What Is Offshore Software Development?

BUSINESS | 21 Oct 2019

Commercial software development is a tricky business. Often requiring multiple skill sets and a vast array of knowledge, organisations big and small regularly struggle to deliver these projects in-house, on time and within budget. To overcome these challenges, many turn to offshore software development

But just what is offshore software development? 

Put simply, it is the hiring of an external development company, team or individual located outside the customer’s continent to build a software project. It’s really that simple. 

Why Organisations Use Offshore Software Development


There are many reasons why companies choose to turn to offshore software development. For a start, they help scale a development project, without ballooning costs. The ability to double or even triple a development team’s size, without the need to consider hiring and admin costs is very attractive indeed. Pair this with the added agility and flexibility offshore software development can provide and it’s easy to see why it’s considered such an attractive proposition. 

Beyond simply reducing scaling costs and improving flexibility, offshore software development can also:

Free up Internal Resources 


By deferring a project to an external partner, organisations can ensure their internal resources are effectively prioritised on the tasks that make the biggest difference to the bottom line. Offshore software development offers an excellent opportunity to reduce the pressure on internal teams and allows them to focus on what really matters. 

Offer a Convenient Alternative to Overcome Local Hiring Challenges


Expanding an internal development team can be tough and expensive. In many instances, it can take months to find the right hire as quality engineers become increasingly scarce, and this can be problematic if they’re required sooner rather than later. Offshore software development provides almost instant access to the talent required and avoids the common issues experienced when attempting to hire locally.    

Provide Access to the Latest Technologies


In some instances, a project will require technologies that aren’t available in-house, this can create major challenges in the effective delivery of a project, particularly if the barrier to entry is high. Finding qualified Golang or Python engineers is often challenging and these programming languages are becoming more and more popular. With increased competition for such expertise, it is paramount to look for alternatives. 

Over the last few years, there’s been a significant increase in offshore software development companies specialising in specific niche technologies. These organisations can build ready-to-go teams and help businesses fill their talent gaps where necessary.

The Different Types of Offshore Software Development Companies


Offshore software development companies come in all shapes and sizes, designed to meet every need, budget and specialty, however, it’s worth keeping in mind some organisation types are more valuable, productive and trustworthy than others. 

These are the common options often found in the outsourcing market: 

Large Software Houses 


These companies typically consist of 1000’s of developers, operate at significant scale and come with majorly high employee churn, often being referred to as ‘Coding Factories’. This scale makes it very difficult to track who is actually working on your project and the quality of work produced. As such, the output from these organisations often massively varies, depending upon the personnel involved. 

With that said, there are often processes and systems in place to maximize the chance of high quality output being produced. However, the fact remains, success working with these companies is often pot luck. This option is often used when companies choose to go down the ‘cheap’ route. 

‘Body Shops’


These organisations are often extremely rough around the edges and typically deliver the bare minimum at every opportunity. Manned almost exclusively by junior developers, work is often cheap, low quality and of little value. Success working with these companies is rare, but does occasionally happen. In most instances, the juniors involved are managed by a few senior developers ‘behind the curtain’ and can potentially produce work that is of satisfactory quality. But, the reality is, with these organisations, you don’t have transparency on who is actually working on your project, so it can be hard to predict the final outcome. 

Freelance Networks 


These networks consist of multiple individual freelancers working together to get a job done from various locations. While in theory this can work well, in reality it opens the project up to significant vulnerabilities. Trying to build a large team that have never worked together before not only takes time, but is often highly challenging, particularly as developing team chemistry can be difficult and unpredictable. 

Work produced by these networks is often hard to coordinate as there are so many interested stakeholders involved. They can deliver high quality work, but the logistical challenges and nature of the unfamiliar team structure often create problems around timeliness, teamwork and accountability. 

Freelance networks are best used for small spot work and as a support function rather than for large multifaceted projects. 

Boutique Engineering Consulting Companies


These organisations are professional outfits with a high-skilled and coordinated workforce. They typically offer premium services that deliver extremely high quality work to schedule. Most organisations in this category take pride in their portfolio of clients and typically only accept projects that they are excited about. They usually come with years of business experience and are often great for long-term partnerships.

However, this reliability and quality is naturally reflected in the price, these organisations offer very little opportunity to reduce costs, but almost guarantee project output will be of high quality. 

The Risks of Offshore Software Development


There is often a taboo around offshore software development due in large part to the horror stories shared by companies who chose their partner without conducting the right due diligence or by prioritising cost. 

Yet, despite this market concern, the likes of Spotify, Uber and Netflix still all use external development resources, but don’t actively announce it to the public. If market leading companies like these are prepared to embrace external consultants, then it just goes to show that it can work when done properly. 

With that said, while offshore software development can offer significant opportunities to organisations looking to diversify their capabilities or upscale, there are risks attached too, and many of these can fundamentally undermine entire projects if not managed properly. 

Communication Challenges 


Most offshore software development takes place in countries where English is not the first language. As a result, effective communication can sometimes be a challenge, particularly around technically detail-oriented subject matters. A miscommunication due to a language barrier can have significant consequences and is undoubtedly a risk that needs to be considered. With that said, many external vendors have excellent in-house English language skills and come with no risk of issues. It’s just a case of doing pre-emptive due diligence to ensure you find one of these partners instead. 

A Lack of Proven Technical Know-how 


When hiring an offshore software development team, it’s essential to choose an outfit that understands the technical requirements at hand.This is absolutely fundamental to project success. However, it’s easier said than done. Many teams will say they can deliver to win the work, then attempt to wing it - this often ends in a mess or with major errors. Others promise to deliver, then put their junior developers on the project to learn on the client’s dime while maximising project profitability.

Quality Concerns


Quality is often a significant issue when using offshore software development team, in many instances the quality delivered will be sub-par, this is often the case when a cost-based approach to choosing a partner has been taken. If cost is the primary basis for the partner selection, then errors are likely to be common. This highlights just how important up-front due diligence really is, there needs to be a clear understanding and alignment on what good quality looks like before any contracts are signed. 

Responsiveness Issues


Working hundreds (sometimes thousands) of miles apart, remote communication is key. Unfortunately, it is not uncommon for this to become a major issue as project coordination and delivery speed are significantly impacted by poor responsiveness. It can be particularly problematic in instances where deadlines are tight. In many organisations this is a direct result of a lack of communication tools and processes, as such, it makes good sense to review a partner’s internal communication infrastructure upfront for any potential warning signs. 

With so many risks to consider, it makes sense to invest time in proper due diligence to ensure you find the right partner for your needs and maximise the chance of project success. 

The Importance of Due Diligence When Looking for a Offshore Software Development Partner


Offshore software development often gets a bad reputation and it’s easy to understand why. Many see it as nothing more than a cost cutting opportunity, farming projects out to Indian and Ukranian software factories who deliver sub-par work and regularly fail to deliver on time. 

This is not how offshore software development is supposed to work, it is not a cost cutting exercise and those that view it this way will quickly regret their decision. While it is possible to get complex digital projects delivered on a budget, it is incredibly risky. 

If you’re looking for an offshore software development partner, it’s critical you conduct the right due diligence to avoid the risks that can damage project delivery and quality. Remember, you need to make sure you understand exactly what kind of organisation you’re partnering with and that expectations are communicated at the start of the relationship. 

There’s no doubt about it, due diligence is a hard and time consuming endeavour, but it’s all worth it in the end if it helps you find the right partner for your needs. It really is better to invest up-front and minimise the risk of project failure and the complete waste of budget. 

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