Advantages and Disadvantages of Offshore Software Development

Offshore development has become the new normal today, However, getting to that point meant that many companies had to learn it the hard way! Before we begin with what is offshore development? What are the advantages of offshore software development for businesses? Let us take a U-turn in history that will surely help in a better or your IT department appreciation of today’s best practices. Plus, this might even prevent you from making any unnecessary mistakes.

1. History of Software Development

As we all know that Offshore Software Development is no longer a buzzing term. However, the IT industry was not always the same. It all began with a notion of making work execute from somewhere else (more or less, third parties). Unfortunately, back then there was no context, background, and centralized process for work. As a result, conducting a software development project was pretty much a hassle  for the IT team. The entire project was broken into different software development tasks so that it could be executed in different transactions.

Again this didn’t turn out well! In fact, software developers end up falling in a total confusion where at one end they couldn’t figure out what their customers want while as at the other end what was in the suppliers or remote employees minds. As a result, it became very hard to expect the software development process to be good. On and all, it was a lose-lose situation whether it is quality or inaccurate predictions, high costing, and the retention rates of people would be disastrous because intelligent people would be easily scared away by these practices. Taking responsibilities was difficult.

So what businesses decide, they shouldn’t outsource their problems or they won’t get what they expect from the software providers (especially in the offshore scenario). So how things changed? You may ask!

And that happened!

Well, after witnessing the offshore process not working as per expectations. Businesses decided to give more responsibility and entrust entire components to the offshore teams. This did work, the development quality improved, predictions became accurate. But still, there were some problems like the retention of the talent was poor, distrust and negative competition happened. Therefore, offshore companies learned that just giving more delivery ownership is not enough. There needs to be some understanding of the process and also building trust and giving responsibilities to the offshore teams proved to be a very important factor. This led to the final situation: distributed insourcing.

 And as per the software development situation now! Today, ownership, responsibility, understanding of the domain and process are all very important, and especially in highly complex processes like software/product development, the best model to do this is “distributed insourcing”. With high complexity processes like software development, product development and other highly custom activities, this is the only way to really enjoy the benefits of offshore software development services.

The prerequisites are:

  • Proper knowledge management
  • Agile ways of working (Scrum)
  • Some solid governance structures to steer the operations
  • Strict policies are being introduced on how to do things
  • A very keen eye and full attention for human capital development

If you don’t honour their aspects, offshoring and outsourcing adventures might very well be a total failure. Especially with core business or highly complex activities. If you do honour these aspects, you can enjoy a lot of the benefits of offshoring  and quality services, like:

  • Easy access to talent
  • Latest technologies
  • A very competitive price-point
  • Superb flexibility
  • Ways to achieve growth potential and more

1.1 Choosing a Company Overseas = Offshore Software Development

The current market size of the global software development overseas or offshore is growing bigger and better. And you know what the future seems on the pinnacle of success. Also with the pace of technological advancements, the next decade of software development, meetings, collaborations, and offshore or outsourcing will be flawless by bridging all the barriers that entrepreneurs face today.

The blog encloses how entrepreneurs will be able to make the most of or take advantages of offshore software development for their upcoming project.

Change has been the new normal. And these ever-changing evolutions always end up compelling employees to think differently about whether to outsource a software development company or going for an offshore team. Now before we even begin defining the term offshore let me clarify some common scenarios when a company must think about outsourcing a software development project from offshore countries.

Scenario 1 – Cost reduction or any additional software expenses

Scenario 2 To expand global exposure for developing software

Scenario 3 If the in-house team isn’t compatible enough with the organization’s development projects

The term outsourcing development is all about asking to get the job done remotely  by a remote team, of course by qualified professionals living outside the country. Well, one of the key factors for conducting software development offshore is less operational costs to cost less but trust me, it’s way more! Developing a brand new digital platform such as a mobile application, website, web app requires dedicated resources and a hell lot of time and talent. And this is where an offshore software development company comes in and offers creative software solutions.

2. Advantages of Choosing Offshore Software Development

Conducting your first software development project overseas does come with some clear benefits or advantages. These do end up becoming the main motivation behind several industries opting for the concept. Let us unveil them one by one.

2.1 Cost-Effectiveness

The first and foremost advantage of choosing an offshore software development company is the reduced costs. According to the State of Global Outsourcing report, 24% of participating IT decision-makers feel that the most significant barrier to scaling operations is labour costs.

