Offshore Software Development: Why Implement It For Your Business?

Building a tech startup is an excursion full of difficulties, all the more so with increasing expenses, powerfully developing programming innovations, and more tight contests. As a result, many businesses and startups use offshore software development to achieve their objectives.

The worldwide supervised administrations market was esteemed at $161 billion in 2022. By 2027, this number is supposed to surpass $300 billion. This suggests that there will be an increasing need for offshore software development shortly.

However, what about the current economic downturn? As new businesses require greater investment to raise another speculation round, originators attempt to relieve expenses and consider the benefit first – seaward programming advancement acts the hero. Using offshore software developers is a great option for business owners who want to keep going in these economic shifts and not give up hope in 2023.

This guide will discuss offshore software development, its advantages and disadvantages, the best countries to hire offshore software developers, how much it costs, and more crucial tips. 

What is Offshoring Software Development?

Offshoring software development refers to outsourcing tech tasks or projects to companies or individuals in other countries, typically with lower labor costs. It involves hiring a remote software development team or partnering with a software development company in a different geographic location, in a different time zone. For example, if your company is based in the US, and you want to extend your team with offshore software developers, we recommend paying closer attention to Eastern European countries. 

The motivation behind offshoring software development is to reduce costs while maintaining or improving software development quality. By leveraging the skills and expertise in other countries, businesses can find offshore development services at a lower price than local options. This cost advantage can be especially significant in countries with lower labor costs.

Offshore Software Development Benefits

Let us take a closer look at all advantages you can get while implementing offshore software development in your business:

• Cost Savings

Offshoring software development can significantly reduce costs compared to hiring local resources. Offshore locations often have lower labor costs, enabling businesses to access skilled software developers easily. This cost advantage can result in substantial savings, particularly for long-term or large-scale projects.

• Access to Global Talent Pool

Offshore software development allows businesses to tap into a diverse and extensive talent pool worldwide. It provides access to skilled software developers, engineers, and specialists with expertise in specific technologies or industries.

• Increased Scalability and Flexibility

Offshoring allows businesses to quickly scale their software development teams up or down based on project requirements. This flexibility enables organizations to adapt to changing needs without the constraints of hiring and training local resources. It also allows faster time-to-market by ramping up development efforts when necessary.

• Focus on Core Competencies

Offshoring software development allows businesses to focus on their core competencies and strategic initiatives while delegating development tasks to specialized offshore teams.

• Faster Development Cycles

Offshore software development allows for parallel development and round-the-clock work, leading to shorter development cycles. This can be particularly advantageous when time-to-market is critical, allowing businesses to gain a competitive edge by delivering products or features more quickly.

It’s important to note that while offshoring software development offers several benefits, there are also challenges and considerations, such as cultural differences, communication barriers, and the need for effective project management. However, with proper planning, communication, and relationship management, the advantages of offshoring software development can often outweigh the potential drawbacks.

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Offshore Software Development Risks

While offshoring software development offers various advantages, it has risks and disadvantages. These include:

Communication challenges: One of the primary concerns in offshoring software development is communication. Language barriers, cultural differences, and varying time zones can pose challenges in effectively conveying project requirements, addressing concerns, and ensuring alignment between onshore and offshore teams.

• What to do? Clear and frequent communication channels and well-defined processes are crucial to mitigate these risks. Also, it is vital to choose an offshoring location without huge cultural differences with your country – professional vendors like Qubit Labs can always advise on the perfect outsourcing destination. 

Quality Control and Management: Offshore software development introduces additional complexities in maintaining quality control and effectively managing the development process. Differences in development standards, methodologies, and quality assurance practices can affect the software’s overall quality. 

• What to do? Businesses must establish robust quality control mechanisms and effective project management frameworks to deliver high-quality software consistently. It is better to hire a remote PM to control the quality of tasks done or to ask your vendor about the opportunity to use services of their in-house PM.

Intellectual Property Protection: Offshoring software development may involve sharing sensitive and proprietary information with offshore teams. Protecting intellectual property rights and ensuring data security becomes crucial in such scenarios. 

• What to do? Businesses must carefully assess the offshore location’s legal and regulatory frameworks and establish comprehensive agreements and safeguards to protect their intellectual property.

Time Zone and Distance Challenges: While the time zone difference can be an advantage, it can also be a disadvantage. Delayed responses, slower issue resolution, and extended feedback loops can impact development timelines and project efficiency.

• What to do? Effective project planning and utilizing tools for real-time collaboration can help mitigate these challenges.

Hidden Costs and Financial Risks: While offshoring can provide cost savings, there may be hidden costs associated with travel, infrastructure setup, and communication expenses. Additionally, the offshore location’s currency fluctuations and economic changes can introduce financial risks. 

• What to do? Businesses should carefully evaluate the total cost of offshoring, including both direct and indirect expenses, to ensure the anticipated cost savings are realized. Qubit Labs can always help with cost estimation, our fees are transparent without hidden expenses. 

