Offshore Software Development Guide

A brief history of offshore outsourcing

The craze of outsourcing has been in the social market since 1989. And from that time, it has become an integral part of business management on a global scale.

In the 1950s and 1960s corporations exerted support from the outside of the firm to increase the economic growth and quality of the product, however, it majorly applied to labor work but with time the perception changed and business executors started to implant this idea in the software world.

With the inception of outsource, corporations discovered that agility and appended profits could be accomplished by focusing on core strengths and handing over the other aspect of the business to others.

The era of the 1970s and 1980s was the start of proper outsourcing, and at that time it was officially introduced as outsourcing

In 1967, EDSC’s Morton H. Meyerson proposed it as a business model that became outsourcing.

In 1989, the big-brand company Kodak that time started “outsourcing most of their information technology systems from outside” and so on people started to walk on their path from the 1990s.

After the decades, at the beginning of, 21st century, companies frequently outsourced services outside of their own country which is well-known as offshoring or offshore outsourcing.

The other options consequently include these:

  • Nearshoring
  • Multisourcing
  • Crowdsourcing
  • Strategic alliances
  • Strategic outsourcing

Although the most preferred outsourcing comprises three approaches such as,

1) Offshoring

2) Onshoring

3) Nearshoring

Among these three, the popular one is offshoring, as it renders all the IT-enabled services, although some of them are not universally accepted.

However, offshore outsourcing is connected to the availability of large numbers of competent and affordable transmission infrastructure along with the telecommunication, Internet expansion, and these below-listed benefits.

Services that offshoring countries include:

  • Back-office and organizational functions, like finance, accounting, HR work, and other legal documentation
  • Call centers, customer-facing departments, including marketing and sales services
  • IT infrastructure
  • Application development
  • Engineering support
  • Product design
  • Research and development
  • QA and analytics

A well-known slogan of Drucker states that a company should only seek to subcontract in those areas in which it demonstrated no special ability.”

And a lot of business strategies were constructed as per this slogan to take the benefits of offshore outsourcing with exceptional knowledge and economics of scale to enhance production and complete the expected service.

What is offshore software development?

Offshore development is the process of developing software products or software solutions through another software organization or freelance software developers across the sea.

When you offshore a software solution from another country you get multiple benefits. One of them is when you are lacking true talent, you could expect to work with a team of proficient developers who have exceeded their technical fields.

Offshoring a development team from another country benefits you to save your time and money along with your efforts to get the new-brand team of professionals.

These are the categories in which you could find the offshore developers team for your software project.

  1. Software development company: The first and foremost option for you to pick the proficient team of developers is delegating your software project to an overseas software development company that has a team of professionals. When you hire a company or agency for your development work it is better than hiring multiple individuals to perform various tasks.
  2. Freelance developers: Sometimes the hiring cost of the whole company could go out of the budget especially if you need a certain number of developers for your project at that time the alternate option is to hire individual professionals from overseas to do your software project in your budget.

Why do you need offshore software development?

With the growing digital era, the need for establishing a modernized work environment in the organization has increased, however, for enterprises, the software department becomes one of the trickiest parts especially for non-tech firms.

To tackle that problem you have two exclusive options: either you can hire a whole in-house software development team or outsource the team from another reputable software company.

Though the problem with in-house teams is you have to invest your precise time and money to hunt down the finest professionals in the market, your resources need to be invested through the process, your HR team will be spending their major amount of time recruiting individuals for the project.

In short, you will be facing more problems while hiring the in-house team and less focused on the core business. To prevent getting distracted from the core business you can opt for outsourcing over an in-house dedicated team.

Outsourcing gives you leverage to hire a proficient individual or a dedicated team from another company at your convenience, you don’t need to work moreover the fact that your team has to be indulged in the recruiting tasks.

You can hire someone who fits your criteria, who can work with your work schedule on your terms, hiring an outsourcing team leads you to multiple benefits, which we will discuss further.

