Some alarming facts about IT outsourcing trends:
- The US labor statistics states that there is a huge tech talent shortage that leads to an unrealized output of $162 billion.
- The global tech talent shortage will reach 85.2 million workers by 2030.
- The revenue from the IT outsourcing market is projected to grow to $413.7 billion by 2021.
It signals the outsourcing trend in the IT industry is certain to surge. In developed nations like- USA, UK, Israel, or Sweden, the companies are increasingly opting to hire offshore developers because they don’t have in-house specialists, don’t have the bandwidth to do it at the office, missing the specific technical skill, or local talent is quite expensive.
In this blog, we will cover the following topics:
- What is an offshore development?
- The reasons to build and grow with an offshore development company?
- How to work with the offshore development team?
- Which markets are considered the best for outsourcing?
- A couple of tips to hire the perfect offshore developers
- Ending note
What Is Offshore Development?
Offshore development is the practice of delegating software development projects to another development company in a different nation that takes care of every nitty-gritty of software development based on the agreement. It eliminates the need to create infrastructure, set up a development center, and manage the complex development process, which in turn lets the company focus on core business strategy and improve business outcomes.
The Reasons To Build And Grow With Offshore Development Company?
From start-ups to large enterprises, they connect and partner with offshore development companies to enjoy the following advantages in abundance:
- Production at a lower cost
The staggering gap is found in the salaries of western nations’ developers like- the US developer earn avg $85,229 annually and Vietnam’s developer earn $19,954 annually, which is a difference of more than 400%. It makes sense to choose Vietnam as an offshore software development destination. Additionally, it saves the companies from paying office rent, payroll, insurance benefits, recruitment fees, vacations, and bring other benefits to them. The significant gap in the production cost doesn’t mean ten developers are less talented; instead, a lower cost of living makes the development cost-effective.
- Scale your business at ease
In business projects, the strategy may scale which requires scaling the development team to meet the requirements. Extending the in-house team increases the costs in the long run and the company may not need the developers but they have to retain them. On the flip side, with outsourcing, whenever the changes in project scope or technology stack come up, the outsourcing company scales the developers as required. The flexibility helps the businesses to stay competitive by making changes as they are needed.
- Easy access to the hard-to-find skillset
The proficient developers that are well-versed in advanced technologies are pricey. Also, the company needs to invest to continuously upgrade the knowledge and brush up the skills. It’s not the case with development companies that are looking for an offshore model as they easily get access to best-in-the-world IT professionals that stands high on a rare tech stack ladder.
- Attract top talent without paying wages
We all know the tight competition in western countries won’t let you find talented developers as due to the tech talent gap, most of the developers are already hired even at good salaries, extra benefits, alluring perks, job security, and other things. That’s where outsourcing is a good option to get access to a wider pool of talent and fill the void in emerging technologies by paying a specific amount to them. Also, if required, you can select the potential candidates and interview them before they start working on your project when the outsourcing company allows you to do so.
- Avoid opening your offshore development center
Starting an office in the nation to meet the business project development needs is not a good choice because creating an offshore mobile app development center means you need to invest huge bucks and time, hire support staff, and deal with legal issues. The setup cost and involved hassles are avoided by teaming up with offshore developers. The outsourcing company takes care of payroll, taxes, leaves, office management, and other things just in exchange for a specific amount.
- Reduced development time
Outsourcing software development means the company doesn’t need to invest the time in hiring the specific skillset, focusing on employee retention, taking care of project management routines, handling infrastructure-related things, up-skilling the existing staff, and making new employees cope up with the project. All these things are better managed by the offshore development team that saves a ton of time which you as a company can invest in things that improve business productivity.
How To Work With Outsourcing Development Team?
- Identify business project goals
At first, be clear with the development project objectives in detail so that you can communicate the same to the developers exactly and make them understand what are your expectations from them. The complete project is divided into small achievable units where each includes a list of functionalities along with their deadlines.
- Evaluate the domain knowledge and expertise
Once you have explained the project goals, the next step is to identify whether the partner you are looking to partner with, they have experts with the required expertise, technology knowledge, and niche experience needed for the software development team. Ask them who will manage the projects and other things. Will they allot a dedicated project manager, account manager, and business analysts, or not?
- Ensure your involvement
Often, the concerned person or key stakeholders from the business are involved in the development process with real-time updates for everything. But some vendors won’t allow the clients to play an active role. Make sure the development company agrees with your involvement so that if mistakes occur, they are rectified on time; instead when they become a gala issue.
