees of the vendor or from their existing workforce, but they are hired especially and exclusively for you.

3) Consider different types of contracts

Various types of contracts are in practice nowadays for outsourcing, extensively study them and decide which one suits your project.

Time and Materials 

Also known as T&M, it’s the widely used contract type in project outsourcing. In this contract, the client pays only for the hours which were actually spent on the project.

Pros & Cons: T & M is one of the best flexible models; here the client holds the control and is free to replace features of the project, shift goals or adjust requirements whenever needed; even if he desires or feel the need of, he can stop the development process at any time or stage of the development.

The downside of this otherwise flexible model is that the client has little control over the cost and budget of the project neither it can be predicted beforehand. Moreover, as the client directs the outsourced project, sometimes the companies even charge for the “idle time” their developers spent waiting for the client’s feedback.

This contract model works well for those who anticipate that their project’s requirements may change during the development process.

Fixed Price 

Fixed price, as the name refers is a single-sum contract and once agreed, the development company is bound to complete the project according to the client’s requirements within the agreed budget and time. Even if they work beyond the deadline to complete the project, they won’t be paid for extra time.

Pros & Cons: Biggest plus of this agreement is that the client knows the cost beforehand and it won’t come as a shock at the end of the project, but all the same for this the client needs to be sure and clear about the specifications, requirements, and outcomes of the project and should have properly communicated them to the developers before signing the contract.

This model isn’t flexible like T&M model and changes in the project’s scope or specifications, after the agreement has been signed, will be charged additionally. The downside of this model is that it’s much expensive than other models because the vendors are well aware of the challenges of the development process and the resources it’ll require; therefore they mostly increase the price up to 30% at the time of signing the agreement to avoid risks in future.

Rate Card 

This is a monthly-payment kind of model, in which the software development company tells you about the developers who’ll be involved in your project and the amount they monthly charge; you will have to pay the bill on monthly basis.

Pros & Cons: Unlike fixed-price agreement, there are no hidden risks and charges in this agreement and the client will pay for a month spent entirely on his project. The team of developers work exclusively for one client and gives their maximum to the project.

A major pitfall of this model is that you have no idea whether the assigned team of developers is suitable for your project or not, in terms of their expertise. Sometimes, the vendor doesn’t even allow you to directly communicate with the developers and you have to convey your requirements via the project manager which may lead to miscommunication.

Cost+ 

Cost+ is usually used in the extended team model and in this agreement, the client not only pays monthly salaries to the developers but also pay a fixed amount to the vendor for the services it provides which include office infrastructure, taxes, payroll, workstation and support staff.

Pros & Cons: Often referred as out-staffing, this model is beneficial because in this the client holds the entire control of the development process; he interviews the developers, hire those he finds suitable for the project and directly communicate with them without a middleman.

But so much control is dicey too because, in case of a disaster, you can’t blame vendor because the responsibility of time, cost, communication, and management relies solely upon you.

Both Rate card and Cost+ contract models are beneficial for those who want to control the budget of even long-term projects which will require multiple changes with time.

4) Hire an in-house technical expert

Communicating with the offshore team is quite complex and sometimes miscommunication halts your project or makes you pay more. So, if you don’t have much time to give to your remote development team or don’t have sound technical knowledge of the project then it’s better to hire a specialist project manager who’ll be responsible for communicating all the technical details to the offshore team and documenting the updates regarding your project.

5) Establish an efficient development process

Decide features for your target audience – Before finalizing the list of features you want in your software, first, analyze the available software/website/application provided by your competitors. Figure out what’s lacking in them and what additional features you can introduce to facilitate your customers, expand your target audience, consider their personalized demands and aim to provide a better solution to them as compared to your rivals in the market.

Identify your requirements – You should be crystal clear in terms of technologies you want to use for your software; be specific about the specialists you want to hire, e.g, a marketer, a web designer, developer, etc. Decide these before consulting the software development company or discuss your project with them and ask them to provide you best solution accordingly. Here is key things every startups should know before hiring software developers.

Prepare your objectives – Be explicit in your goals, this will aid you in setting priorities and managing project in a better way. Moreover to keep track of your success and to up the motivation level, set metrics which you are aiming to reach.

Document the product roadmap – Always document the product roadmap, because when you do so and give the team of developers’ access to this roadmap, everyone will stay updated regarding altered objectives and the changes project is going through; thus they will work in line with your goals in a better way.

Appoint the product owner – Make one person head of the product to avoid confusion and miscommunication. This one person will carry on all the meetings and communications with the stakeholders. He should have in-depth knowledge about your business and should be able to correlate your customers’ demands with the project development process.

Communication tools – Pay much attention to the communication tools you’ll be using to connect with your offshore team of developers. Decide beforehand which instant messaging and video-call platforms (Skype, Slack, Hangouts, Google, etc) you’ll be using and which task tracking service (Asana, Trello, Jira, InVision, GSuite, etc) should be availed.

Software development methodology (Agile) – Agile is one of the most effective software development methodologies. It’s ideal if you want to stay updated about the phases of development and remain in contact with the team on regular basis via meetings and artifacts.