However, there are various types of approaches that outsourcing comprises, such as:

  • Offshore: Offshoring means engaging business vendors for software solutions from another country. (Ukraine and Latin America)
  • Onshore: In this approach, your enterprise could outsource your business from the same country as yours benefiting the same geographical region for both of you.
  • Nearshore: Nearshore is another form of offshore outsourcing the difference is in nearshore outsourcing the enterprise outsources from a nearby country. (i.e. for the USA the nearby outsourcing countries could be Argentina or Mexico)

Among these, you can pick anyone, although offshore is one of the most outstanding options for the blooming business. As it is more flexible and cost-effective compared to onshore and nearshore.

So, let’s dive deep and comprehend why offshore is the first and foremost choice of business executives.

5 reasons why offshore is the Chosen One for the business world.

1. Cost-effective:

With the growing market, the businesses are constantly seeking different ways on how to gain a stable source of revenue while at the same time sustain their day-to-day operations to stay competitive or even survive.

With the growing market, businesses constantly look for several ways to gain an enduring source of revenue along with sustaining their day-to-day procedures to stay competitive and robust in the industry.

However, with the in-house team, the unpredictable and excessive fluctuations in the economy lead to high-cost projects, and most companies cannot afford the cost of local ventures, so offshore seems to be the most appealing strategy.

These are few geographical places that have the highest rate of developing a project.

developing a project
Image Source: Economist

Offshoring reduces the overhead costs and redirects businesses resources to these benefits:

  • Focus more on their core competencies
  • Increase productivity
  • Provides more job opportunities
  • Prioritize revenue-generating tasks

2. Focus On Core Business:

The main reason for a product being in the longest run in the market is because of delivering a successful software product that satisfies all the market demands.

However, with the growth of your business, you will face the other aspect of your business especially the technical domain, and if you’re not attentive towards them, then it might affect the quality of your project.

Whether you are a tech base or non-tech company, co-operating with digital solutions is one of the first necessities of this digital era, that means offshoring software development gives you time and your valuable resources to be more focused on the core of the business that makes you successful.

3. The Talent:

Offshoring is not only cost-effective but also best for fetching the best talent from the pool. It means you can harness the talent that you can’t find in your local area.

When you look into the spectrum of skilled highly educated across the world, you will get whoever is most suitable for your project and is in your pre-defined budget.

Image source:

China has approximately 4.7 million engineers followed by India with 2.6 million professionals that can provide your desired outcome.

You can offshore professionals with training and experience in these diverse domains:

  • Finance
  • Development
  • Design
  • Customer service
  • Animation
  • Marketing, etc

4. Keeps Your Business Competitive

The competition in businesses at a global level has increased in this digital world, as with time innovation has become a vital factor in the success of a company.

Also, it adds the constant pursuit for efficient customer service for companies across various industries to stay relevant to other businesses along with their own.

Offshore teams are precisely talented and skilled in various domains that keep companies competitive in the market.

As offshore improves operational methods, develops efficiency, and renders top-notch quality services to its customers that take your enterprise ahead in the game compared to your competitors.

5. Quality

Offshoring brings valuable results to your company. And one of the most preferable reasons is the quality of the project. The talent and skill that you could get through the global workforce.

The proficient offshore software development team is irreplaceable and effectively harnessed by companies to assist them to reach their long-term goals.

That means getting high-quality services from those dedicated teams of professionals with an efficient process flow within their business for them to enhance the quality of their products and services.

With modern technologies and the latest methodologies, companies have complete charge over their offshore team, therefore, you can ensure quality in what they offer.

Now you have the insight into why offshore could be the ultimate choice for the business now let’s see how to build the software development team.

How to build an offshore software development team?

Launching a new software development project is always stressful as we all want it to be a success among other projects. However, to ace the race you need to rely on a strong core and that is your software development team.

As we all expect our proficient software team to consist of highly experienced and skilled individuals, but is it the only requirement in the team? No, because a strong and dedicated team comprises more than that.

So, there arises the question — how to build a robust offshore software development team?

