Mastering Offshore Software Development Outsourcing

Software development and IT rank among the most frequently outsourced sectors worldwide. This is evident to such an extent that countries like India and China have become synonymous with these operations. Consequently, capitalizing on the ever-growing opportunities in these industries can be highly lucrative, particularly with the increasing shift of numerous sectors to online platforms.

Nevertheless, once the idea of engaging external partners is comprehended, practical challenges in terms of logistics emerge. While the "what" of offshore outsourcing may be understood, the "how" often remains enigmatic. Offshore outsourcing may appear daunting or intricate, and businesses may face difficulties when it comes to selecting a suitable offshore outsourcing partner. This blog aims to provide a step-by-step guide on what aspects to consider and how to locate teams, assess their suitability, effectively manage project work, and establish valuable networks to ensure the success of software development projects.

Why do businesses outsource?

To ascertain the viability and value of offshore outsourcing for a project, it is crucial to evaluate the benefits it offers. Consequently, businesses typically prioritise introspection before considering external factors.

Focus on core business activity

Why should companies prioritise their core elements instead of handling everything in-house? Core competencies are critical processes that businesses cannot outsource without sacrificing value and their primary operational purpose. Numerous businesses fail to achieve their maximum potential due to distractions and complications arising from peripheral tasks.

Save on costs

Based on a global outsourcing survey, it was found that 59% of businesses opt for outsourcing as a cost-saving strategy. By engaging external teams at lower rates compared to those in the United States and the UK, companies can maximize the benefits of software development, particularly when facing significant cash flow challenges. Additionally, outsourcing alleviates the psychological stress experienced by business owners, especially during periods of economic instability. It also reduces expenses associated with training, infrastructure, recruitment, and other operational costs, making it an appealing alternative to maintaining permanent in-house teams.

Improve on quality

Over time, business requirements have evolved, and while prices may have been the primary focus in the past, quality now takes precedence in driving the market. This is because the user's experience surpasses marginal cost reductions when purchasing an inferior product. The same principle applies to software development. Companies require IT and software solutions that enhance their operational efficiency to deliver an improved customer experience. By outsourcing to specialized software development providers equipped with up-to-date systems, technology, and skilled personnel, the overall quality of the final output can be significantly enhanced. The expertise and skill sets brought by these external partners contribute to the improved output quality of the project.

Become more flexible

The technology industry and markets are in a constant state of flux. Software updates, evolving requirements, and economic fluctuations create a fast-paced environment where innovation becomes crucial to maintain a competitive edge. By engaging contractors and consultants, companies can effectively manage changing seasonal and cyclical demands. This approach helps keep labor costs low, predictable, and efficient. Outsourcing software development enables firms to compete by leveraging agile technology that embraces emerging trends such as Artificial Intelligence and load time optimization. All these flexible elements combine to create a more appealing and less risky market presence.

Reduce time to the market

By opting for outsourcing, companies can significantly reduce the product life cycles of their outputs and expedite market launches. This is achievable because offshore teams can collaborate seamlessly with in-house or other external teams, enabling faster completion of tasks. Offshore companies, with their extensive experience in software development and product launches, possess the necessary expertise to work efficiently. This experience leads to shorter timelines and the availability of skilled resources streamlines the entire process. In competitive markets, speed often plays a crucial role in business success. The longer it takes to reach end-users, the more resources are wasted. Thus, offshore outsourcing emerges as a solution that addresses these challenges, allowing for quicker resolution of issues and faster delivery of products and brands compared to in-house development.

Acquire a diverse team of industry professionals.

When a project requires specialised skills, outsourcing can facilitate the connection between businesses and professionals who possess the precise training to accomplish the task at hand. External teams excel in streamlining processes and developing integrated platforms, apps, and social media presence aligned with the client's web operations. Various countries have established expertise in specific areas of the technology sector. For instance, India has emerged as the unrivalled IT powerhouse globally. Consequently, companies can establish collaborations with the top countries for software development and engage highly skilled teams.

The diversity of outsourced teams also brings the advantage of fresh and innovative perspectives to projects. Experts from around the world may employ agile development models, practical techniques, or contemporary methods to enhance project outcomes. They may introduce valuable ideas that companies can leverage, ideas that might otherwise remain unrealised. It's important to note that outsourcing entails more than a simple task-based transaction; it represents a comprehensive partnership between firms aimed at achieving the best possible outcomes.