6) Build ties with your offshore team

To compensate the geographical distance between you and your remote developers, start by building cordial ties with them and make them comfortable; this way they’ll work as one integral team in collaboration with your in-house team. Value your team and start by stating “same rules” for all developers (remote and local); this will make your remote team of developers feel respected. Provide your developers with a challenging environment, so that they’ll keep on learning and improving in the entire development process. Moreover, apart from arranging team building events, provide your developers an amicable space to discuss everyday topics too.

7) Give priority to communication

Communicate, converse, connect – that’s your key to success when dealing with an offshore development team. Language barrier is the major reason behind miscommunication especially with technical concepts and explanation of ideas; make sure that there is one common language between you and your remote development team to avoid glitches in communication. Make use of latest messaging apps, these will make communication more efficient and ensure your round the clock availability (or in the pre-decided working hours) to answer queries of your offshore employees and to minimize misunderstandings.

8) Hire a Quality Assurance Engineer

Most beginners are short of funds and usually to manage the costs they skip hiring a Quality Assurance (QA) engineer believing that the developers are talented people and they’ll better check their work themselves. While, the fact is only a QA engineer knows how to test-check your product; he tests the code, figures out the bugs and make the development process more efficient.

If you will keep on going without a QA engineer, the bugs and technical glitches in the product will pile up and eventually you’ll have to spend more time and money to fix them.Leading Offshore Outsourcing Partner

Benefits of offshore software development services

  • Cost and budget

Outsourcing a remote team of developers is much cost-efficient than hiring an in-house team and as per rough estimates, a remote developer will cost you 34% less than your local developer. That’s because mostly the offshore development companies and freelance software developers are from developing countries like India, Ukraine, Indonesia, etc and therefore they’d cost you much less than your local developer. For example, the average cost of IT outsourcing in India is $18-50 / hour, whereas you’ll have to pay $25 – 250 / hour for the similar service in UK and USA. This is a great cost-saving option for start-ups who are already running low on budget.

  • Innovation and quality

Innovation and quality are the USP of offshore companies; they have teams of highly qualified professionals who are proficient in meeting your requirements and ensuring top-notch final product. Training young professionals and making them as productive as an offshore developer is will be time-consuming or budget-consuming if you’re aiming to hire a senior professional.

  • Qualified specialists

Outsourcing gives you an opportunity to hire the best pool of developers from across the globe. Within your limited price range you can get the best experienced and certified developers who are ready to develop the product just in line with your demands.

  • 24/7 development cycle

When you are dealing with offshore developers, there are great chances that they will be living in an entirely different time zone and naturally will have different working hours; this difference in local and remote working hours can be utilized to ensure 24/7 development cycle. The difference in local times of different developers residing in different corners of the globe will aid in completing your project in the least possible time.

  • Can focus on the creative aspects of the business

By outsourcing the complicated software development task, you will have more time to spend on core business activities. For start-ups, it’s even more crucial because their business is taking baby steps and require full attention to grow. By sparing yourselves from the development process, you can pay your full attention to the business strategies, its creative aspects, management and implementation of novel ideas.

  • Shared responsibility

Risk management for novices in businesses is dicier than it is for established businessmen, especially if the client company is a non-IT company. With outsourcing the risk management and its impact is shared between offshore developers and customers and offshore company will mitigate the risks in a better way because it’s part of their job. here is few points will help you to select a correct offshore company

  • No need for new infrastructure

Apart from the low hiring cost of developers, outsourcing is beneficial in terms of lower operating expenses. You don’t need to rent an office to provide working space for the developers, buy equipment and other essentials for software development. The offshore development company will take care of all these and eventually will speed-up the development process.

Drawbacks of availing offshore services

  • Communication barriers

Time-zone difference usually results in slower communication and arranging meetings with the developer will be quite difficult as you have to wait for the overlapping hours. Besides, sometimes it results in halting the project for the time being when the developer wants to ask an important question from the client and have to wait for him to come online.

  • Cultural differences

Cultural barrier effects when the remote developer resides in entirely different continent than yours, for instance, you are in the U.S and the developer is in Asia or UAE, contrary to the situation where the developer will be in Europe or Australia as they’ve almost similar cultural realities to the U.S. Sometimes language difference create unnecessary hurdle and it becomes difficult to properly convey your idea to the developer.

Best countries to outsource software development

Following are the top-rated countries for outsourcing software development because of the top-notch tech services offered by these regions at competitive rates.

  1. India
  2. China
  3. Philippines
  4. Brazil
  5. Indonesia

Conclusion

Outsourcing IT-related projects to offshore development companies is a modern era reality; it’s a tried and tested successful model. Availing offshore software development services is trickier and fruitful at the same time. Beginners in the field should do their homework before signing a contract; they need to be explicit in their demands and after extensively evaluating their shortlisted developers, they should select one. One wrong decision will cost them a substantial amount of budget and a lot of time. With the help of a QA engineer and by developing an efficient development process, they can capitalize on the talented pool of developers residing in different geographical locations across the globe.