What Countries Are Best for Offshore Software Development?

When considering the best countries for hiring offshore developers, several factors come into play, including the number of IT specialists, level of expertise, proficiency in English, and experience working with foreign companies.

While the following list includes some notable countries, it’s important to note that the offshore software development landscape is dynamic, and factors may change over time.

Ukraine

Ukraine has emerged as a prominent destination for offshore software development. It boasts a large pool of IT specialists, with over 200,000 Ukrainian developers highly skilled in various technologies. Ukraine is prosperous for its game developers like 3D artists, 2D artists, Unity developers, AI engineers, etc. Moreover, Ukraine is one of the most digitalized countries in Europe, it is proven by automation of most countries’ operations systems like government, banking system, medical system, etc. 

However, the unstable economic situation still concerns most of foreign companies to hire developers from there. Some time-zone differences also might be an issue for the US-based businesses. 

Poland

Due to its competitive employment market, Poland is considered a “perfect landscape” for multinational corporations. Poland came in fifth among the nations with the highest tech-skilled labor markets. Local IT specialists collaborate with some of the leading technology companies. Python, JavaScript, and Java are the three programming languages used most frequently in Poland. Additionally, many programmers focus on more advanced areas of development, such as cloud solutions, API-based solutions, and mobile solutions. The Polish IT market is expanding at a steady rate of between 5%-10% per year. 

But, compared to other countries like Ukraine, Georgia, Moldova, Kazakhstan or Azerbaijan, Poland is relatively more pricey due to economic situation, taxes, fees, lifestyle, etc.

Bulgaria

Its time zone is comparable to most European nations, making it ideal for nearshoring. For American clients, the Bulgaria time region will likewise be advantageous, making the country suitable for seaward programming improvement—the quantity of new tech experts increases by 2% consistently. Therefore, Bulgaria’s IT reevaluating area is increasing. 

The nation offers administrations from client assistance to Data Innovation Re-appropriating (ITO) and Business Interaction Rethinking (BPO). The Bulgarian government put a ton of exertion into fostering the nearby tech environment. They made opening R&D centers for foreign businesses simple and affordable, with income taxes of only 10%.

Romania

More than 120,000 dedicated IT specialists in Romania are eager to work for multinational corporations and crave new experiences. Romanian computer programmers are strongly centered around the Western market’s work culture to offer support for their clients. As per a CBRE examination, Bucharest is Europe’s eighth quickest-developing tech center point. For instance, Bucharest is the focal point of the Romanian programming advancement industry and records for 63% of complete IT incomes.

Georgia

Georgia’s IT businesses are exempt from paying taxes. Most companies collaborating with foreign enterprises are exempt from paying taxes, including the tax on profits earned outside of Georgia. In addition, this country is one of the easiest to open a business for foreign companies. The portfolio of Georgian companies has a range of solutions, from ERP Systems and e-commerce projects to 3D projection mapping installations. The most popular programming languages among the coders are Java, JavaScript, PHP, and Python, which are the most demandable for most tech companies worldwide.  

Still, there are few software developers in Georgia as the country is still on its way of developing and improving the tech environment. That’s why scaling teams with specialists from Georgia might be challenging. 

Moldova

Moldova has expertise in data analytics, UI/UX design, software development, application development, mobile software development, and data visualization. Moldova’s IT area utilizes around 12,500 individuals. Most of them are associated with reevaluating and outstaffing organizations that employ software engineers for unfamiliar organizations. Furthermore, Moldova has serious tech instruction and has graduated more than 2,000 new IT-trained professionals.

Kazakhstan

Kazakhstan focused on IT outsourcing and outstaffing. Nearby organizations attempt to interface with worldwide associations since working with unfamiliar organizations is drawn-out speculation. The country is focusing on the development and application of cloud technologies. Nearly all businesses actively use cloud technologies to store data, displacing the need for manual data management. Likewise, firms ensure information well-being by presenting different antivirus programs that investigate, block, and dispose of a wide range of malware.

Azerbaijan

A high-tech park exists in Azerbaijan without paying taxes or customs duties. Also, since the startup biological system is still in its earliest stages, many finances help these youthful organizations in tying down subsidizing and acquiring the amazing chance to grow. Thus, Azerbaijan has a decent possibility of “raising” experts fit for creating specific programming items. Even though only about 3,000 programmers are in the country, that number keeps increasing.

However, due to the young tech environment, finding the right specialists and scaling the team could take a lot of work. 

Brazil

Brazil outsourcing lets your company work with highly skilled software engineers. Brazil is a famous spot for recruiting experienced engineers: According to HackerRank, the developer’s skills are ranked 38th. Furthermore, a wide variety of programming abilities is accessible. Most Brazilian software engineers use moderate programming dialects like C++, Java, Python, and Perl. Covering Cloud-related assignments will benefit fundamentally from moving to Brazil. To accelerate the formation of pristine advanced items and administrations and take full advantage of distributed computing.