Given that outsourcing software development involves a significant investment, it is beneficial to understand the different outsourcing models available to make an informed decision.

Hence, it is essential to explore the various sources of outsourcing.

Outsourcing Models

Project Based

This particular model involves outsourcing the end-to-end management of an entire software project. Businesses provide the project requirements to the outsourced team, and the team takes charge of developing the project from scratch. During the initial phase, companies communicate their project goals to the outsourced team, and together, they determine the pricing structure and project timeline.

It is worth noting that pricing can be established through various methods, such as fixed pricing or a task-oriented model, rather than solely relying on hourly rates.

A project-based model proves especially beneficial when:

•       The project requirements are well-defined and clear.
•       The project scope remains fixed.
•       Both parties have agreed upon and established deadlines.

In such scenarios, a project-based outsourcing model is highly advantageous.

Dedicated Teams

In this model, businesses engage a team of skilled experts from a third-party vendor who function as an extension of the in-house core teams. These software development professionals collaborate to ensure smooth and efficient product development processes. The dedicated team comprises a diverse range of skilled individuals, including software engineers, designers, and UX specialists.

Managing a dedicated team follows a similar approach to managing a remote team. Therefore, appropriate management practices need to be in place to maintain team alignment and act as a liaison. Hiring a Project Manager specifically focused on dedicated teams can help ensure their productivity and motivate them to deliver the desired output at the expected pace.

This model proves particularly valuable in the following situations:

•       Establishing a long-term relationship with an outsourced company.
•       Requiring regular maintenance and updates for software.
•       Managing highly scalable software solutions.

Therefore, the dedicated team model offers significant benefits when it comes to fostering long-term partnerships, maintaining software functionality, and supporting scalable growth.

Staff Augmentation

In this model, the outsourcing partner takes care of recruiting the software development team while the business retains control over core processes. Companies independently manage their software development projects and initiatives, as well as the allocation of responsibilities within the outsourced team.

This model proves particularly advantageous when:

•       Businesses desire a higher level of involvement in the development process.
•       Creative control is crucial during software development.

The choice of outsourcing model depends on the specific nature of the project and the desired outcomes of the business. Factors such as budget and project timeline also play a significant role in selecting the most suitable model for the successful completion of the initiative.

Choosing a country to outsource

Outsourcing is a diverse and global industry that encompasses various specialisations and geographic locations. Different countries excel in specific areas, contributing to their competitive advantages. For instance, China has made significant investments in software development and AI technology, while India focuses more on IT services and customer relations. France has emerged as a preferred destination for animation outsourcing, and South American countries are rapidly gaining ground in the outsourcing industry. These competitive advantages can be attributed to factors such as cultural strengths, technological advancements, investment opportunities, and language capabilities. When considering outsourcing, businesses should assess these factors in conjunction with their specific project needs.

The shift towards a technology-driven economy is particularly noticeable in developing nations across Asia. This transformation plays a significant role in software development and should be taken into account by firms seeking to outsource. For example, Pakistan has forged partnerships with China to enhance its tech infrastructure and leverage the benefits of 5G technology. As a result, outsourcing firms in the country are poised to benefit from these nationwide advancements. Additionally, the size and skill set of the local population are essential factors in finding qualified professionals for outsourced projects.

Ultimately, the decision to outsource may also hinge on the compatibility and rapport between the business and its outsourcing partner. Establishing cohesive networks based on trust and understanding is crucial. This may involve shared visions, cultural alignment, or even language compatibility to foster effective collaboration.

By considering these various factors—competitive advantages of countries, technological landscapes, local talent pools, and partnership dynamics—businesses can make informed decisions when selecting an outsourcing partner for their software development needs.

Choosing a firm to outsource

Having discussed the benefits of outsourcing software development, you might be wondering about the process of finding the ideal offshore software development company. We are happy to have you covered with some practical strategies to get started. Here are some valuable approaches to consider:

Where to find teams

Finding a qualified outsourcing team can be a daunting task, especially considering the uniqueness of each software development project. To simplify the process, it can be beneficial to utilise popular platforms where businesses can post projects with specifications and guidelines. Professional teams will have the opportunity to view these postings and pitch their services. Here is a list of frequently used platforms for finding teams to work on outsourced projects. These platforms are accessible and user-friendly, requiring a simple sign-up process to access a wide range of outsourcing and freelance opportunities:

Upwork: A global freelancing platform where you can find specialists of various types. By posting your project, you can receive offers from hundreds of teams and individuals. On Upwork, contractors are rated by customers and prices, ensuring you can find a team that aligns with your goals.

