Why Businesses Leverage Offshore Software Development

Software development, whether crafting enterprise solutions or creating apps for everyday users, requires specialized skills, speedy time-to-market, and cost optimization. Unfortunately, not many businesses can achieve these on their own. This is where offshore software development comes in.

leveraging offshore software development

Statista predicts that by 2029, the global market for this service will hit US$124 billion, showcasing its extensive adoption. Leading the charge are industry giants like Google, Microsoft, Apple, Slack, and Uber, which are delegating some of their software projects externally. Their successes are proving the effectiveness of this approach.

In this article, we’ll discuss why businesses are embracing offshore software development. We’ll also cover when to consider this strategy and how to make it a success.

Read on!

What Is Offshore Development

This is a strategic approach that involves outsourcing software projects to a company or team in another country. This approach provides access to specialized expertise unavailable locally, which can increase and optimize costs. This strategy has become increasingly common as businesses seek to bridge the in-house skills gap and leverage global resources to maximize their software development processes.

It is important to point out, however, that success in offshoring requires careful planning and robust project management. Choosing a reliable offshore outsourcing partner is also essential. This partner will assist in finding and recruiting skilled developers, ensuring legal and regulatory compliance, and handling administrative and supervisory duties.

Top Advantages of Offshore Software Development

Let’s look at some of the top benefits of offshore software development, supported by relevant statistics.

Top Advantages of Offshore Software Development

Access to a Worldwide Talent Pool

Access to a global pool of software engineers is definitely the greatest of all the offshore development advantages. This makes it easy to find skilled professionals who may not be available locally. For instance, Ukraine, Poland, Romania, and India are renowned for their rich talent pools. These are key countries for outsourcing software development. Working with teams here often leads to higher-quality software products and innovative solutions.

Cost Effectiveness

Cost savings is another of the benefits of hiring offshore talent. Hiring a front-end developer in Ukraine will cost around $48,000 per year, whereas it costs around $87,000 in the USA. This is a whopping 80% savings that can be channeled to other parts of the business.

Accelerated Product Time-to-Market

One clear benefit of offshoring is a faster time-to-market. This approach helps companies cut down their product timelines considerably. Distributed teams can work in their own time zone, which could translate into round-the-clock development. This means that work can finish faster and products launched long before the competition. According to a study by EnterpriseAppsToday, 12.5% of businesses consider accelerated time-to-market a key driver for outsourcing.

Flexibility in Scaling

It is impossible to discuss offshore development benefits without mentioning scalability. Offshore development provides exceptional flexibility in adjusting the size of operations according to project needs. This means companies can swiftly meet market demands without committing to long-term contracts or hiring full-time local staff. The same EnterpriseAppsToday report found that 25% of companies cited flexibility as a major reason for choosing to outsource.

Time Zone Benefit

Time zone disparity is one of the more strategic offshore advantages for businesses. Having teams spread across various regions means that work can progress seamlessly. For example, a U.S.-based company can delegate tasks to an offshore team in Asia before their day ends. The US team then takes over when they return to work the following morning.

Tailored Staff Expertise

Offshore development is valuable for tapping into specialized expertise that may not be readily available locally. Whether it’s blockchain development, AI, or cybersecurity, you’ll find people overseas who have niche skills for specific project requirements. Take Ukrainian developers, for instance; they’re renowned for their proficiency in game engines such as UE and Unity 3D, boasting over 20,000 experts in this field. Businesses in regions where such expertise is scarce can greatly benefit from their specialized knowledge.

Risk Management

Taking software development operations offshore also strengthens risk management. When development tasks are spread across various locations, businesses can better handle risks related to local disruptions, such as natural disasters or political instability.

Cultural Variety and Diverse Perspectives

Another advantage of offshoring is that it promotes inclusivity within companies. By working with offshore teams, businesses gain access to diverse cultural perspectives and ideas. A diverse team not only excels in effective problem-solving and crafting innovative software solutions, it is 39% more likely to be more profitable than its competitors.

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When to Consider Offshore Development

So, when should you consider offshore software development? Let’s look at different scenarios when this approach is a good idea in this section.

When to Consider Offshore Development

When Local Tech Talent Is Scarce

Finding skilled tech professionals locally can be tough, no thanks to the ongoing global IT talent shortage. If you’re facing this problem, you may want to consider using offshore staff augmentation for your software development. This approach helps you tap into a global talent pool with experts in various programming languages, frameworks, and technologies. It allows you to easily fill the in-house talent gap and ensure projects get done on time.

When Budget Is Limited

Own a small business or have a limited budget for your software project? Working with offshore developers can be a smart choice in these situations. Outsourcing is often more affordable compared to hiring a full-time, in-house team. Additionally, you can avoid the expenses of recruiting and retaining in-house staff, as well as the overhead costs of space and equipment.

When Specialized Skills Are Necessary

Some projects may require specialized expertise that is readily unavailable locally. Offshoring can be the solution in such situations. Partnering with offshore developers who excel in your required tech stack guarantees that your projects receive the expertise they require, accelerating schedules and avoiding delays caused by hiring and training in-house personnel.

When Resources Are Needed for Short-Term Projects

When you have short-term projects and need resources quickly, consider offshoring software development. It’s the perfect strategy when you require specific skill sets but don’t need the hassles associated with long-term contracts/full hires. You can hire experts on a project-by-project basis, perfect for short to medium term work.

