Offshore development services have attracted a lot of concerns from business runners in the past decade. The business market soars in the USA, UK, Australia, and other countries, which leads to a great demand for IT talents. However, a severe lack of programmers has dramatically increased the hiring price. The only way for them to both expand the development team and optimize cost is to utilize offshore development services. Many of them decide to set up an offshore development team in well-known offshore development hubs like India, Ukraine, Russia, the Philippines, Belarus, Uruguay, and Vietnam.
Entrepreneurs endure both good and bad experiences when they leverage offshore development services. Some made a great profit and found success in offshoring. The others made big mistakes and received nothing other than lessons. Therefore, before you decide to give offshore development services a try, you must take the pros and cons of offshoring into account.
To be honest, handling a software development project as a whole is challenging, and moving a part of your project to a group of outside experts is also risky. If you don’t have in-house software developers, hiring outside developers is your best bet. A lot of reviewers say that offshore development is easy, but it is not, for sure. You can not just assign your work to someone that doesn’t share responsibility with you once something goes wrong.
Despite that, offshoring has become a ubiquitous worldwide trend within the past decade thanks to its wide range of benefits to business owners. With the help of offshoring, entrepreneurs can get access to an enormous talent pool, save cost and time, promote productivity. Literally, offshore development services give companies technical support to any projects they tackle.
In this article, we will figure out the pros and cons of offshoring to give you a full lookout of what you should do to obtain success with offshore development services. Besides, we will also identify drawbacks associated with offshore development services and suggest active solutions to reduce their impact.
Hyva Theme – the future of Magento frontend solutions is written in detail in our Free Handbook. DOWNLOAD NOW!
What is offshore development?
Table of Contents
Offshore development implies moving a part of your company or a project to a third-party company located in another country. They will help you handle some processes or operations so that you can focus on main tasks. Besides, offshore development services offer companies without in-house software development teams a way to use new technology without investing themselves.
Offshore development services involve acquiring, monitoring, and consulting for IT-related operations for the host company. They receive money and are expected to bring about the best quality with the least time. Aside from offshoring, we also have outsourcing, onshoring and nearshoring. Outsourcing means assigning your operations to another business regardless of domestic or foreign contracts. In contrast, the main criterion for offshore development services is whether software developers base in another county or not.
Usually, offshore development teams are on the opposite side of the globe compared with the holding company.
In addition, onshoring refers to shifting your part of the business to companies in your own country. Besides, nearshoring means that your team is from a nearby country, not a remote location. The one thing that offshoring, onshoring, nearshoring have in common is that you assign your work to someone else and pay them instead of doing it on your own.
For US-based companies, when you hire a dedicated team of developers from countries like India, China, Eastern Europe, or Vietnam, that means you are offshoring a part of your business.
If you want to know more about why Vietnam is an attractive destination for hiring offshore development services, you can click on this link
This business model paves the way for cost-savings, time reduction, productivity enhancement. On the other hand, offshoring presents a couple of difficulties like communication and collaboration obstacles, security risks, data leakage, and a shortage of IP protection.
There are many kinds of offshoring. A company can choose to hire an individual developer or a whole agency depending on different requirements. Moreover, you can delegate the whole project or only a few parts to the offshore development center provider. Or, you can make a long-term contract with a dedicated team of software developers for upcoming projects.
Advantages of offshore development services
We will shed light on the key benefits of offshore development services – reasons why many companies decide to adopt this approach to gain success. Offshoring has a wide range of benefits, that’s why many businesses based in developed countries choose to hire developers from countries with lower living standards. This is beneficial cooperation for the two sides in which companies can save cost and time, and developers can make considerable extra earnings.
Cost reduction
This is typically the most remarkable advantage of offshoring. IT labor usually receives much higher salaries compared to other occupations. This turns into a financial burden for companies, especially in developed countries, the price to hire employees with digital expertise is overwhelming. It is estimated that about 25% of IT companies deem that labor costs are the most significant obstacle to expanding business scale.
When you are the head of a company, the financial burden is a big deal to you. You will make a great effort to minimize cost and still want to get the best products and service. A boss definitely finds talented labor that can meet their requirement. A job only open for people in your country will make the employer have fewer choices.
However, when it comes to offshoring, business owners can get access to developers throughout the globe. Companies can leverage the cost disparity to reduce costs. You can get dedicated developers with the same expense. They are willing to work overtime and meet the schedule. In short, you can pay less but receive more. You can save money to invest in other resources to grow your business too.
In fact, a lot of well-known successful businesses used offshore development services to expand the business size like Microsoft, Slack, Skype, or Basecamp. Therefore, there are no reasons for you to hesitate to hire offshore developers. Thanks to offshore development services, they were able to minimize time-to-market and launch their business on a tight basis and gain success like these days.
