Offshore software development is the delegation of IT processes and services to a third-party provider located in a different country. What’s all the hype around outsourcing product development to the remote software development team offshore? 35% of global business owners claim that this significantly releases the company’s resources and allows focus on the core.
Go on reading to learn how offshore software development works in practice!
What is the difference between offshoring and outsourcing?
As many people confuse these notions, let’s get it clear from the start!
The borderline between the two lies in the team placement. While outsourcing presupposes hiring remote developers or even a team for filling in a production gap, outstaffing navigates in-house jobs overseas.
And can you guess who is the leader in the offshore race? Maybe you think of the US first?
But it’s India! The world is changing, and this player is getting more power in offshore business services. However, choosing India, you should mind the possible consequences of this choice! First comes the cultural distinction as the Asian mindset affects all: communication, tasks management, the vision of quality, attitude to delays, etc. Second, the Indian development projects constitute the bigger part of the redo list and require further improvement. This stems from insufficient education and the motivation ‘to do it for money rather than ‘to satisfy the professional interest.’
Considering these arguments, it’s already essential to think closer about a selection of your software development provider. And we, at Patternica, consider Ukrainian developers as a great alternative to the high prices of the West and the low quality of the East. Our cost-efficient service and team’s expertise create the perfect match for you!
How does the software offshore development approach work?
It can be realized through 3 business models:
1. Fixed cost. In this case, an offshore software contractor provides a definite part of the job according to the agreed budget and time boundaries. Though it may sound perfect, offshore developers sometimes sacrifice quality to deliver the work within the price limitations.
2. Time & materials. Here, the freelance software engineers join the existing team for executing the specific, short-term tasks. Finding the relevant expertise and having no obligation to retain the specialist after the job completion is a key plus of this model. Come to Patternica, and we’ll make this model work right for your project!
3. Dedicated team. That’s the most favorable model that allows gathering the custom-tailored team per your business requests out of your country. You’re to pay monthly salaries to get this option, but you get the full-time employees chosen for your specific project. And Patternica is ready to provide you with a dedicated team of experts precisely for you!
When to outsource the software building to the offshore team?
Before implementing any of the above-mentioned business models, consider five conditions when this is going to be a suitable scenario for your software project development:
If you zest for more flexibility
In most cases, by giving preference to the offshore development team, you, as an employer, offer the short-term employment option to them. And that’s what makes your hands untied! Once the project is finished and the developer’s pull of responsibilities is run out, pay for the work and say goodbye. Your liabilities to the employee don’t cause your headache! So, here are you who calls the shots!
If you wish to reduce time to market
As a rule, this goal is one of the primary ones in the software development industry. Everyone wants to get the job done quickly and qualitatively, isn’t it? In this relation, offshore software development allows you to accelerate processes by delegating the tasks to well-experienced and skillful remote technical specialists. Choose the most suitable talents to form the team that will dive deep into your project’s specifics and accomplishes at the expected level of quality! And don’t forget about the timing!
If your quality already suffers
Are you used to making the regular SWOT analysis and market research to realise your brand’s position? How will you estimate your product in terms of innovation? Is your unique selling proposition powerful enough to outshine the competitors? Do you consider the company’s operations well-organized and smooth? All these questions will guide you to an understanding of your service quality. Be objective in your assessment! If you feel that the quality doesn’t comply with your expectations and set goals, it’s a clear request for a big change. And the outsourcing of the software development to the offshore team can be this big change for you!
If you strive for efficiency
We’ve already discussed the time factor in the #3 item of the list, and now it’s necessary to elaborate on the resources factor. It’s not limited to the costs of developers’ salaries solely! This also includes tools for deployment, business obligations, compliance with the legal side of the issue, and all the steps required from the inception phase to the final release of the product. All this calculation becomes more efficient if you choose offshore software development.
If you mind the cost-to-quality ratio
By lowering the bar of your costs, you risk getting the low-quality software product far away from your initial expectations. Not to make this grave mistake, don’t spare your money for getting a particular software engineering task done faster and in proper quality. Your reasonable investment from the start frees you from all the troubleshooting and possible production delays in the future. Think it over and refer to Patternica to leverage our profound expertise for your business specifics. Don’t miss out on this splendid opportunity!
How will shifting your IT team to offshore reduce your business costs
If you’re a business owner, you should be ready to take a risk. But it’s always easier when you have a strategy. Let’s say your goal is to cut down business costs twice and keep efficiency at the same level. Then, your working strategy can be offshore IT outsourcing—delegating specific tasks to the third-party provider from a foreign (usually, far away) company instead of handling them in-house.