By choosing an offshore development team, one can decrease direct and indirect costs, such as recruitment, supervision, and compensation of in-house team. While working with an offshore development company, organization don’t have to worry about infrastructure, Human Resource team, and recruiting-related other essential tasks. They pay only when the project assignment is under development. That surely makes the development process smooth and cost-effective.

2.2 Gain a Competitive Edge

The use of innovative technologies has become more and more important for businesses these days. Technologies like BI, AI, ML, RPA, Blockchain, and many more have become a primary source of streamlining operations for businesses across the globe. However, the implementation of these technologies can be a tough nut to crack, which is why businesses often look for outsourcing their development projects to offshore software development companies companies with expertise in these software technologies and gaining a competitive edge in their domain.

2.3 Access to World-Class Expertise

One of the crucial advantages of choosing an offshore software development team is that you get a vast talent pool of programmers and software engineers. As a business, you can expand your horizon to a great extent. I mean unlike in-house development team, you don’t just have to choose from a few software talented programmers (out of which some are amateurs or less experienced). With outsourcing development, you can get access to offshore software developers with strong qualifications and competent skills in some specific areas to make them highly talented experts. Getting in touch with some professional offshore team is a bonus for your project and IT Team in itself. After all, these qualified specialists will have the ability to do the development related essential tasks better and within the given deadline.

2.4 Allows Time to Focus on Specific Tasks

Offshore development teams save you ample time. Especially the start-ups are always strapped for time. Firstly because they are struggling to make a mark for themselves in the industry and secondly because they are short on manpower.

Hiring a software development outsourcing companywill deliver your start-up from the responsibility of recruiting, training, and housing staff to develop applications for your business. Your company will have immediate access to high performing and expert offshore team of professionals and you will be able to focus on your core business functions. Their experience and expertise will help you achieve business goals.

So these were advantages of offshore software development, but that doesn’t mean it doesn’t have any fair share of controversies.

3. Cons of Offshore Development

3.1 Lack of Communication

Communication is extremely important for the success or failure of any software project. This can be problematic since communication is crucial for determining and understanding the development progress of a venture.

It is easier to communicate with in-house developers than with offshore software companies mainly because they’ll be working in the same office and timezone as you. With offshore developers, they’re not physically present to respond to your problems and there could be huge time zone differences between the two of you.

Lack of communication can result in software companies losing their focus on your development project. But given the benefits of outsourcing, it isn’t too much of a concern. These communications can be handled effectively if both parties offshore development team as well as the client’s involvement is clear about their expectations from each other right from the start.

3.2 Data Security

Outsourcing the software part is a complicated job. And one must always safeguard any sensitive data from offshore software development center. They can do so through constant management checkups. A signed, trustworthy contract does not mean confidential data is safe. So it is always important to be wary of any personal data leaks or development abuses that may occur. According to several sources, the number of data breaches has gone down by 33% approx right in 2020 itself. So data privacy has become a critical matter for businesses as well as developers.

Working with an offshore development center might include cloud data storage and developers exchanging information via collaborative tools. While this looks like an opportunity for a data breach, SMEs and start-ups can apply preventative actions by requesting the following:

  • A Non Disclosure Agreement (NDA)
  • A Service Level Agreement (SLA)
  • Security Protocols

Right from data storage to storing different methods, development platforms, intellectual property, etc, all these are covered. After all, offshore development is here to help your business thrive.

4. In a Nutshell,

We hope that this blog gave you  in-depth knowledge on the benefits and risks involved in going for an offshore development center. Choosing an offshore company for your upcoming project  can turn out to be a smart strategic move for your company. It does fair share of boons and banes. However, as long as you evaluate or go through the partnership carefully, outsourcing software projects will turn out as pure bliss for you.

Itesh Sharma

Itesh Sharma is core member of Sales Department at TatvaSoft. He has got more than 6 years of experience in handling the task related to Customer Management and Project Management. Apart from his profession he also has keen interest in sharing the insight on different methodologies of software development.


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    1. Charles Wills

      Yes, there are many cons of offshore software development. But if planned correctly and with the right offshore development company the cons can be forgotten and we can enjoy the advantages of offshore software development. Thanks for covering this topic in the blog.

    2. Brielle Newman

      In this competitive era, it is essential for the businesses to remain focused , boost their performance and productivity. And offshoring their development requirements helps businesses to achieve all these factors. The advantages of offshore software development that you have mentioned in this blog are precise and correct. Thanks for this informative blog.