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The fundamentals of offshore development

This article is a submission by Kaopiz. Kaopiz is a premier IT outsourcing and software development services company located in Vietnam that specialize in advanced technologies such as AI, blockchain, Data analytics and AWS. 

Offshore development involves outsourcing tasks such as software infrastructure construction, system development, and operational maintenance to overseas companies or local entities with lower wages compared to domestic rates. 

In recent years, Western nations have faced a shortage of engineers, causing disruptions in development and related activities.

The IT industry in Europe, grappling with a scarcity of talent, rising labor costs, and an increase in IT adoption by businesses, finds it challenging to meet demand solely within the country.

Many who have experienced difficulties in smooth system and app development have turned their attention to offshore development as a solution to break free from this situation.

This article explores the fundamentals of offshore development and provides insights into key points for ensuring its success. 

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What is offshore development? 

Offshore development is a method of outsourcing tasks such as designing, developing, infrastructure building, and software maintenance to offshore companies with a fraction of the costs of those in the domestic market. 

Multi-ethnic group of young business professionals, start-up establishers, freelancers working and developing together
What is offshore development?

Objectives of offshore development

One of the main purposes of hiring development services is to reduce the costs associated with it. Hiring skilled engineers in developed countries can be expensive and challenging.

Many countries abroad have a large pool of talented developers, and labor costs are lower than in Europe.

By outsourcing work to IT companies and professionals in such countries, businesses can cut labor costs compared to relying entirely on domestic engineers.

Additionally, connecting with talented IT professionals overseas can alleviate shortages and resource limitations, especially in the absence of in-house expertise in the latest technologies. 

Countries viable for offshore development

Delegating development to other countries originated with outsourcing tasks to India, known for its abundance of IT talent and lower labor costs than in Europe.

Other countries chosen as outsourcing destinations include China, Vietnam, the Philippines, and Bangladesh. 

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Outsourcing Destinations Average Monthly Unit Price Range for IT Engineers (dollars) 
China 2400 ~ 2700 
India 2000 ~ 2700 
Vietnam 2000 ~ 2400 
The Philippines 1800 ~ 2000 
Bangladesh 1500 ~ 2000 

Benefits of offshore development

Delegating development processes offshore offers three significant advantages.

1. Cost reduction

The most substantial benefit of offshoring is the reduction of development costs.

Outsourcing tasks to countries with lower labor costs enables significant savings in personnel expenses, a significant portion of overall development costs. 

2. Securing excellent talent

Securing talented IT companies and professionals abroad is a crucial advantage in addressing the skill gap. In developing nations, where there is a growing need for IT talent, offshore development serves as a solution to address the expected requirement of about 85 million professionals by 2030.

Establishing connections with overseas talent through offshore development also provides opportunities for talent acquisition through collaboration.

3. Shorter delivery time

Offshore development allows engineers from different countries to work simultaneously through cloud operations. This significantly reduces the time required for delivery of products.

The ability to secure many skilled individuals and expedite delivery times means increased flexibility to handle large-scale developments and complex programs.

Best practices for successful offshore development 

Successful offshore development requires careful consideration of key points that contribute to success. Here are some of the crucial factors for successful offshoring.

Thorough planning and preparation

Success in offshoring, in general, is deeply connected to thorough planning.

When engaging in offshore development, consider elements such as the language used by the outsourcing partner, time zone differences, and other factors that may impact the work. 

Employees having a Board Meeting
Best practices for successful offshore development

Further, many countries follow a practice where anything not explicitly stated in the contract or specifications may not be implemented. Even details considered common sense in Europe might be overlooked, leading to potential issues.

It’s essential to specify the necessary details in the contract and specifications clearly.

Building a positive relationship with a bridge senior engineer from the start is also an essential element for success.

Effective communication

As mentioned earlier, effective communication with the outsourcing partner is crucial.

Regular, detailed communication allows for early correction of misunderstandings or misalignments caused by language or cultural differences.

While relying on a bridge senior engineer, avoid delegating all management responsibilities to them. Maintain frequent communication, manage tasks, and provide feedback consistently.

Careful progress monitoring

One of the challenges in offshore development is the management of progress and deadlines. The impact of time zone differences on communication during work can have a substantial impact on deadlines.

Careful communication helps in managing progress and deadlines more effectively. Be meticulous and cautious when overseeing progress and deadlines compared to domestic development projects. 

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