With offshore development services, companies can cut down on recruitment, training, fixed salary to maintain, bonuses, other social security fees… when they hire official employees on-site. They can save a considerable amount of money and get outputs beyond expectations with great outcomes.
In numbers, The US and Western Europe-based developers ask for from $60 to $200 per hour, while developers from Central Europe would earn somewhere around $50 per hour. The hourly pay for Vietnamese software developers ranges from $10-$25/ hour. In other Asia countries like India or China, IT-related employees get paid from $18 to $50 per hour for the same scope of work. That is why you are sure to save up some of that budget money with this approach.
Wanna hire your own offshore development center? Check out the Top 12 offshore development teams in Vietnam right now!
Aside from labor cost savings, offshore development services allow entrepreneurs to reduce the investment expense into equipment and facilities within the companies. The offshore development center provider usually assists companies with their infrastructure. Thereby, companies can focus their financial and human resources on promoting technology capabilities.
Therefore, you’ll set up a solid plan to make full use of the cost-saving advantages of offshoring.
Increase in productivity
This advantage is associated closely with the first one. Thanks to offshore development services, you can save a considerable amount of money. Then, will you put this amount of money aside? Of course not. You will use them to invest in your resources and yield profit.
What’s more, offshore developments give the core team spare time to commit themselves to significant parts of the business. It is reasonable that people just matter something but not all. Especially if your company is not a tech company, it is challenging to carry out tech-related tasks. However, technology implementation is an irreversible trend for all companies regardless of their spheres.
In addition, you don’t need to invest too much time and effort into something which you don’t know well. Just leave it to someone who knows what they are doing. You don’t have to care about the process but just focus on the result. Dedicated offshore development teams will try to get your consent and stay with you until the very end.
Experienced offshore employees can assist companies in managing strategies and projects effectively. So, companies don’t need to waste a lot of time to train existing employees and buy expensive tech facilities like computers or internet connection upgrades. Offshoring helps to optimize output and promote productivity.
The bottom line, you get more time and resources to speed up all the processes and maximize productivity.
An enormous talent pool
Offshore development services involve an enormous talent pool. People from anywhere in the world can apply for the job. Therefore, companies have much more choices for each position, whether they hire individual developers or agencies.
Labor from diverse backgrounds and environments usually adopt different mindsets and come up with different ideas. This can diversify your strategy and benefit your business. In a dedicated team with many members, each will have unique abilities that can make valuable contributions to the growth of the business. Positive competition among IT talents from many countries is a good thing for the innovation of the business as a whole.
If you are looking for some IT-related collaborative effort, you do not need to look for talent closer to home. Instead, companies should concentrate on hiring developers with wholehearted dedication and various expertise to handle products, services, and operations.
Due to a dramatically increasing demand, there is a shortage of IT experts in some countries and some domains of technology like data science, big data, AI, DevOps. If you find it difficult to recruit IT professionals in your country, it is wise for you to take advantage of offshore development services.
Foreign market expansion
When companies move some processes or activities to a remote location, they will have a chance to get access to the local market. A subsidiary or a branch based in their own country will make customers have trust with your company. Companies can directly get exposure to local customers and understand them. Therefore, they can save money and get your products and services ready for the local market launch faster.
A trusted offshore partner can help you reduce barriers like language and culture differences and build your reputation when you enter new markets. Because it is quite difficult for companies to get attention from local consumers. Offshore development services can make market expansion easier thanks to active assistance from the offshore development services provider.
Check out a related article: How to work effectively with an offshore development team.
This efficient business model will save the cost of recruitment, training, and management. This will minimize the timeline and save time-to-market and your products or services will be ready for market launch sooner.
Disadvantages of offshore development services
Aside from remarkable advantages, offshore software development services have some cons that you need to stay alert when going offshoring. However, remember that there are no solutions to your business without any flaws. You need to research and find out consistent solutions to minimize drawbacks and make full use of potential benefits.
Time zone differences
This is the very first thing to acknowledge when you want to offshore some parts of your business to another country. Many companies from the USA usually choose to work with offshore individual developers or agencies that are located on the opposite side of the globe. That means when the host company is at work, offshore developers are meant to be sleeping in the bed.
If your team is not consented to working at night shifts to match with working hours, communication among different departments will have a big gap. If a manager from the host company sends a notice to the offshore development team, he or she will have to wait for the reply until their shift starts. In business, customers always want to have their products and services deployed immediately. If you can not meet their expectation, your competitors will stand a chance to steal customers from you.
The time zone difference causes adverse impacts on work productivity. When the boss distributes tasks for developers, they will have to pay attention to the time zone. In consequence, offshore development services require good time management and a flexible schedule. However, the majority of software workers assume that IT-related work is not something they tackle during working hours. They are willing to do them at late night at which the holding company operates.