To create a reliably effective software development team, you need these approaches to build one successful team for your software project:

1) Define Your Team Type

The first step to build a team is to determine the type of team you want for your project, which helps you to create one as the outline of the team will be in your mind.

For the success of your project, you ought to establish a clear software development team structure, without the clarity of it you would be lost in the woods.

Pick the most suitable one for your business among these three main types:

  1. Generalists: They possess a broad range of knowledge and expertise. As most of these types of teams are created for end-to-end comprehensive digital solutions, which is the plus point of these kinds of teams. However, when it comes to a higher level of expertise in certain areas, generalists often take a back seat due to the lack of knowledge and skills.
  2. Specialists: This type of team consists of highly skilled professionals in a certain field or domain. And having specialists on board with your benefits to address a specific matter with their years of experience, knowledge, and expertise, means more efficient and productive work. Also, the downside of this team could be the lack of communication, as it is not a strong suit of this kind of software development team.
  3. Hybrid team: The last one and most preferable is a hybrid. It is a mixture of the above mentioned two teams. The hybrid approach is the combination of the best from the two worlds, where the highly skilled professionals can focus on functional parts, and generalists can take upon the task of communication and cooperation inside the team.

2) Team Size

Now that you are through the type of team that will be best for you then we will jump to the second part, which is the size of your team.

Though, it is best to know that there is no magical number or certain size that forces you to follow up, as the size of your team entirely depends on your software project along with the requirements of the assignment.

If you chose to have smaller teams then the task of managing the team is easy but assigning the task among the team is more crucial, as losing one team member could affect the team negatively.

With a bigger team, the scenario is quite the opposite, assigning the tasks to the experts is not the concern, as the main reason for worry is the management of the team especially the communication among the members.

However, the deciding factor of the team size is not on you, evaluate these factors and then decide the right number of team members for your project.

  • The complexity of your project
  • Budget
  • Time frame
  • Available resources

3) Assign Certain Roles in Prior:

After reading the name you might wonder, isn’t the role of each member in the team will be pretty clear? As you would need software developers, various types of designers, project executors, etc.

Well, the thing with assigning the roles and goals of team members to the right one is one of the significant factors that lead to the success of your project.

So, allotting a task to a certain member of an effective software development team is more versatile and complex but essential for the project.

Also, before you handover the project you need to create the team apart from the developers, which includes:

  • Project Manager
  • Software Architect
  • Experience Designers
  • QA or Tester
  • Business Analyst

4) Communication:

Communication is one of the essential keys for the success of the software development project. If there is a slight chance of miscommunication among the offshore team members or between the team and your enterprise, then the risk of project failure is much higher.

Neglection towards this aspect can harm the whole project. So, establishing a clear interaction among team members certainly accelerates the process along with their creativity and innovation.

So, encourage transparency and promote interactions inside the team more and more. And to enhance the experience you could schedule these practices:

  • Pair programming
  • Daily standups
  • Weekly meetings
  • Face-to-face meetings
  • Or video conferences

Tips to Manage Offshore Development Team Effectively

Now you have finally built the team, let’s start the task of maintaining that team effectively. Follow these tips to maintain your team effectively. Let’s dive in!

(A) Define Your Goals:

First thing first, if you assign a project to an offshore team without giving them the insight of the goal then it might land you in trouble.

The chances of not getting what you visioned are high, as you have to let them entirely, or they would play blind and will build as per their understanding.

And the end product developed by professionals may not satisfy all the purposes that you want to accomplish through the product.

Offshore developers expect a full-fledged product vision to start the project. And for that, you need to tell the reasons why you want to build the product, or which are the functions that you would like along with some specifications you expect them to develop and deliver.

(B) Create a Product Roadmap

Project Development RoadMap
Image source: Roadmunk

Make a list of the general tasks, it will help you to divide all the scope of work, including time intervals you can create a product development roadmap.

The product roadmap is a top-notch way to keep in check if the requirements are fulfilled or not to complete the product vision.

