Offshore development is one of the trending models of outsourcing in the IT industry. The popularity of it is easy to understand when considering the benefits it offers. It is cost-efficient, fast, and a scalable option. In this article, you’ll find out what offshore development services entail and the advantages that they offer.
What is Offshore Development?
Offshore is a model of outsourcing – delegating tasks/projects to a third-party provider. The main difference here is the vendor’s location. Outsourcing can be done in the same country or even city. But offshoring means working with a partner from another country and geographical region.
Overall, outsourcing is extremely popular nowadays. According to Grand View Research, its global market size is growing rapidly and is expected to grow by 8.5% a year in 2021-2028. In the year 2020, it has reached $232 billion.
What is an offshore development center (ODC)? It is a development team with all necessary infrastructure and human resources in place (including administrative and management staff). It can be provided by an experienced offshore software development company like Develux, which significantly reduces time and increases ROI. Or it can also be set up by the business on its own, but this method might come with larger risks, disbursements, and time waste.
ODC can be used by companies for any type of IT task, like offshore application development, data migration, UI/UX design, DevOps implementation, application testing, etc. Overall, having an ODC can save up to 60% of the costs you would’ve otherwise spent on the project.
Another difference of such a model from other outsourcing practices is that it is basically like having an extension of your internal team in another country. You are in control of all requirements and demands as well as management. Your preferred methodology is used to set up infrastructure and onboard professionals.
What is Offshore Software Development Company?
It is a service provider located in the country of interest, which is ready to do everything for you. For example, you are willing to open an ODC in Ukraine. But how do you start? Do you check in with your legal team about local labor regulations? How do you look for professionals? Where do you set up an office? How do you know what prices are reasonable?
This is just a fraction of questions and issues a business has to resolve to set up an ODC on its own. For large enterprises, it might not be a huge deal as they have the time, money, and manpower to do it. But for startups, small, and medium-sized businesses, it can be a crucial issue.
Here is where an offshore development company comes to the rescue. It is an established vendor that has experience in providing international partners with dedicated development teams. An excellent offshore outsourcing software development company is:
- Experienced and knowledgeable in local labor legislation and all the possible taxation intricacies;
- Expert in finding the best local professionals; they know where to look for them, how to interview them, and what rates are reasonable for the country;
- Capable of hiring employees according to your requirement fast as they usually have a great database of specialists and processes in place;
- Capable of setting up an office and all necessary infrastructure to start working on the project;
- Ready to provide administrative support and maintenance for ODC while you are in full control.
To sum up, you just partner with a vendor that gathers your specifications and does all the work for you. It eliminates any possible legal or tax risks as well as issues regarding registering an enterprise locally.
Benefits of an Offshore Development Center
The first advantage has already been mentioned. It saves a lot of costs. This is one of the main reasons lots of companies opt for offshoring. It allows exploiting economic differences of countries all over the world. Also, you can cut costs on the hiring process and maintenance of such a team in-house.
But it is far from being the only benefit of having ODC. Here are some others to think about.
Access to Talent
It is no secret that there is a shortage of professionals when it comes to IT. The demand grows faster than the market can fulfill it. Finding the right experts for projects can be extremely hard locally. No one wants to settle for less expertise or experience.
Offshoring beats this problem as you can access a wide talent pool of another country. And you can hire high-level employees for a fraction of what it would cost you in the US, the UK, or the EU. A company gets trained and qualified developers fast, effective, and with little effort.
Focus of the Core of Business
Choosing offshore development allows you to focus on the core of the business. Your in-house team can concentrate all of their productivity on that while development is taken care of elsewhere. This is particularly important for the firms that do not have IT at its core. For example, a Medical Services provider that needs a mobile app can focus on their services, while the development team works on the app itself. Or a Financial institution can delegate the IT tasks while focusing on the core of the business.
Save Time
Hiring in-house employees is time-consuming. Hiring employees abroad is even more challenging. But working with a vendor is easy and quick. The vendor has a database of experts and knows exactly how to find a suitable professional. Also, it is often faster to hire someone on a project basis rather than as a constant employee.
Another benefit of ODC is time zone differences. If you need around-the-clock service or work, it is completely possible. For example, when your in-house team goes home, an ODC team takes over and you lose no time.
Flexibility and Scalability
As you are in full control of the team, you can scale up or down pretty fast when needed. If the project grows, you can hire more professionals. It allows businesses to grow organically without slowing down due to costs and infrastructure maintenance.
New Opportunities
Setting ODC is affordable and opens exciting opportunities for businesses that couldn’t afford it otherwise. You can open new markets, access a high level of technology, and incorporate advanced methods into your product or research.
Possible Risks of Offshore Software Development
These can be called disadvantages but all of them are manageable and require a conscious approach to avoid them. It is just to know what to consider when starting the project:
- Language barrier – choose vendors that speak the same language with ease;
- Cultural differences – can be avoided by working with experienced vendors or offshoring to countries with similar business cultures (for example Ukraine and the EU);
- Data security – one should take care of it in the contract and NDAs as well as implement advanced data protection measures.
In Summary
Overall, having an offshore software development center is highly beneficial. It is affordable, fast, and increases productivity while you focus on the core of the business. Any risks that might occur can be taken care of by partnering with a suitable offshore provider locally and choosing the suitable destination in terms of time, language, and cultural similarity.