Mexico

There are over 300,000 programming engineers in Mexico. This number has expanded recently because the public authority arranged to advance innovation, which created qualified engineers. More than 110,000 experts have graduated yearly from Mexico’s colleges, and this number is ascending as the public authority consistently sets out new open doors for gifted engineers.

When to Opt for Offshoring Software Development?

Surely, offshore software development can bring a lot of benefits, but you have to know when is the best time to opt for it. If you are looking for a team you plan to cooperate with on a long-term basis – offshore development is a great option for cost-effectively building a team. Also, offshore software development can be a cost-effective option if you are a startup owner with a limited budget. 

Moreover, if you own an enterprise and want to reach new markets, you can also take advantage of an offshoring team – just choose a location, find a vendor and start work. 

When offshore development won’t work for you? If you have a short-term project and need a specialist to cover a certain task in your project, offshore software development may not be the best decision. In this case, freelance will work better.

Offshore Software Development With a Vendor

Offshore software development should be run by a professional vendor who knows everything about the offshore market, best rates, tax system, and expertise in each country you want to hire. But how to choose the vendor among so many options? (also check IT vendor management guide) Let’s take a look at the common steps:

• Define Your Project Requirements

Before implementing offshore software development into your business, determine your software project’s scope, objectives, and technical specifications. Outline your goals, budget, and timeline. This will help you communicate your needs effectively to potential vendors.

• Research and Shortlist Vendors

Look for offshore software development vendors through various channels, such as online directories, referrals, industry events, and social media platforms. Consider their expertise, experience, reputation, client reviews, and portfolio. Create a shortlist of vendors that align with your project requirements.

• Evaluate Vendor Qualifications

Review the vendors’ capabilities based on their technical expertise, relevant experience, industry certifications, and client testimonials. Check if they have completed similar projects or have expertise in your technology stack.

• Choose the Location 

Your potential vendor will help you to choose the best location to start offshore software development based on your requirements and budget. Vendors should know about each country’s rates, salaries, and taxes. 

For example, Qubit Labs offers many destinations for hiring perfect offshore development team. All countries have attractive salaries, affordable taxes, great expertise, competence, cultural fit, and more.

•  Negotiate and Finalize the Contract

Collaborate with the selected vendor to finalize the contract. This should include project scope, deliverables, timelines, pricing, payment terms, intellectual property rights, confidentiality clauses, and dispute resolution mechanisms. Ensure that all details are clearly defined and agreed upon by both parties.

• Select the Vendor 

After evaluating all the information gathered, choose the vendor that best aligns with your project requirements, budget, and company culture. Consider technical capabilities and factors such as communication skills, cultural fit, and your overall impression of the vendor.

How to Manage Offshore Software Developers?

• Effective offshore developer management requires clear communication, well-defined processes, trust-building, and regular monitoring. 
• You have to ensure that you have open lines of communication for discussing project requirements, updates, feedback, and addressing any issues or concerns.
• In addition, you must provide detailed project documentation, including specifications, conditions, and milestones. 
• Of course, it is crucial to implement robust project management processes to ensure smooth coordination and progress tracking and monitor progress and quality. 
• Don’t forget about onboarding and retention of your remote offshore development team, which requires time as well. 

It is crucial to highlight that all processes onboarding, retention, team building, and team management – are covered by your vendor with its professional HR manager while you can focus on other business processes. 

If you want a professional who will be in charge of managing tasks and the progress of your remote team, your vendor can provide you with a remote project manager who will be responsible for it. 

Offshore Software Development With Qubit Labs

With Qubit Labs, you can expect a commitment to quality assurance, transparent communication, and an efficient HR manager ready to support your team. We use the latest trends and innovative practices in engaging software developers in your projects long-term. As we hire team forms scratch, you receive developers fully matched to your individual requirements.

You can benefit from our cost-effective services without compromising quality by choosing Qubit Labs as your offshore software development vendor. Our competitive pricing models and access to skilled professionals from regions with favorable labor rates result in significant cost savings compared to in-house development. 

We hire top tech specialists for you from the most digitalized and developed hotspots like Ukraine, Poland, Bulgaria, Romania, Moldova, Georgia, Kazakhstan, Azerbaijan, Brazil, and Mexico. Engaging offshore software development teams in these countries allows you to get the best service without breaking your budget. We also cover onboarding, retention, payrolls, and more. 

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Conclusions

Offshore software development has emerged as a crucial strategy for businesses in 2023. It involves partnering with external vendors or teams in different countries to leverage their technical expertise, cost advantages, and global market insights. Implementing offshore software development offers numerous benefits to businesses. Firstly, it provides access to highly skilled professionals with expertise in various technologies and can deliver high-quality solutions. This access to specialized skills is precious when businesses face a shortage of local talent or require specific technical expertise.

Qubit Labs will help you to get all advantages of offshore software development quickly and stress-free. You can choose the best-looking location according to your requirements and keep focusing on your tasks while we do everything else.