A roadmap for the product is a flexible instrument, so there are chances that deadlines and functionality may vary as per the speed of the development process, user terms, and all other external aspects.

The aim of it is to build a clear understanding of the process of project development for all members of the offshore development team.

© Frequent Communication with Simple Language

With an in-house team, the communication is quite easy and frequently, you can speak with them face-to-face, whenever you require.

However, with offshore teams, that’s not the option, but you need to communicate more frequently so that all the elements are clear among the team and between them and your enterprise.

That eliminates the threat of confusion despite the long-distance between your and offshore team.

And several technologies enhance the communication and collaboration with your offshore team, tools such as:

  • Slack
  • Microsoft Teams/Office 365
  • Cisco WebEx
  • Zoom
  • Trello
  • G-Suite

(D) Understand Your Offshore Team’s Perspective

This pointer is for all types of team projects. To comprehend their perspective, first, know who you’re working with for the project.

Even on-shore or nearshore teams have team members who have their different factions of strengths and weaknesses. So, imagine if someone is far away from your region, how different they could be, so understanding their perspective is essential.

Also, understanding the depth of your team will lead you to develop and implement robust team strategies.

With an offshore team, you just don’t need to understand their skills and perspective towards the task but also be considerate towards their culture and time zone differences.

(E) Conduct Regular Demos

Providing the demo means demonstrating the standard result of the teamwork, which you will get at the end of each iteration.

The main reason for using the demo is to display what the team has achieved during the sprint along with understanding whether the team performance can meet the expected conditions.

At demos, the product owner and manager must provide the team effective feedback for better improvement and document the meeting.

Apart from that, examine the last iteration, classify positive and negative points of the project, and create solutions for them.

(F) Invest in collaboration tools

Project management Tools

With the collaboration of various technologies, offshore development teams become more effective. Tools like Trello, Slack, Zoom, Skype, and JIRA become the aid to development teams to create the collaboration workflow easy and translucent.

These tools are not the same as working together in one room, but they certainly keep the whole team on the same ground, and the differences in locations and time zones also don’t bring much difference with these tools, which means they are a vital part of the team.

What engagement development model should you follow?

An engagement model is a system, method, or plan that determines the foundation of collaboration between the client and the software development company.

The engagement model is created as per the wants, requirements, and benefits of the client. That also guarantees adaptability, efficiency, and the level of control over the project.

You will find several types of engagement models in the software market as there is no ideal way of collaboration, as the type of model depends on your project.

To determine a suitable engagement model for your product you need to ensure that it regulates your mission, goals, and vision along with providing positive outcomes.

There are various reasons to choose an engagement model depending on the applicant company’s or individual’s factors, such as:

  • Experience
  • Record
  • Cost of app development
  • Reputation

Likewise, the other cause could be prejudiced, for instance, the client’s previous experience with a company.

Now you know what it is and why it is essential let’s see the types of engagement models with their pros and cons.

So, there are three kinds of engagement models:

(i) Fixed Price:

The fixed price engagement model is the standard procedure in software development. It’s the same as its name — you will have a fixed price before the project development, and you won’t need to pay more than that.


  • It has a simple workflow
  • Transparency between you and the offshore team
  • Comprehensive specifications
  • Easy to manage


  • Lack of flexibility
  • Need more time for pre-preparation
  • You can’t make big changes anytime

(ii) Time & Material:

Time and material engagement models cost you as per the time and efforts the development team applies to the app development. As a client, you will pay for the materials and the hours consumed by the team members over the project.


  • It has amazing flexibility
  • Cost-effective
  • It has fewer low risks
  • Easy to modify requirements


  • Modifications causes issue with the budget
  • Need to be involved through the project
  • No fixed delivery date

(iii) Dedicated Team:

The dedicated team engagement model is one of the best choices if you want a long-term collaboration for your big project that needs the development of a complex product from scratch.


  • Great Flexibility
  • Access to offshore experts
  • Real-time check
  • Overall control on resources


  • Long process planning
  • Possibility of disagreement
  • Need to spend more time

What are the risks you will face during offshoring and how to mitigate them?