By having access to a wider talent pool outside your country, you have all the chances to find the required expertise at a cheaper price but get the same quality of job done. Isn’t this the dream of any CEO? No wonder more and more companies shift their business services to offshore destinations, where the leading positions are taken by the Asian countries predominantly.
Hence, if you’re driven by the motive to reduce IT costs, shifting your IT team offshore can be a way to go. And today we’ll take you through the benefits of offshoring and the real cases it worked out the way it should. Stay with us to learn both!
Сost difference between local and offshore IT teams
As offshore outsourcing is one of the ideas for cost savings in a company, it’s good to illustrate it by numbers to feel the contrast to having a local IT team.
For instance, if we talk about software development costs, you’ll need to pay $100 per hour on average to the developer from the US. Or you can think of giving the same task to the offshore developer and spend approximately $55 per hour for an equivalent level of quality.
Now, let’s look at the details behind the numbers:
As you can count, partnering with offshore businesses allows you to reduce software costs from 40% to 70% of the overall sum. The percentage depends on the required skills, experience level, location, cooperation length, and English proficiency.
As you can count, partnering with offshore businesses allows you to reduce software costs from 40% to 70% of the overall sum. The percentage depends on the required skills, experience level, location, cooperation length, and English proficiency.
Benefits of offshoring IT functions
Well, you’ve already learned what is offshoring in IT, and it’s time to discuss what it can bring to your business in addition to cost reduction.
Wider talent pool
If hiring the staff is more expensive and complicated in your region, it’s logical to look out of the box and consider the alternative—an offshore IT team. As a result, you’ll have access to the global workforce, which significantly simplifies finding the necessary IT talents. Moreover, you’ll also benefit from saving costs in business operations, as specialists from less developed countries usually voice lower salary expectations.
Modern technology
You may be surprised to see this outsourcing benefit, but people aren’t the only reason for going offshore in IT. You might be no less interested in obtaining resources and technologies that matter for your project. And if you choose a reputable IT offshore partner, you’ll address these gaps as well. It’s also guaranteed that your final product will be optimized, automated, and digitally savvy.
Business expansion potential
Moving your operations offshore for an IT company means spreading brand recognition across the world. So, in case of doing it smart, you can reach new clients in other countries and speed up the company’s growth. Think of IT team outsourcing as the driving force of your business expansion and choose the new staff location based on thorough research.
Improved efficiency
Offshore outsourcing is usually the answer to the question of how to reduce operational costs, but it’s also tightly linked to service efficiency. First, through offshore in IT, you get skilled specialists from other countries who will do the job you need. Secondly, by partnering with the IT outsourcing provider, you also feel more automation thanks to the advanced technology used. All in all, your company’s processes are getting optimized and streamlined.
Quality service
That’s the logical consequence of the previous point—improved efficiency. If the delegated IT tasks are performed by a professional tech partner, you can also be sure of the qualitative outcomes. To protect yourself from risks, you’ll first sign a contract with the chosen provider. To monitor and assess the performance regularly, you can engage the PM/QA specialist in the team, depending on the project specifics. This person will work on improvements and drive the team in the right direction.
Success stories of companies that reduced costs through offshoring
Now that you’re familiar with the advantages of offshore outsourcing, let’s look at some examples to prove that the offshore team is truly one of the best cost-saving initiatives.
One of the fresh success stories comes from a US company that decided to replace the bigger part of the local development team (42 developers) with offshore remote engineers from Poland (41 developers) and India (5 developers). According to the findings by Denisov-Blanch, this measure resulted in cutting the annual business costs on development by 40%—from $12,3m до $7,4m.
What’s more important, the qualitative and quantitative metrics of the team performance were equal to the ones conducted by the previous team.
Isn’t it all inspiring? Another bright example is WhatsApp, which used offshore outsourcing to Eastern Europe for core app building, design, and backstage management. This decision allowed the in-house team to focus on client-related issues, and the company succeeded in growing fast and, finally, was bought by Facebook for $19b.
One more solid case to mention is Oracle. The company addressed the offshore outsourcing provider to replace local support teams with the ones from Europe and Asia. By this, they gained 15% savings, scalability, and new ties with regional markets.
Build your new IT team from Patternica's specialists offshore
No matter how large your company is, you always think of reducing business costs and staying the same efficient. Offshore outsourcing gives you a perfect instrument to achieve this goal. The only thing you need is a trustworthy tech partner like Patternica. Reach out to us today, and we’ll gather a new offshore team per your business needs.