- Sign a contract
Planning the budget before looking at the development partners is all-important, so you should create the app development requirements accordingly. Finally, at the time of sealing the deal, don’t forget to sign an outsourcing contract that defines project scope, timeline, cost, and other compliance requirements.
Which Markets Are Considered As The Best For Outsourcing?
The developing nation is the popular destination for app development outsourcing because of its low pay-scale, second-largest English-speaking population, and 2.6 million STEM graduates in a year. According to Hacker rank analysis, the country has received a 76% rating, where the developers work at $20-40 per hour.
Thanks to the government’s strong focus on education that has created a leading tech industry with developers had a score of 88.7% rating. It homes to the largest number of C++ developers with 80% of them are proficient in English-speaking. The limited communication barrier, little-to-none time zone difference, and average Pay-scale (Ranges between $11,936-46,787) make Ukrainian developers a good choice for outsourcing.
The nation is the hub of most skilled programmers worldwide that includes- developers ranked first in Java and listed in the top five for Python and Ruby. Being English as the second language makes communication easier for Western companies. A good overlap in time zones narrows down the communication barrier. An average software developer enjoys an annual salary of $22,273.
The serious educational reforms, 92% of the English-speaking population, and specialized high school system makes it the top destination for offshore development, and its capital ranked as the second-best outsourcing destination globally. However, still, there is a margin to get to the top position of best outsourcing destination worldwide.
A Couple Of Tips To Hire The Perfect Offshore Developers
- Assess the track record in the market
Measuring the level to which vendors are performing out-of-box and how much it resonates with what they boast for, all is possible by quantifying the productivity and the outcomes. You can check it by finding the rankings at Clutch, looking up at the previous clients’ reviews, and asking the previous clients about vendors’ reliability and credibility in the services they offer.
- Check the portfolio
Just by looking at the previous projects won’t work because it won’t let you know about how the developed projects perform. It’s better to study the project and test a run on the products to experience the look and feel, and functionality of the project. The reliable partners never hesitate in allowing the businesses to test the previous projects.
- Don’t forget to conduct interviews
Ideally, every company provides the liberty to check the list of potential candidates and assess the skills after interviewing and before recruiting them for the project development. You can check the technical skills, expertise, and experience they have.
- Know the outsourcing work process
The businesses need to know the process that development companies follow in resource allocation, client interaction, and flexibility in resource reallocation. The reason behind- the company sometimes follows a rigid process to allocate resources that might create conflict among developers. No possibility in increasing the resources based on project scope changes leads to big problems in the end.
- Consider legal aspects
Outsourcing means you are handing over the control over business data and business processes to the vendors, which needs to be securely stored as per the nation’s laws and regulations to ensure data confidentiality. Plus, the apps of the healthcare industry or finance industry need to comply with certain regulations to avoid legal complication issues at a later stage.
- Avoid fixed-price models
The fixed-price model means there is no place for flexibility and 25% of the cost is for risk coverage (Uncertainties). The development team will develop only those functionalities that are agreed in the project scope with zero negotiation for a single change. The changes are mostly expected from start-ups, so this model is mostly preferred by the vendors. But I suggest you refrain from this model. Instead; favor time and material model where the changes are feasible.
- Proper project management should be in place
No skilled team of developers can work to the peak efficiency if the team and the development project are not managed properly. It results in poor communication, improper allocation of the developers, and inadequate management that leads to derailed and delayed project development. That’s why it’s crucial to appoint a dedicated project manager that keep up with project progress and resolve the issues before they arise.
- Prefer going agile way
The agile methodology ensures that developers need to provide the project sprints after a week or two, which keeps both parties traveling in the same boat and the errors if exist, they are rectified at first. The client stays assured that the project is moving on the track.
The technical gap for project development often confuses the businesses as to what to do and what not. That’s where Offshore development- which stands out as an alternative, won’t make the businesses stay affirm with the choice. In this blog, the benefits of outsourcing, the process that helps, and things to consider are well explained, which indicates that modern businesses are looking to outsource the project development to invest the saved time, dollars, and efforts in important activities that boost business performance.
Stay ahead of the game by partnering with an offshore development team in India, which’s regarded as the most-favored destination of SMBs and large enterprises. Don’t hang fire and drop your inquiry now.