Offshore Software Development: Everything You Need to Consider

Offshore software outsourcing makes creating your software product from scratch easier and assists with deadlines, staff management, tech peculiarities of the project, etc. There’s no need for a significant emphasis on running the project and doing other things when you outsource a portion of duties to specialists.

Offshore software development statistics show that such an approach is quite popular these days. The stats by Report Linker prove it: the worldwide IT outsourcing market is expected to obtain $425.19 billion in revenue from 2021 to 2026. In turn, Statista indicates that the IT consulting and implementation services market worldwide will reach $82.44 billion in 2027. It suggests that offshore software development is a highly popular and you should consider it for your tech tasks completion.

This article will show you whether offshore software development is a suitable cooperation model for your business. You’ll also know more about offshore development advantages. Then we’ll tell you how to avoid common pitfalls while selecting and working with a software outsourcing partner.

Offshore software development is the practice of transferring a software development project (fully or partially) to a third-party software development vendor located in a faraway country, with a large distance between them and you, but typically with lower labor costs. This method allows businesses to leverage a wider talent pool, access cutting-edge technologies, and potentially reduce development costs.

For example, if your company is located in the US, you can hire a skilled and cost-effective IT vendor from Central and Eastern Europe, like the following European countries as Estonia, Poland or Ukraine; or if your business is from Australia, you can outsource software development to the offshore IT company in Southeast Asia.

Offshoring allows you to remove the responsibility for creating software and managing the development team. At the same time, you aren’t limited to hiring specialists in your city or country, and access to vast talent and technology worldwide.

However, you have to consider the following peculiarities when offshoring a project. Because of the geographical distance between you and your offshore software partner, a significant time zone difference can affect your development workflow. You may also encounter significant cultural and language barriers. Nevertheless, all these problems are easily solved. You just need to be careful in choosing a technical partner and pay attention to their customers’ reviews.

Outsourcing gives companies a range of indisputable benefits, including pricing flexibility, large talent pool, scalability, and so on. There is a vast range of tech-related services that can be outsourced: mobile development services, web development, UI/UX design, etc. Let’s dig deeper.

• Mobile app development. Offshore mobile development is quite popular since you don’t need to hire an in-house team, pay fees and sick days, hardware and software, or office rent. Offshore software developers will build a cutting-edge solution for you without extra expenses for equipment and working space.
• Web development services outsourcing provides your business with a leg up over the competition with a flawlessly operating web product. This product will boost your company's online presence, as offshore software programmers will do their best for flexible and modern website development in the shortest time.
• UI/UX design. Keep in mind that you obtain a range of preferences outsourcing this service. Skilled designers will make all the complex things amazingly simple. As a result of cooperation, you’ll obtain an intuitive app interface or site that is easy to navigate. Moreover, you’ll be able to focus on other business issues entrusting your design creation to the offshore programming vendor's safe hands.
• QA services. Developing software solutions needs thorough testing of every app part to ensure it works without bugs. Even the best offshore software programmer can make mistakes, but they'll soon be tired, being obliged to write test cases and check product details. In this case, outsourcing is an excellent approach to maintain your solutions at their best without exhausting your devs.
• Cloud infrastructure management. Offshore IT vendors can provide expertise in managing cloud infrastructure for your project on platforms like AWS, Microsoft Azure, or Google Cloud Platform. This frees you to focus on core business activities while ensuring your application has a reliable and scalable foundation.

You can also outsource software product maintenance, data storage, or security. Outsourcing became the optimal solution to all business problems, even at the time of the world pandemic restrictions: you can remotely collaborate with an offshore programming team from around the world.

Offshore outsourcing is only one of IT outsourcing models for cooperation. In order to have a full picture of software development outsourcing, you should also consider other models of IT outsourcing like:

• Onshore software development
• Nearshore outsourcing

We’ll talk more about all of the listed outsourcing models below.

This cooperation model refers to outsourcing software development to a team located within the same country as your business (e.g., US businesses can outsource software development from Silicon Valley to San Francisco, Sydney-based Australian startups can cooperate with onshore companies from Melbourne).

Onshore software development approach offers several advantages:

• Simplified communication. Working with a team in the same time zone and sharing a similar cultural background can lead to smoother communication and collaboration.
• Easier project management. Physical proximity allows for face-to-face meetings and closer oversight of the development process, potentially simplifying project management.
• Alignment with local regulations. Onshore teams are familiar with local data privacy laws and regulations, reducing potential compliance issues.

However, onshore development can also be more expensive due to higher labor costs in developed countries. The talent pool for specific skill sets might also be more limited compared to a global search.