Toptal: This platform features experienced developers who undergo rigorous testing for technical and English skills during the approval process. Toptal approves less than 3% of all applicants. While developers on this platform may be more expensive, starting at $60 per hour, Toptal offers candidates to employers within 24 hours. They also provide a two-week free trial period before clients begin payment.

Clutch: A reputable directory of over 7,000 companies, categorised and rated for easy searching and reference.

LinkedIn: A professional network with a vast pool of companies and consultants. LinkedIn allows you to find information about companies, check endorsements, and engage in direct communication.

Fiverr: An online marketplace for freelance services where sellers list their offerings, and interested buyers can inquire or make purchases. Fiverr acts as a middleman, ensuring satisfaction for both parties.

Other valuable platforms for posting and finding jobs include Freelancer.com, Guru, PeoplePerHour, Fivesquid, Crowdspring, and Scriptlance.

In addition to these platforms, social media platforms provide an excellent opportunity to connect with companies and showcase your projects. Platforms such as Behance, Dribble, and Quora serve as spaces for designers, marketers, software developers, and content creators to share their work, network, and find employment opportunities. The added benefit of these platforms is that companies and individuals often have profiles showcasing their previous work. This allows businesses to assess potential teams based on past quality and experience, minimising uncertainty in the selection process.

How do we evaluate teams?

When evaluating offshore outsourcing teams from the platforms above, businesses need to consider several factors to determine the best software outsourcing company for their specific needs. Here are some key elements that should be taken into account before making a final decision:

Portfolios: A portfolio serves as an adequate record to assess the previous work of a firm, showcasing the scope and history of their projects. I think it's best to look over past work that aligns closely with the current project to be initiated.

References: Genuine references provided by previous clients are invaluable in assessing the credibility of a freelancer or outsourcing firm. Testimonials or direct client reviews can serve as a reliable standard for what it will be like to work with the partner.

Skill sets and language: The qualifications and language proficiency of the outsourcing firm's experts are crucial factors. They should possess the necessary skills to deliver quality work and effectively communicate with clients. Language discrepancies can cause delays and may impact project outputs. English is widely recognised as the international business language, with over 1.5 billion speakers, making proficiency in English necessary for establishing relationships with customers and partners.

Time management: Meeting project deadlines, including incremental deliverables, is essential. Offshore outsourcing firms operate with a significant degree of autonomy due to geographical distance, necessitating their ability to work independently and efficiently. Micromanaging such teams is impractical, and working with partners who lack responsibility or agility can result in significant time wastage. In the digital world, delays can lead to losses in traffic and market value. So, selecting an outsourcing partner with excellent time management skills and open communication channels is crucial.

Trustworthiness: Trust is paramount when outsourcing projects. Once specifications, targets, and timelines are decided upon, the actual implementation is entrusted to the partner. This places a strong emphasis on the outsourcing firm's ethical and responsible approach to delivering a quality product. Reputation, communication style, and attitude can all reflect the trustworthiness of a firm. Word of mouth can quickly spread regarding shoddy work, causing other businesses to avoid unreliable partners. I think it's essential to establish trust before the project begins.

Test project: Conducting a test project is a popular method to assess the suitability of an outsourcing partner for a specific software development project. This involves assigning a coding, design, language, or competency test (or a combination thereof) to evaluate how the partner performs. Test projects are beneficial when a partner's portfolio lacks similar assignments or when they are relatively new in the industry. Such tests can enhance the partner's credibility and foster trust between the two parties.

While working with an outsourced team, businesses may encounter security risks, such as the potential theft or replication of software and the need to safeguard data. To mitigate these risks, it is crucial to consider the types of essential documents and security measures required when outsourcing.

Types of important offshore outsourcing documents

SLA (Service Level Agreement) – This document outlines the project requirements, meeting times, and reporting procedures, ensuring clear expectations and accountability.

SRS (Software Requirements and Specifications) – This document comprehensively lists all the requirements and specifications for the software project, guiding the development process.

KPI (Key Performance Indicators) – These indicators serve as measurable evaluation points for different phases of the project, enabling performance tracking and ensuring project goals are met.

NDA (Non-disclosure Agreement) – This document safeguards the confidentiality and security of data and information related to the project, preventing unauthorised disclosure or misuse. An NDA ensures that sensitive information remains protected, minimising the risk of theft or unauthorised duplication of software.