Cultural barriers
When it comes to teamwork, issues involved with culture are a big deal. Normal behaviors in this culture may be regarded as disrespect in another culture and vice versa. Undoubtedly, a team that shares the same cultural identities will cooperate smoothly and yield better outputs compared to ones from various backgrounds.
Moreover, people from different environments adopt different mindsets and attitudes to work and responsibility. This may result in unpleasant inconveniences and even unexpected conflicts. Additionally, the manager will need to offer developers days off when their country has national festivals or holidays. National official holidays diversify across countries throughout the world. For instance, while people in the US and Europe have Christmas as their most important holiday, many countries in Asia celebrate the Lunar New Year holiday as the biggest holiday of the whole year.
Communication obstacles
English is the worldwide language, and foreign contracts regard it as a means to an end. However, people who are not native speakers will find it hard to discuss IT works that require information words. They usually only master the common language. Thus, the only way to understand each other is to exchange thoughts and ideas in the common language. However, sometimes collaborators may misunderstand each other, which may cause severe problems. This might be a problem that has to be considered when you use offshore development services.
Companies usually use virtual communication like email, video calls, messengers on social media platforms because it takes much time and money to move to the offshore team to make face-to-face discussions. However, it is not as effective as direct interactions. In some circumstances, the significant part of what you want to convert can not be comprehended.
Security risks
When using offshore development services, information leakage is a potential detrimental risk that can cause severe security problems. Developers need sensitive information, including customer data, code, and workflows so that they can understand the entire system and tackle projects. Companies need to make a great effort to maintain information confidentiality.
In particular, IP risk is the most significant thing that you need to work out before embarking on using offshore development services. Before you partner with any offshore development center provider, you have to set up a full safeguard plan for your IP. This contains any data, algorithms, code, or trade secrets that bring about incomes and values for the company. Protection plans and precautions have to be ready before any projects are deployed. Companies have to have strategies to resolve potential disputes about the ownership of patents and copyright after a project finishes with a novel product.
It is more challenging because IP regulations vary across countries. For instance, offshore development services in countries like China move in tandem with a high risk of IP theft. Sometimes, companies can not obtain the patent or copyright of their products and services because developers are considered legal owners according to local jurisdictions.
Conflicts of interest between two sides
When you hire offshore developers, you may endure an unpleasant experience of blame-shifting. When problems come up, they may escape responsibility. That’s why finding a partner with sharing responsibility terms in an official contract is a wise step.
Undoubtedly, your in-house team is the backbone of operations and processes, you work in the same team, in the same room, and maybe friends. You sit in the same boat, even when anything goes wrong. But with offshore developers, it is all in the contract and the partnership will finish when the project ends.
How to minimize the cons of offshore development services?
Picking a business model for your company is a big leap when you start your business from scratch or expand its scale. With offshore development services, we have both pros and cons and you need to optimize all disadvantages to benefit your business.
First, you must take notice of all pros and cons to decide the best option for you. You get cost savings and a major convenience of assistance, but get problems with cultural and language barriers or data risks. However, we assure you that if you find the right offshore partner for your project, the pros will outweigh the cons for you. Research and find yourself a dedicated offshore development team with enthusiastic and certified developers who can tackle your project and meet your requirements.
Before you set up your offshore development team in a country, you need to get to know the working habits and cultural behaviors of the local people. Laws and regulations must be taken into account to prevent any annoying problems later. Time zone converters or clocks with different time zones need to be equipped at the offices to narrow the time gap.
Remember to audit your company’s digital assets so that unauthorized access, security breaches, and vulnerabilities that may damage your company can be easily monitored and tackled relevantly.
You’ll then need to figure out clearly what to share with providers and confidentiality and data protection terms need to be officially mentioned in contracts. Ownership rights must be given to your company that commissions the project, not offshore developers.
Last but not least, you’ll have to establish a full plan to run projects without being interfered too much into the inner workings of your company.
BSS Commerce Offshore Development Center – why should trust us?
It is rather challenging to choose the right offshore development center because there are millions of software development service providers out there, all of them promise to give great results at a low cost. This makes it even more difficult to make the final choice.
You need professional and experienced software experts with a good reputation and a reasonable price that fits your budget. At the same time, companies need a reliable team to ensure information security and tackle complex projects with flying colors.
After launch, perhaps errors and malfunctions come up, which will require repair costs. Therefore, it is very important to choose a reliable long-standing company who will give you consultation and help you solve problems even after the project finishes.
If you want to find a provider like that, BSS Commerce is a promising partner for any business of any size. We provide professional offshore development services with cost-efficient and talent-rich solutions. We also help clients benefit from various engagement models when they can both reduce costs and work with dedicated offshore developers from Vietnam.
BSS Commerce is confident in meeting clients’ needs and goals to handle any projects of any complexity. You can visit our Offshore development center page here https://bsscommerce.com/offshore-development-center.html
CONTACT NOW to let us know your problems. We are willing to support you every time.
