With rising levels of salaries and increased levels of competition in the technology industry, offshore development has become a standard business move for companies to reduce overhead costs and increase productivity.
A company can save on the costs of hiring, training, and managing a development team by delegating its software development activities to an offshore service provider. In this article, we will talk about all essential aspects of offshore development, how it will benefit your business, as well as how you can go about hiring an offshore development team. Let’s jump right into the details!
What is offshore development?
Offshore development is another name for outsourcing in software engineering. It is the practice of delegating your work to another team in a different location that is far from your home country, hence the term offshore. As you transfer your tasks to an overseas development team, you won’t have to place your focus on management and related jobs as when you run an internal development team.
Common activities that today’s companies rely on offshore development to execute are product designing, coding, testing, and managed services.
How does an offshore development team work?
When it comes to hiring an offshore development team, you have two options. The first one is to work with freelancers and merge them into your existing team. This option is not really a good idea unless you already have an experienced product manager because freelancers are basically developers with coding skills, so they will need someone to supervise and provide them with directions.
The second option is to hire a development team from an offshore service provider. This option will offload the burden of creating, managing, and guiding a team onto the provider, and you will just need to provide them with details of your development project.
What is an offshore development center?
An offshore development center, also known as an ODC, is a development team of software engineers based in an offshore country. You can set up an offshore development center by going to an offshore IT outsourcing service provider and hiring a group of developers from them.
Offshore development centers are a cost-cutting business practice popular among companies of all sizes, from startups to enterprises. Big tech companies such as Samsung, IBM, Oracle, etc., all have offshore development centers in foreign countries such as Vietnam, India, and China.
Why should you employ offshore software development?
Advantages of offshore software development
Cost is often one of the top concerns for a software development project. Offshore software development can offer companies lower prices thanks to lower costs of labor in service countries such as Vietnam and India. You can get a price up to 40%-50% lower for the same level of qualification from an offshore development center than from hiring a local specialist.
Solve personnel shortage
Technology is ever-moving, and companies often face a shortage of specialists, especially ones with emerging skills. Offshore software development can help solve this problem as service countries supply large pools of professionals with a wide variety of skills, and they keep learning new ones to keep pace with the latest technologies. Hence, if hiring qualified engineers is difficult in your local area, you can always resort to offshore development to get the qualifications you need.
Companies often worry about the quality of offshore software developers. However, the reality is major development services countries, such as Vietnam and India, are strong in providing high-quality tech workers as IT institutions in these countries produce thousands of qualified developers every year. Also, software engineering is an attractive occupation in these countries because of its handsome salaries, so young people are willing to work on their skills to earn this big money.
Easier to ramp up or scale down
Scaling is often associated with hardware infrastructure, but it is also an important aspect of the human resources side of software development. Your business may not need the same number of engineers all the time – there may be phases where you need a big team while there are others when you need a smaller one – so recruiting permanent staff can come with various headaches. It’s often hard to find people with the right skills, and it’s never less hard to let them go when keeping them becomes a burden. Offshore development can easily solve these problems since service providers typically maintain a sizable workforce at their disposal, and you can choose whatever team size you need at any given time.
Better focus on your business
Instead of getting yourself caught up in recruiting and managing developers, you can offload these responsibilities onto a service provider via offshore development and focus on your core business. Knowing that you have got someone handling the technical side of things, you can be more focused on understanding your customers, as well as enhancing and marketing your product offerings.
Access to the latest technologies
For most businesses, it’s very hard to get access to the latest technologies because of their costs. Since IT outsourcing service providers involve themselves deeply in technology and continuously keep up with new trends, you can rely on them to get access to new tech stacks.
Disadvantages of offshore software development
Time zone differences and proximity
Time zone differences are one of the biggest challenges when it comes to offshore software development. Offshore service providers typically operate within a 5-12 hour difference from their clients, which means there needs to be proper coordination for both sides to have a smooth collaboration.
Communication is the key factor that determines whether a project will succeed or fail. Since offshore development vendors don’t share the same first language with their international clients, it’s important for both sides to be able to understand each other in a mutual language, which is often English. This means you’ll make an effort to find a vendor that can communicate well with your team if you’re going to have a successful project.
Language barriers are one thing in offshore software development, cultural differences are another challenge that you’ll have to overcome. Work styles between the client and their overseas team can be very different. For example, it’s often expected of a North American worker to be assertive and straightforward, but this is not the case with Asian workers who don’t often tell exactly what they think and are rarely willing to tell their boss that he/she is wrong. So you’ll need to understand these types of cultural discrepancies and be proactive in dealing with them, for example, by constantly telling your overseas team to shout out what they truly think or need without hesitance.
Top offshore development destinations
Vietnam has been growing to be a powerhouse in the global IT outsourcing market in recent years. It currently has about 400,000 IT engineers working in thousands of IT organizations and produces more than 50,000 IT engineering graduates every year. Try some quick searches on Google, and you will find that Vietnam has its name on pretty much all lists of the best IT offshore development destinations in Asia.
Today many global high-tech giants, such as Google, LG Electronics, and Samsung, are relying on Vietnam to deliver their IT projects. In an interview with Reuter, Neill Fraser, an IT specialist from Google, said after having come to local schools in Vietnam, Vietnam has the highest-performing computer science students I’ve ever encountered. The fact that Vietnam offers its offshore development clients many benefits, from competitive pricing to highly skilled professionals, is the reason why it has been able to attract large flows of global customers.
While Vietnam is a rising star, India has been a seasoned player in the IT offshore development industry. India is always among the top five countries that have the most STEM graduates in the world currently, with more than 3 million engineers and around 120,000 more joining its tech talent pool every year. With its massive number of IT engineers, India is usually the go-to destination for gigantic offshore development projects that require thousands of personnel.
Standing next to India, China is another seasoned veteran that has the capacity to deliver gigantic IT projects thanks to its massive population. Really, when it comes to industrial-size production capacity, what country has the population to overtake China and India? China can offer some of the best IT services and professionals thanks to the focus of its educational system, which is on Mathematics and Science. One downside of China is its level of salaries has been increasing significantly in recent years from its increased standards of living, so the cost of IT development can be relatively higher here than in other Asian hubs.
4. The Philippines
The Philippines has its own advantages in the offshore development market. The Filippino lifestyle has a nice blend of Western culture to it because of America’s past colonization. Thanks to this cultural mix, the Philippines is now among the nations with the largest number of English speakers. These characteristics alone can already facilitate the collaboration between Filippino service providers and their Western clients. However, there are some drawbacks; apart from its high frequency of climate hazards, The Philippines has been enduring an ongoing political instability that causes mass protests, which is scaring off lots of clients.
Thailand is another offshore development destination with a decent IT talent pool; of about 100,000 engineers. It also shares the same cost advantage with its Asian fellows, and the range of technical IT skills you can get is also as diverse.
Nevertheless, one bottleneck that has been keeping offshore development projects from flowing into Thailand is its political instability, which results in massive protests every now and then. Another disadvantage that makes Thailand less competitive is its level of English proficiency; the nation, with a low proficiency score of 47.6, ranked 74 out of 100 countries on the English Proficiency Index in 2019. This means communication can be a big barrier for clients offshoring to Thailand.
We hope this article has provided you with valuable information about offshore software development. If you’re looking to outsource a project to Vietnam and not sure how to get started, fill out the box below and our Sales team will be in touch shortly to advise!
CMC Global is among the top 3 IT offshore development services providers in Vietnam. We operate a large certified team of more than 1,500 developers, covering all tech stacks, and can supply you with the right team, regardless of size, at a very reasonable cost.