Hiring an offshore outsourcing software development company to execute product development is gaining momentum amongst the business enterprises located in top-tier countries like U.S., Canada, etc. A report by the online research portal XTGLOBAL, states:
“In the year 2020, almost 80% of the top-most firms worldwide i.e. fortune 500 companies, possessed offshore teams for accomplishing their business operations, and this trend is expected to grow in the years to come.”
These stats indicate the unprecedented popularity of the offshoring approach – outsourcing development tasks to vendors located in offshore countries. Yet, some entrepreneurs are unsure about the profitability of this strategy and wonder whether offshoring is a safe bet.
This blog weighs the benefits as well as drawbacks of offshoring and enlightens you about the reasons to consider the offshore model for software development. But before we commence, let’s take a quick look at how these offshore teams work.
How do Offshore Product Development Teams Function?
An offshore software development team usually follows an agile methodology which helps create a clear roadmap that fosters team collaboration, iterative development, and transparent communication. Such teams focus on a common objective of delivering the best possible experience to their client partners. Moreover, their developers are experienced, proficient, organized, and analytical individuals who clearly understand the clients’ specific requirements and strive hard to accomplish the best quality in the product development process as per client needs.
Top Reasons to Invest in Offshore Software Development
Obtain Access to a huge Talent Pool
Would you like to obtain the best software development services available across the globe without much ado? Well then, offshoring is the most viable option. Why? If you intend to hire an in-house team of professionals for your project, you have to go through the hassles of fetching and recruiting programmers. This process is not only time-consuming but also involves lots of effort and expenses. Contrarily, offshoring enables you to move beyond the confines of your geographical boundaries and choose from a huge pool of talented professionals around the globe.
Reduced Turnover Rates
It is observed that turnover rates go higher when the demand for the workforce exceeds the supply. To address this challenge, the U.S. IT firms, adopted the initiative of offshoring product development during the late 1990s, and this strategy succeeded well, as it reduced the local demand to a great extent.
Besides, most of the popular offshore destinations experience high unemployment rates and much lower demand for software services from their domestic markets. As such, these countries promise much lower turnover rates and so, they’re worth the investment.
Lesser time invested and Greater Productivity
Hiring an offshore vendor agency eliminates the need for the client company to invest time in routine activities such as project management, HR processes including employee hiring/retention, and many more. Besides, the client firm need not waste time on the task of training new developers as the offshore staff possesses the necessary skills. Hence, this approach saves time and leads to greater productivity for the client company. After all, time is a crucial factor for start-ups and mid-sized companies to thrive in today’s competitive scenario.
Client enterprises located in high-tier countries like U.S., Canada, U.K, etc. can cut down project expenses considerably by hiring offshore development services. The reasons are as follows.
- Offshore locations come with much lower and highly affordable developers rates due to the lower cost of living.
- The client firms need not pay for overhead costs like renting office spaces, payroll expenses, recruitment charges, insurance benefits, or employee vacations. Payment has to be made only for the services they use and all other costs are taken care of by the vendor company.
Every business enterprise, particularly start-ups, comes across a situation when their team needs to be scaled or changes are to be made in the technology stack, as required by the scope and stage of the project. This turns out to be quite challenging and hiring an in-house team for this purpose could cost a fortune.
Offshoring, on the other hand, enables the clients to effortlessly scale their business as per the need. This is because the offshore software development company hired, will provide clients with an additional workforce whenever the need arises and they can easily switch developers between projects. Furthermore, the dedicated development team will take care of various other aspects like providing advice on the technologies in which the client firm should invest, profitable engagement and marketing strategies, plan of action for staying competitive, etc.
Access Most Recent Technologies at Affordable Rates
It is not feasible for most business organizations to access and maintain the latest technologies owing to their high expenses. The offshore agencies, on the contrary, focus on upgrading their skillsets and acquiring the latest technology stacks, as offering quality software development services is their prime objective. Additionally, they provide their clients with exceptional procedures, structured strategies, and highly organized documentation. These vendor agencies update and replace their clients’ software/systems whenever required.
Time to Focus on Core Business Functions
Certain software development activities like creating UI/UX designs, mobile app/website creation, implementing latest technologies like Blockchain, IoT, AI, etc. require continuous skill improvements, team supervision as well as a substantial amount of time and focus. For this reason, businesses are likely to get distracted from core functions.
Nevertheless, offshoring these tasks to reliable technology partners allows them the time to focus on core business operations. Thus, the workload gets divided and this synchronized way of functioning enables client enterprises to accomplish their goals.
Probable Risk Factors along with Remedial Measures
Take a look at the probable risk factors of offshoring and their remedial measures!
- The vendor agency might fail to meet the product delivery deadlines and cause unnecessary delays. But, hiring a proficient manager/IT executive for monitoring and managing the project will zero down this risk factor.
- The protection and security of data may involve certain risks when offshoring projects. However, to rule out this possibility, you need to be extra cautious while protecting and handling intellectual property rights. Besides, offshore firms, too take efforts to maintain data privacy.
When should you offshore Product Development?
You have Budget Constraints
Hiring in-house software professionals will cost you a fortune. So, if you have budget constraints, offshoring is the best bait as it will allow you to hire talented engineers at much lower rates.
You need to speed up development
Time is money! But, if you do not possess sound technical knowledge and enough experience, essential tasks like recruitment of software developers, extensive research on the best development tools, technologies, etc.; will be challenging and time-consuming. But, the highly competitive market you are involved in demands reduced time-to-market and prompt utilization of opportunities as soon as they emerge. So, to speed up the development process, offshoring proves beneficial.
You intend to minimize Liabilities
The entire process of the software product development process right from the inception phase to deployment of the end-product requires resources, time, attention, and focus. Moreover, a dedicated team has to be maintained and the necessary tools and technologies are to be acquired. All these crucial prerequisites may prove heavy on your pockets, particularly if you are a start-up or mid-sized company, hence trying to reduce liabilities and utilizing the available resources is most important to reduce the cost.
You need Flexibility
There are times when you prefer short-time contractual software developers instead of hiring and maintaining a full-time in-house development team. In such scenarios, offshoring employees help as your obligation to those professionals ends after the completion of the project.
You lack Quality and Innovation
Quality and innovation are stepping stones towards the success of software app development and allow you to gain a competitive edge over peers. Hence, if you find that your product quality is below average and the standard of innovation is deteriorating, it’s high time to adopt the offshore software development approach.
Adopting the Offshore development approach is a lucrative option and guarantees a higher ROI for businesses. This strategy does have a few pitfalls, but these can be resolved easily. In other words, the myriad advantages of offshoring undoubtedly outshine the drawbacks.
Looking for a reliable outsourcing firm and would like to gain more insights on this approach? Contact Biz4Solutions, a leading Offshore Software Development firm with extensive experience in serving global clients!