When Leveraging Cutting-Edge Technology Is Crucial

Prioritizing cutting-edge technology? Offshore software development is your ally. Partnering with offshore developers who are early adopters of emerging technologies keeps you ahead in your industry. This approach lets you tap into the latest innovations and benefit from developers experienced in cutting-edge tech.

When Prioritizing Core Business Functions Is Essential

Offshore software development might relieve some of the burden if your primary company operations require attention. By assigning non-core development tasks to offshore teams, you can ensure project success while concentrating on your areas of expertise. It allows you to allocate resources more effectively and focus more on strategic goals.

When Facing High Levels of Resource Turnover

High turnover rates or retention challenges? Offshore development brings stability and continuity to your projects. Teams have structured processes for knowledge transfer and documentation, ensuring project progress remains steady despite changes in personnel.

When Project Deadlines Are Tight

Tight deadlines looming? Offshore development can be your saving grace. By leveraging time zone differences, teams keep development running around the clock, resulting in faster turnaround times. This distributed work model ensures progress outside regular hours, slashing time-to-market for your offerings.

How to Embark On Offshore Development

To enjoy the advantages of offshore software development, you’ll have to follow several crucial steps. Here’s a clear and concise roadmap to guide you through the process.

How to Embark On Offshore Development

Define Goals and Requirements

Start by stating your goals and the necessary steps to attain them in explicit terms. Identify your reasons for choosing offshore development, such as accelerating product releases or gaining access to specialist talents. Define the project’s objectives, deliverables, scope, and budget, keeping it flexible.

Research and Select an Offshore Partner

When you’ve laid the foundation, the next step is to select your offshore partner carefully. Look for destinations recognized for their strong IT knowledge and favorable business conditions, such as India, Ukraine, or Poland. Assess potential partners according to their reputation, skills, past projects, customer reviews, and English proficiency.

Conduct Due Diligence

Verify references and examine case studies to understand the vendor’s track record thoroughly. Ensure they comply with legal regulations, such as data protection laws, and safeguard your intellectual property and data.

Negotiate Contracts

After selecting a vendor, sign detailed contractual agreements defining the work scope, timelines, and any other confidentiality agreements. Knowing what you are paying for when choosing offshore development is important, as you may want to tie payments to milestones.

Onboard the Offshore Team

Conduct orientation sessions to introduce the offshore team to your company culture, tools, and work processes. Hold kickoff meetings to set expectations, review project objectives, and establish initial timelines.

Set Up Communication Channels

Use platforms like Skype, Slack, Microsoft Teams, Jira, Trello, or Asana. Schedule routine video conferences, daily stand-ups, and weekly reviews. Efficiently monitor progress and maintain open lines of communication for successful project management.

Monitor and Manage Progress

Track key performance indicators (KPIs), implement feedback loops, and address cultural differences to promote seamless collaboration. Continuous monitoring is essential throughout the software development journey.

Post-Development Evaluation

Software development goes beyond just writing the final code. You must continuously assess and improve your product to meet the ever-changing needs of your users.

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Newxel Can Help

The offshore approach can revolutionize your business if you’re struggling with skill shortages or striving to outpace competitors. However, this approach is only as effective as your offshore partner.

Hundreds of satisfied clients in more than 11 countries agree that Newxel is the ideal partner for software development. For over 6 years, we’ve empowered organizations of all sizes to tap into global software talent and establish offshore development centers worldwide. Beyond IT recruitment, our services cover legal, regulatory, logistical, and supervisory support.

When you choose us as your reliable partner for offshore development, you can be sure you’re working with a team that values your project’s success and will use all its expertise and experience to achieve this.

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Offshore software development is a game-changer in today’s competitive scene. It lets businesses access top-notch talent worldwide, which helps overcome skill gaps, speed up project delivery, and stay ahead. But the key is finding the right partner, like Newxel, where we’re known for our track record and expertise.

With Newxel, companies can set up effective offshore development centers, handle regulations smoothly, and hit their goals. Embracing offshore software development isn’t merely about handing off tasks—it’s about adopting a transformative approach to innovation and growth that pushes in today’s fast-changing digital landscape.


Which projects are suitable for offshore development?
Offshoring can work for a wide range of projects. Common uses include web development, custom software development, software testing, and software development consultancy.
How can I use to measure the success of offshore development?
Start by checking if the final product meets the agreed standards in terms of accuracy, functionality, and reliability. Verify that the project stuck to the schedule and met its deadlines. Also, compare the actual expenses with the budget to ensure financial efficiency. Gather feedback from stakeholders on communication, responsiveness, and issue resolution. Finally, evaluate how well the offshore team worked together.
What are the various models for offshore software development?
There are different approaches to hiring developers overseas. 1) Fixed-cost Model. You agree on a set price for the entire project upfront. Ideal for clear-cut projects with stable requirements, but renegotiating costs can be tricky if needs change significantly. 2) Time and Materials Model. You pay based on the hours the team works. Great for projects with evolving requirements or fluid scopes. 3) Dedicated Team Model. You hire a team solely for your project. This promotes close collaboration and understanding but often demands a longer commitment.
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