Offshore Software Development: Cost, Benefits, How-To Guide

Onshore, offshore, and nearshore are the three most common outsourcing services that IT vendors get their software development projects done. Among the three options, offshore software development gives IT vendors better control, benefits, and results over the project. This outsourcing model largely depends upon the geographical location and your partnering company. It comes with scalability, flexible price sets, and labor resources. There is a long list of outsourcing services, from mobile app development to UI/UX design to software development. This blog will highlight whether offshore software development is suitable for your company. Also, read more about benefits, costs, destinations, models, and other aspects related to offshore software development.

Why Should You Hire Offshore Software Developers?

To stay competitive, every company prefers to implement modern IT technologies in their business workflows and software products. If the company has no experience in software development, outsourcing can be a valuable option to make a big difference. Outsourcing development can offer you time-tested benefits. You can outsource your product creation projects to third parties when you have a restrictive budget, expect faster project delivery and high scalability, need access to the latest technologies, want to reduce operational and offshore development costs, plan to concentrate on core activities, prefer to speed up time to market, and need better flexibility.

Top Benefits of Offshore Software Development for Businesses

Deloitte, one of the largest professional services networks globally, states that cost reduction, consistency, and operational effectiveness were the most reachable and visible benefits of software development outsourcing in IT services in 2021. Delivery team, staff augmentation, and project outsourcing are three prime offshore software development categories. Outsourcing software development tasks fully or partially to an offshore team can be hugely beneficial. Executing any software development project overseas comes with loads of benefits. These benefits are the primary motivation why many industries favor the concept of offshore software development.

Offshore software development enables companies to reduce overall costs, optimize existing resources, search for the right talent, and access more tools and technologies. Look at some of the most common and popular benefits of offshore software development that give companies an edge. These include;

• Affordable prices (the best quality-to-price ratio)
• Fast delivery (set the speed of your project building)
• Qualified talents (skilled specialists capable of helping you)
• Hight scalability (scale up and down as per changing business needs)
• Risk transferring (vendor will care about development issues)
• Utilization of modern technologies (appropriate expertise matching your project)

Top Offshore Product Development Models: 3 Key Strategies

There are two financial models that most outsourcers prefer for getting outsourcing product development services. These include Time and Material (T&M) and fixed price. The Time and Material (T&M) model makes a difference when outsourcers focus on changing the project’s direction, budget, and scope. On the other hand, the fixed price model helps outsourcers with small to medium software development projects estimation with a fixed budget and clear objectives.

There are also three other engagement models that software development outsourcers can try to get the top-notch software development services. These include a managed product model, a managed service/dedicated team model, and a managed/extended team model.

1. Managed Product Model

This engagement model has been designed to achieve business goals with a strict budget and timeline. This model helps you get a complete software product on time as per the schedule and with transparency and detailed reports. A team of business analysts (BA), project managers (PM), designers, solution architects, offshore software engineers, and external technical consultants offer you end-to-end software development services through this model.

2. Managed Service/Dedicated Team Model

This engagement model is suitable for projects where flexibility matters the most to adjust to new requirements. Here, a scalable team helps you make a shared decision concerning software development projects.

3. Managed/Extended Team Model

You may adopt this engagement model when you own a pool of experts and look for a performance booster. Here, remote professionals help you on the project and manage it from your end. This model is appropriate for lowering software development costs and enhancing the pace of production.

Top Destinations of Reliable Offshore Software Development in Asia

India, China, and The Philippines are three prime locations that attract European and American companies to outsource their software development projects. They get benefits of lower costs, team expansion on demand, connecting with top experts, faster time to market, saving money on educating technical experts, and locale-specific software solutions.

#1 India

The Tholons Global Innovation list and global management consulting firm Kearney report rate India as a global leader in offshore custom software development. Thanks to the factors like talent pool, IT hubs, tech education, cultural compatibility, and IT outsourcing market, India is the first choice of global outsourcers. India is one of the leading offshore software development countries in Asia. India’s professional software development company serves large- and mid-size companies with various software development projects for fintech, insurance, healthcare, construction, e-commerce, etc. There will be more than 250 top global companies that have partnered with local IT companies in India.

• Average hourly software developer rates: $18-$40
• Software developers produced annually: 2.6M
• Number of IT professionals: 5 million
• Number of IT graduates joining the software market: 2 lakh
• Popular programming languages among software developers: C++, Java, and Python

#2 China

After India, China is another popular name in software development services. Cheap labor and developer productivity are the two primary reasons China is the best destination for outsourcers.