Nearshore software development involves outsourcing software development to a team in a neighboring country or region. It offers a middle ground between onshore and offshore options:

• Favorable time zone overlap. Nearshoring often benefits from some time zone overlap with your team, facilitating communication and collaboration compared to a completely different time zone.
• Potentially lower costs. Labor rates in nearshore locations tend to be lower than onshore rates, offering cost savings while maintaining a high level of quality.
• Cultural similarities. Nearshoring teams might share some cultural similarities with your business, potentially leading to better understanding and project execution.

But kindly note that the nearshore software development is as useful and effective if you look for an IT provider nearby. However, in this case, you can be geographically limited in your choice. And here offshore comes to help you.

This cooperation approach refers to outsourcing software development to a team located in a distant country with significantly lower labor costs. Moreover, the offshore development process is an economically rational option that allows you to work on your project with experienced software developers while remaining within your budget.

This approach has some key benefits:

• Cost-efficiency. Offshore development offers the most significant cost savings due to lower labor rates in developing countries.
• Access to a global talent pool. You can tap into a wider range of skilled developers with specific expertise that might be harder to find locally.
• 24/7 development potential. Depending on the time zone difference, offshore teams can potentially work on your project while your team is offline, keeping development moving forward.

Nevertheless, communication challenges can arise due to time zone differences and cultural barriers. Data security concerns and intellectual property protection also require careful consideration when working with offshore teams. However, the professional vendor can properly solve these issues making a collaboration process comfortable.

First, let's consider the main benefits for you as a customer in case you decide to use offshore development services.

Most offshore outsourcing software development companies provide their customers with flexible prices and first-grade services. Central Europe, for example, gains its popularity concerning a bunch of talented individuals, state backing, and low taxation for the IT sector. It also displays the ideal value for money balance of the software provided.

The development costs (as well as software development time) may also be influenced by staff size, technology stack used, experience, and may also be influenced by duration of the offshore software collaboration. Furthermore, many offshore software development service providers strive to give their clients the best possible circumstances, offering them additional pleasantries (like some free services).

The total time spent on recruitment can be reduced by cooperation with an offshore software development outsourcing company. You can always speed up project completion by collaborating with the right experts. However, building a high-performing team takes time and effort. Offshore IT cooperation streamlines this process by providing access to pre-assembled talent pools with diverse skill sets. This allows you to quickly assemble a team perfectly suited for your project, accelerating concept development and implementation to get your innovative product to market faster.

IT outsourcing makes available cooperation with a variety of technical experts competent in needed business domains. A wide talent pool is one of the reasons why software outsourcing companies from all over the world open their headquarters and R&D centers in this region.

The internal recruitment may be completed in some days rather than months. Outsourcing allows you to hire as many people as you want. So, you may select the best offshore developer (or a whole team) by considering different specialists from all around the world with various talents and expertise.

Software development offshoring can be a tricky business, and you never know how many developers you'll need at any time of the project. However, one of the biggest advantages is its inherent scalability. Offshore development teams can easily adjust their workforce based on your project's evolving needs. This means you can readily scale your development team up or down to meet fluctuating workloads or changing project requirements. This allows you to optimize your development costs and resource allocation throughout the project lifecycle.

Working with outsourcing professionals allows you to acquire a dependable final product that has been examined and corrected on time. For this reason, every software development offshore project includes not only a project manager but also a QA team that is responsible for debugging written code to ensure that future product runs smoothly.

We’ll name the most common offshore IT development challenges to help you understand how to find proper solutions in outsourcing cooperation.

When dealing with offshore IT development staff, time zone difference is crucial. If you and your vendor are in different time zones, communication may take a little longer. In addition, product development may be delayed from time to time if the organization has a critical question that requires your response and permission. At Cleveroad, we schedule all meetings in advance to improve communication efficiency and reduce possible time lags.

This is one of the most common software offshore development problems, which can be traced back to various factors. Your communication, for example, may degrade as a result of your vendor's poor command of the English language. To cope with it, pick an IT partner, assess their English proficiency ahead of time, or discuss it individually with the company's representative or team members. For instance, Cleveroad software developers are equipped with excellent English communication skills and extensive experience working in cross-cultural teams, that will help them properly master your project and quickly solve the arising development issues.

Data leakage is one of the most pressing challenges today because working with offshore IT companies typically entails providing some information. For example, solving this problem, our specialists in Cleveroad highly prioritize data security offering comprehensive NDAs to ensure your intellectual property is protected. Moreover, a reputable company like Cleveroad always prioritizes data security and employs robust technologies like user privacy policies, private data storage with encryption, and ensures compliance with regulations and security standards like the GDPR, HIPAA, FMIA, KYC, etc.