Offshore is not only for the small enterprise but also the biggest companies seek for them.

Organizations such as Apple, Cisco, Ford, and so on rely on offshore outsourcing, where they are mainly employed in the customer service and construction entrepreneurs.

This strategy is one of the most effective as it has a great track record for many years. However, negotiating with another company in another country to succeed in daily services for your industry has its risks.

There is no doubt that offshoring is all about cost-effectiveness and developing companies or business services in the business world.

Though, there are various effects that offshore might leave on your business. So let’s understand the risks and ways to tackle them.

1. Hidden Cost

The risk with offshore outsourcing is not about outsourcing — it usually includes several cases where offshoring clients get astonished by abrupt and extra fees that were never discussed beforehand during the legal agreement. That’s why most utmost offshoring companies prefer fixed rates.

Solution: To avoid this situation, start with asking your business partners for referrals of the previous projects along with testimonials. Another step you should take is, pick an outsourcing model that allows transparency of expenses and provides control over renting your development team.

2. Poor data/IP Security

There is a chance that a company or business’ data or IP might not be secured as per standard, and lack of security will result in data loss or leaks. There are a few incidents that occur to steal data, which ultimately become the downside of your business.

Solution: To prevent the tiniest and slightest chance of information and data fraud, you can take two steps, which are,

  1. Ask the software development company about their data protection methods. Any trustworthy company will provide you with a detailed answer without any fuss along with, case studies and examples, which you can check.
  2. To element this threat the second step is to seal the deal with a non-disclosure agreement with that said company or individual to secure your intellectual property.

3. Lack of Proper Work Distribution

If you think that offshoring means multitasker employees, then you are wrong, it is about recruiting diverse employees and assigning the task to those employees, who are efficient in their job. However, while a poor distribution task the progress of the project may be impeded.

Solution: So, to tackle that, select a company with an entrenched model for remote team integration. This model in place helps you to find the vendor that has the expected experience and skills necessary for successful collaboration. Also, your potential cooperation must provide essential training and consultation as per the project requirements.

4. Poor Communication

One of the biggest flaws of offshoring is the communication barrier, as your project will be outsourced in another country where their primary language is different. Although the most preferred language in offshore companies is English, however, the lack of proficiency might dent the communication between them and the offshoring company.

Solution: To tear the communication barrier choose a team, who has a mediator, like a project manager, who could handle these communications for both parties. Ideally, most project managers are trained to be proficient in multiple languages to maintain international relations, and they know how to ensure that their team embraces your ideas to turn them into realities.

5. Quality Problems

The main reason to opt to offshore for businesses is because of the lower labor costs, which means they could hire more than one employee at the same price as for the one. However, with the low cost, the quality might not be top-notch in the cases of offshoring. This might happen because of inexperienced employees, lack of team management, inability to comprehend the requirements, and so on.

Solution: The way to tackle this risk is to recruit a team that considers rendering its software developers with on-going training and modern tools. With these latest technologies and methodologies, the developers are inclined to continue to develop their skills and expertise to build quality products.

Final Thoughts:

So, any business-oriented personality needs to stay updated with the freshest tech trends to comprehend the market quickly. The world of IT is a big ground field, and there is no surprise to find new talents every other day.

And to let your business shine in the software galaxy, acknowledge the approach of offshore software development, it will enhance your business to the next level.

For the development of high-quality software products quickly, cost-efficiently and without letting down the scalability, the offshore is the one that will be at your aid.

So, before you step into the world of offshore, this guide will help you, as it’s always great to have a complete overview of the plan at hand before you decide to pick the option.

More Useful Resources:
How Much does it Cost to Hire a Software Developer
A Complete Guide on Choosing the Right Software Outsourcing Model
All you need to know about types of Software Outsourcing




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John James

Like to Share Insights and Information on Trending Technologies | Avid Learner | Passionate about Tech Research | FOMO of New Updates in Tech Industry

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