Demand for software engineers, QA experts, and testers is expected to grow by 25% between 2021 and 2031. 24% of executives use an outsourcing model in their IT projects. Offshore software development companies are hired for building products outside of a client’s country or even continent. There are a few common reasons for the outsourcing model that can combine, and every case can be specific.
Why are companies looking for offshoring services?
- Limited budget. An offshore IT partner can suggest to you developers with lower hourly rates.
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The final cost depends on location, team size, and level of expertise. According to
Deloitte’s study, 70% of companies opt for software development outsourcing to save money. - The limited scope of work. For example, you have a short-term, experimental (or not connected to your core operating) project and don’t need the internal team. You prefer to outsource the whole hiring process to the provider and finish working when the project is completed.
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- Running out of resources. Sometimes, you need to extend your internal software development team quickly to avoid any downtimes. Offshore development services don’t mean building a product only from scratch. Your contractor can dedicate for you only a UI / UX designer, a backend developer, a frontend developer, or offer only Quality Assurance expertise.
- Lack of expertise. You may already have an in-house development team but need professionals with particular knowledge and skill set (such as AI in education).
To benefit from this model, experts from Belitsoft recommend considering and preventing the most common issues that you can face during cooperation with your offshore software development partner.
Legal protection in case of conflicts
Do thorough research and read the reviews on credible sources (G2.com, Goodfirms.com) choosing an offshore development company. Collaborate with established and trustworthy firms with a proven track record of delivering successful projects.
The provider has to suggest transparent terms of service and a clear contract that outlines the steps in case of any disputes.
How to ensure a sufficient level of security for data
Your offshore partner has to follow the strict rules to securely gather, store, and operate your data, including compliance with GDPR and HIPAA regulations. If you have your own security protocols like restricted access and frequent monitoring of offshore developers’ activities, a provider has to accept them.
Potential compliance issues
The lack of expertise in local laws may lead to compliance challenges, particularly for businesses operating in heavily regulated sectors. To mitigate such risks, you can consider hiring a local legal advisor to review contracts and agreements with the offshore development provider, ensuring adherence to regional law.
Management of Intellectual Property (IP) rights
Enterprises that rely on proprietary technology strive to safeguard their intellectual property (IP) rights. It is advisable to include pertinent clauses in your contract with an offshore development company. These may consist of a non-disclosure agreement (NDA), an IP assignment agreement, and a non-compete clause. Moreover, implementing encryption and access controls can add an extra layer of protection to prevent unauthorized access to your IP. Also, it is recommended to implement encryption and control measures to prevent unauthorized access to your IP.
Lack of control over the remote team
In cooperation with an offshore contractor, define detailed requirements and milestones of your project. Approve the specific project management tools and software with real-time updates. So you can regularly monitor the progress.
Time difference between the offshore developers and the in-house team
The absence of in-person interaction and collaboration may raise concerns, especially when brainstorming new ideas and problem-solving. Effective supervision can still be achieved through video conferencing and project management software. Defining specific working hours and communication channels, while remaining flexible regarding time differences, can facilitate round-the-clock development. Consider organizing occasional in-person meetings or team-building activities to foster stronger relationships with your offshore developers.
Accordance to your business culture and values
If your business has ethical and sustainable practices, share them with your offshore contractor. Then, consider conducting regular audits of its working conditions to verify compliance with your standards.
Summary
Outsourcing software development is a trend that is expected to continue in 2023. The offshore model can be beneficial for businesses with limited budgets and scope of work, running out of resources, or lacking expertise in specific areas. However, there are potential issues that must be taken into consideration when hiring an offshore development team, including legal protection, data security, compliance issues, management of IP rights, accordance with business culture and values, lack of control over the remote team, and time differences. By addressing these potential issues, businesses can achieve fruitful collaboration with their offshore development partner, leading to the successful completion of their projects.