If you value quality over quantity, start thinking about it now. Quality assurance is a priority at Cleveroad. That’s why we employ a full-cycle software testing process throughout development, utilizing skilled testers and testing as well as automated testing tools (e.g., Charles proxy, Postman, Xcode, Appium, Gmeter) to ensure your project meets the highest quality standards.

It’s high time to consider what practices to apply when outsourcing software development to an offshore IT company.

For offshore software development to succeed, choosing an experienced and reliable technical partner is crucial. Here are some ways to find a sure-fire IT outsourced partner:

• Look through the most popular outsourcing destinations (e.g., Central and Eastern Europe, North America, Western Europe, Asia, Australia, etc.) and choose the most suitable according to the hourly wages for their services. For instance, Central and Eastern Europe offers a good balance of competitive offshore software development costs and strong technical talent.
• Surf through the platforms like Clutch or GoodFirms to discover a curated selection of IT vendors.
• Read the clients’ reviews to decide whether it’s a good idea to work with the company.

For instance, you check below the review our client from Singapore left on Clutch about offshore IT cooperation with our Cleveroad team:

Identifying your business requirements is the foundation for a successful offshore IT outsourcing partnership. This involves taking a deep dive into your:

• Project goals
• Desired functionalities
• Target audience
• Budget of your project

By clearly defining these requirements upfront, you can effectively communicate your needs to potential offshore vendors, ensuring they possess the expertise and resources to deliver a solution that aligns perfectly with your business objectives.

Developers without well-defined objectives may be unsure of what they need to perform and, as a result, may feel constrained and lose productivity. All this leads to increased project risk and lower earnings for your business; the quality of offshore programming services will also suffer. Setting clear, achievable goals for your offshore staff is important to your software project's success.

How to do it? For example, you can use a SMART system, according to which your goals should be Specific, Measurable, Achievable, Relevant, and Timely. This abbreviation will help you analyze the set goals and improve them to obtain a high-quality product.

You with your IT vendor should implement robust project management methodologies like Agile or Scrum to ensure flexibility and responsiveness to changes. Use project management tools such as Jira, Trello, or Asana to track progress, assign tasks, and manage deadlines. Moreover, you should clearly define roles and responsibilities to avoid confusion and ensure accountability. Conduct regular stand-up meetings to monitor progress, address issues, and make adjustments as needed. Establish clear milestones and deliverables to track the project’s progress against the timeline. Regularly review and refine project management processes to optimize efficiency and effectiveness.

At this step, you and your offshore IT provider should define preferred communication channels (e.g., email, project management tools, video conferencing) and establish a communication frequency (for example, daily, weekly meetings). This ensures clear and consistent information flow throughout the engagement. A structured communication set in cooperation with your IT offshore vendor minimizes misunderstandings, fosters a collaborative environment during offshore software project completion, and allows for timely decision-making.

Data security is a top priority in offshore IT outsourcing. In order to properly protect it, you and your vendor can implement strict security protocols to protect sensitive information and use encryption for data storage and transmission to safeguard against unauthorized access. Moreover, the provider can help you establish access controls and authentication mechanisms to ensure that only authorized personnel can access critical data. They’ll also help you follow industry standards and regulations, such as GDPR or HIPAA, to ensure compliance with data protection laws.

There are hundreds of offshore software development companies. How to choose the most reliable vendor to cooperate with? Let's try to find this out.

How to determine if an offshore software development outsourcing vendor is worth cooperating with? How to find the best one? We have already provided you with a few tips above, but there are more. To decide what company is right for you, study it in more detail:

• Look through the company’s website, explore the blog materials
• Learn more about the provider's security measures. For instance, our Cleveroad team prioritizes data security and employs robust practices like encryption, secure data storage, and adheres to industry regulations and security standards (e.g., GDPR, HIPAA, FMIA, etc.) to safeguard your sensitive information throughout the development process.
• Carefully examine the portfolio to get acquainted with the vendor's projects
• Check out the company’s profiles on LinkedIn and Dribble
• Learn more about the offshore tech partner’s cooperation models (e.g., dedicated team, staff augmentation, etc.).

This information can tell you a lot about the organization and its history, and help you make a decision about cooperation with the best and leading offshore IT vendor.

You may take it a step further and look for specialist rankings on reputable resources like Clutch or GoodFirms. These professional platforms for the best B2B service providers analyze companies based on client reviews, project experience, and verified work history, etc., and define the best ones due to the said criteria. If you're looking for IT outsourcing in Europe, for example, you may select companies based on tech service you require at the moment.