• Average hourly software developer rates: $18-$40
• Software developers produced annually: 5M
• Number of IT professionals: N/A
• Science and technology industry parks: 50
• Popular programming languages among software developers: Python and Shell

#3 The Philippines

Famous for the development of the BPO industry, The Philippines has emerged as a professional hub for outsourcing software development jobs. According to the AT Kearney report, The Philippines ranks among the top 10 favorable countries for IT outsourcing. The country serves large- and mid-size companies providing software development projects for fintech, healthcare, e-commerce, etc.

• Average hourly software developer rates: $18-$40
• Software developers produced annually: 130,000
• Number of IT professionals: 95,000
• Popular programming languages among software developers: Java, PHP, ASP.NET, Ruby on Rails

How Much Does it Cost to Offshore Software Development?

Generally, business enterprises of all sizes and types favor offshore software development projects to lower development costs. It is true! You need to consider various cost elements while hiring an offshore team. These include

• auxiliary costs
• development cost
• infrastructure cost
• project management cost
• quality assurance cost
• service costs
• training and hiring cost

The geographical boundary is another factor that enhances the list of cost elements. Note that the average hourly rates of offshore software developers are different across the globe. Generally, the average hourly rate of app development is very high in North America ($80-150) and Western Europe ($50-200). On the other hand, Latin America, Eastern Europe, and Asia are the geographical regions where the average hourly rate charged by offshore software developers is lower. Asia is the only geographical location that seems to be the best offshore development destination for lower prices, quality output, and technical excellence. That is why these regions are the hotspots for offshore as well as outsource software development companies.

4 Key Challenges of Offshore Software Development and Ways to Address Them

A survey from global research company Statista on IT outsourcing services market revenue shows that the global IT outsourcing services revenue will reach about $425.19 billion in 2026. Last year, the same revenue was $413.72 billion. It is a fact that offshore software development comes with many benefits for a start-up, medium, or large-sized company. However, there have been some incidents where business enterprises failed to get desired business outcomes and lost their time and efforts owing to odd offshore development models. An extended assortment of hidden and unseen challenges makes companies unsatisfied with their changing business preferences. Find here some common challenges that help you understand all the ins and outs of offshore software development properly.

1. Time-Zone Differences

While dealing with an offshore development company and its IT development staff, the time zone difference induces a big challenge. This time difference makes communication between two parties difficult. It may also result in delayed product development. Here, offshore development companies can settle issues of time-zone differences by setting up pre-scheduled calls and timely alignment properly.

2. Communication Issues

Communication gaps are among the usual software offshore development challenges that can make things challenging for companies interested in outsourcing their projects. Factors like poor English or lack of English proficiency can’t fill the gap in communication. Here, companies can hire professional English speakers who know how to deliver relevant and effective messages in the least amount of time.

3. Security Issues

Partnering with an unverified offshore development company can put your valuable business data at risk and give birth to security concerns. If it shares your data or ideas with its clients, things can worsen. Offshore development companies can share a non-disclosure agreement (NDA) with you before initiating interaction on the project. This way, your data privacy will remain touched.

4. Quality Assurance Issues

A product that does not adhere to quality can bring your brand into the bad books of all. That is why it is good to partner with an offshore software developer who sticks to quality parameters and offers a software testing services for product which is free from errors and and technical glitches. Offshore software developers can schedule weekly meetings with the clients to share the project’s progress. It is better to keep all in every build and ensure the project excels well.

Also Read: Offshore Product Development Challenges

Conclusion

After going through all aspects of offshore software development, you may be interested in partnering with the right offshore development company or knowing how it can help you with offshore software development. The offshore software outsourcing sphere in IT offers business enterprises numerous opportunities to save their effort, time, and money.

100+ subject matter experts at Binmile offer you customized software solutions with their control of emerging technologies, software tech stack, and technology acumen. Software developers know how to address all challenges and issues that are likely to make software outsourcing companies feel unsatisfied. The company professionally gives value to all aspects, from cost control to quality assurance and timely delivery of software products to business relationships.

Binmile, an offshore software development company in India, has been helping its global clientele across many industries by fulfilling their business needs and getting a niche in the competitive market. The company has worked with finance, insurance, lifestyle, real estate, banks, payment, eCommerce, utility, and energy companies to accomplish their software development projects with software development services.

Author

Arun Kumar Sharma

AVP - Technology