The world is developing rapidly with the evolving technological advancements. Businesses need to keep up with these changes if they want to remain competitive in the market. With the increase in demand for software development, outsourcing has soon become a go-to option for many companies. One of the ways to outsource software development is through offshore development.
Offshore software development is commonly used by startups, small to medium-sized enterprises, and large corporations to scale their software development wings and save on overhead expenses. It is a popular trend in the software development industry, but many clients are still not familiar with this kind of software development service. In this blog post, we will look at offshore software development and its various models.
What Is Offshore Software Development?
Offshore or remote software development refers to the practice of outsourcing software development tasks or projects to a company located in a foreign country. Oftentimes, this is done to take advantage of lower labor costs, specialized skill sets, or time zone differences that allow for round-the-clock work. Some of the popular offshore locations for outsourcing software development include India, China, the Philippines, and Eastern European countries. Among the renowned ones, Vietnam is the rising star in software outsourcing, attracting companies from all over the world with its talented developers and competitive prices.
Pros and Cons of Offshore Software Development
Offshore software development makes a range of benefits and challenges possible for businesses. Here are some of the key advantages and disadvantages:
- Cost Savings: The biggest advantage of offshore software development is cost savings. Countries like India, China, and the Philippines have a lower cost of living, which translates to lower salary ranges for software developers. This means that businesses can get the same quality software development services at a lower cost than they would in developed countries.
- Access to Skilled Professionals: Offshore software development companies have highly skilled professionals with years of experience. These developers use the latest technologies to develop high-quality software. Outsourcing to these companies also gives businesses access to a large pool of skilled professionals. This makes offshore software development services a good way to fight the shortage of resources and talent.
- Faster Turnaround: Offshore software development companies have teams of developers working on projects 24/7. This means that businesses can get their projects completed faster than they would with an in-house team.
- Cultural Differences: Offshore development can potentially result in cultural differences between parties – the in-house team and the offshore team. These differences can be difficult to manage, affecting the outcome productivity and quality of the final product. Businesses can provide cross-cultural training to their employees to mitigate cultural differences. This will help them understand and work more effectively with offshore teams.
- Communication Barriers: Communication is a critical aspect of software development. When outsourcing software development offshore, businesses may face language barriers, leading to misunderstandings, delays, and quality issues. The key to resolving communication barriers is clear communication. Businesses should establish protocols for language barriers and have translators to assist the offshore team if necessary.
- Different Time Zones: Offshore software development companies operate in different time zones, which can be a challenge for businesses. The time difference can result in communication delays and reduced productivity. You can adjust their working hours to overlap with the offshore team’s working hours to minimize the impact of different time zones. This can improve communication and reduce delays.
Different Offshore Software Development Models
Offshore software development models vary based on the project requirements, budget, and management style of each organization. Here are some common types of offshore software development models:
Offshore Development Center (ODC)
What is ODC? An ODC is a dedicated and customized offshore software development center that serves as an extension of your in-house team. It is a long-term collaboration between the client and the ODC provider, with clearly defined roles and responsibilities for both teams. The benefits of an ODC include cost savings, access to skilled professionals, efficient communication, and increased control over project outcomes. Additionally, ODCs provide a secure and stable environment for businesses to expand their software development capabilities without the need to establish a physical presence in another country. Ultimately, an ODC allows businesses to focus on core activities while leveraging the expertise of offshore teams for software development.
Dedicated Offshore Model
The dedicated offshore development model is a great fit for organizations that want to get their work done without any hassle. It is a model in which a team of dedicated offshore developers work on your project only. They are fully dedicated to your project, and the relationship with your organization is a long-term partnership. You are in full control of project management, while the dedicated offshore team handles the software development. This model ensures constant communication and transparency, and your team has full control over the project outcomes.
A project-based offshore development model is an ideal solution for businesses that want to outsource development for a specific software project or task. This model is good for businesses that have regular in-house development teams but need an external team to handle additional projects. In project-based outsourcing, the offshore team is responsible for delivering specific pieces of the project within specified timelines and budgets. Project-based outsourced teams can help reduce the overall project cost and save businesses development time.
Time & Materials Model
The time and materials offshore development model is a model in which you pay on an hourly basis for the work completed by the offshore development team. This model can be great for businesses with limited budgets and projects where requirements are not stable or for businesses in which project scope or requirements change frequently. This model allows for increased flexibility as you can constantly change development requirements as needed. The downside is that it can be more expensive than project-based offshore outsourcing.
Build-Operate-Transfer (BOT) offshore development is a model that starts with foreign firms setting up an offshore development team, and after completion of a specified period, the company transfers ownership of the team to the offshore branch. This is a significant investment, but over time, the offshore branch will become an independent offshore development company. This model is suitable for businesses that want to establish a broader presence in a particular geographic location on a long-term basis.
The hybrid offshore development model is ideal for businesses with complex projects. It’s a mix of the other offshore development models, and it allows businesses to take advantage of the best of all the models. A Hybrid model can be custom-fitted to a company’s specifications, requirements, and budget. Businesses use this model to minimize risks and maximize benefits by keeping costs down while retaining control over the project.