Make sure that your concept is properly secured. For this purpose, you can contact a vendor to find out whether they sign an NDA (Non-Disclosure Agreement) or not. It's essential if you have a unique app idea and want to know it won’t leak anywhere.

Let's also explore the trends an offshore software development vendor may use to optimize your project's success throughout the development lifecycle. By working with an offshore development partner that embraces these trends, you can expect significant advantages in terms of cost, efficiency, and security. These trends are particularly relevant for web and mobile app development, where innovation and agility are crucial for success.

Offshore software development companies are increasingly incorporating AI into their workflows. This includes using machine learning to automate repetitive tasks like code generation and testing, freeing up developers to focus on more complex aspects of the project. AI can also improve development efficiency by analyzing project data and suggesting optimizations.

The popularity of cross-platform development frameworks like Flutter and React Native is on the rise in offshore development. These frameworks allow developers to build applications that work seamlessly on both iOS and Android platforms using a single codebase. For example, you can use Flutter app development services to reduce development time and costs compared to creating separate native apps for each platform.

Cloud-based solutions are becoming increasingly popular for offshore software development projects involving IT infrastructure services. This involves building applications designed specifically for the cloud environment, leveraging its scalability, flexibility, and cost-effectiveness. Finally, cloud-based solution development allows for easier deployment, maintenance, and updates, making it ideal for modern applications.

As data breaches become more common, security is a top priority for any offshore outsourcing programming project. Offshore development companies are placing increasing emphasis on robust security practices and data protection measures throughout the secure global software development process. This includes employing secure coding practices, regular vulnerability assessments, and adherence to data privacy regulations.

While offshore development offers numerous advantages, cost remains a key decision-making factor. So, let’s analyze the cost structure of working with a development team from the offshore companies.

The cost of offshore software development differs, depending on the team’s location you choose to work with. Below are the hourly rates of specialists in the most popular outsourcing areas.

So, depending on the region you choose and the project's complexity, the development costs will vary. Feel free to contact us to know Cleveroad software developers' hourly rates to evaluate the cost-efficiency of the candidates.

Cleveroad is a professional offshore software development outsourcing company headquartered in Estonia and with R&D centers in Poland, Norway and the US. For more than 12 years, we have assisted startups, small businesses, and large corporations in achieving their objectives and bringing ambitious ideas to reality. Our variety of IT services that we offer, and bespoke software solutions our experts develop, improve workflow efficiency, address business issues, and aid in the acquisition of competitive advantages.

We have 250 in-house software developers and over 1200 IT specialists in our talent pool across Europe. Our presence on the lists of top B2B IT service providers, including Top 1000 Service Providers, Clutch Champions, and Clutch Global Leaders, has gained us distinction in the IT market.

There is a large benefit set you can get working with us:

• Collaboration with an offshore software development provider experienced in software engineering services and IT consulting and certified with ISO 9001 and ISO 27001 for security and quality of your software
• Your app idea protection through Non-Disclosure Agreements (NDAs) execution per your request
• On-demand outsourcing software development services: software development from scratch, UI/UX design services, IT consulting services, and many more
• You can hire our team of highly skilled developers proficient in implementing a wide range of cutting-edge technologies like AI and ML, cloud computing, the Internet of Things, Blockchain, etc.
• Your work supervision by our project management office to ensure that the intended results are delivered on schedule, in compliance with your company needs, and within your budget
• Flexible cooperation models (e.g., IT staff augmentation services, Project-Based Cooperation, Dedicated Team) to choose to start working with us

Our portfolio includes a bunch of offshore software development projects in different domains. And we would like to tell you about the latest ones.

• RPM solution for behavioral health support. As an offshore outsourcing vendor, we’ve designed this solution for the healthcare domain to help customers struggling with depression.
• Transportation management system with route planning. This solution is built by our offshore software development team for an enterprise that offers warehousing and logistics (generally dropshipping) services.
• Social network for likeminded sports enthusiasts. Our offshore software development skills were trusted by the US-based firm, which gave us the task to create cross-platform app for aligning teams to sport activities.
• Multifunctional retail and ecommerce SaaS solution. It is a versatile SaaS platform developed by our offshore IT experts with a powerful toolset (including Inventory and Warehouse Running, Receiving, etc.) for retail companies focused on e-commerce and omnichannel sales.
• B2C system for digital auto insurance. Using our offshore software development services, the US-based car insurance company was able to create a new and robust online services ecosystem to manage auto insurance.

The offshore IT development sphere offers businesses a range of opportunities, according to which they are able to save their efforts, time, and money. If you also want to save your resources and achieve good results, you can also apply to offshore IT professionals in order to obtain a completely new product, flexible and thriving on the market.