With offshore teams located thousands of miles away, businesses need to establish efficient management practices. Effective management can be achieved through open communication and structured approaches. Here are some strategies to consider:
Managing offshore teams can present challenges due to geographical distance and time zone differences. However, advancements in technology have bridged these gaps, making communication with offshore teams more accessible than ever. It is beneficial to view offshore teams as global teams rather than external partners to foster a continuous link and establish long-term relationships, especially for large-scale projects or potential future collaborations with the same outsourcing partner. To maintain and grow this network, the following elements should be incorporated into daily activities:

Schedule regular meetings: Regular meetings ensure consistent updates and alignment among all parties involved in the project. Meetings can be integrated into weekly or biweekly routines, with team leaders from both organisations participating to address any issues promptly.

Utilise video calls: Incorporating video into meetings adds an element of trust, builds relationships, and helps avoid miscommunication that may arise from written or telephonic interactions. Platforms like Zoom, Google Meet, Microsoft Teams, or Skype offer free or time-limited meetings and facilitate efficient communication, including presentations, screen sharing, and collaborative document review.

Arrange in-person meetings: To foster motivation and cohesion between partners, organising at least one in-person meeting can be beneficial. This allows clients and outsourcing service providers to connect on a personal level and experience each other's cultures. For long-term software development projects, developing relationships between liaisons can be valuable. Additionally, designers and developers can gain insights into the environment and target audience, particularly in sectors such as hospitality or travel.

Share a common vision: Over-communicating is essential when outsourcing, as businesses may have a vision for a product or campaign that exists solely in the team leader's mind. The project's scope should be adequately explained and understood by both sides to establish a realistic and suitable timeline. By openly sharing opinions, inspirations, and goals, businesses can minimise delays caused by outputs that do not align with their core vision or brand image. This also allows the outsourcing firm to focus on elements that are known to be well-suited to the client's tastes and needs. Therefore, no detail should be spared when communicating with service providers.

Avoid micromanagement: Once the vision is shared and the project details are finalised in a formal proposal, businesses must allow the outsourcing team to work independently. If thorough research has been conducted to select the most suitable team or freelancer, micromanaging from a distance becomes impractical and counterproductive. Outsourcing is a tool for businesses to focus on their core activities, and it should be treated as such, without the need to excessively manage experienced service providers who possess the necessary skills to carry out the projects themselves.

Best tools to use when offshore outsourcing

In the realm of offshore outsourcing, technology has played a significant role in streamlining the process. Various platforms and tools have emerged to optimise communication, coding, and scheduling between outsourcing partners. Here are some widely used tools that facilitate a smooth workflow:

Communication and Collaboration Tools:

Gmail, Google Docs, Google Drive, and Google Calendar: These tools from Google's suite enable efficient communication, document sharing, and collaboration among team members.

Skype, Zoom, Google Meet, Microsoft Teams, UberConference, GoToMeeting, and Join: These video conferencing and communication platforms offer real-time interaction, screen sharing, and collaborative features, allowing teams to connect and work together remotely.

Project Management and Organization Tools:

Slack: A popular messaging and collaboration platform that enables efficient team communication and file sharing.

Trello: A visual project management tool that helps teams organise tasks, set deadlines, and collaboratively track progress.

Basecamp: An all-in-one project management tool that facilitates communication, task management, and file sharing in a centralised platform.

GitHub: A version control platform widely used for collaborative software development, allowing multiple developers to work on code simultaneously and manage changes effectively.

These tools provide a solid foundation for effective communication, collaboration, and project management in offshore outsourcing. Depending on the specific needs of the project and the preferences of the outsourcing partners, these tools can significantly enhance productivity, streamline workflows, and ensure smooth coordination between team members.

Conclusion

Are you ready to explore the world of outsourcing?

Deciding whether to embark on offshore outsourcing hinges on various factors such as budget constraints, skill shortages, and specific business requirements. While offshore outsourcing may initially seem complex, with potential complications, following this guide and similar resources can simplify the process. The global talent pool offers diverse skills, and businesses must assess whether this talent can meet their unique needs. The key takeaway from this blog is the importance of thorough research. Without a deep understanding of internal business requirements and how to find the right outsourcing partner, any project runs the risk of failure. Thankfully, a wealth of information is available to guide firms through the process, helping them derive maximum benefit from their outsourcing endeavours.