Offshore Software Development: The Definitive Guide For CEOs
As experts in building offshore teams, we have put together a simple, easy-to-understand, definitive guide to offshore software development. Read on to know!
There’s no doubt that the software industry has become incredibly saturated. With tech start-ups mushrooming like never before, industry experts suggest that there will be over a million software companies in the world within the next 10 years. Almost 50% of these businesses are tightly-packed into Western Europe and American cities. Competition is at an all-time high, operational costs are always climbing, and talent is getting scarcer by the day.
Offshore software development services have now risen as a solution for Western businesses who are looking to get ahead in the crowded and expensive marketplace. However, a lot of businesses still don’t know what offshore development really is. With the internet full of confusing and conflicting information, even understanding the basics of offshoring can be quite a task.
In this blog post, we break it down for you. As experts in the offshoring industry, we explain what offshoring is, what benefits it could bring to your business, and how you can offshore your software development.TABLE OF CONTENTS
Offshore software development is when a company opens a new office called an offshore development centre and hires a team of developers in another country. They are permanent employees just like your in-house team, except that they’re based elsewhere.
For instance, IT giants like Google, Microsoft, and Apple have all established their R&D centres in Bangalore, the Silicon Valley of Asia. The lower operating costs, massive talent pool, and the opportunity to scale quickly allows them to increase their output and improve their technical expertise, without undue stress, hassle, or cost.
Simply put, offshoring means expanding your business with a new team of skilled employees who are geographically distant from your in-house team.
Engineers are the most highly-paid workforce in the world today. Research conducted by The Engineer in 2018 shows that the average salary of an engineer in the UK is roughly 48,000€. With employee wages accounting for more than half of the fixed costs of an average business, hiring local talent in the West means having to pay through your nose. And that’s just the payroll!
Add employee-centric benefits such as travel allowance, insurance, and yearly bonuses to the equation, and your operational costs are through the roof. Instead, by starting offshore development, you can save a significant amount of money, and increase your margins, without compromising on your output.You’re not scaling fast enough
No business wants to be in a position where they have to turn away profit-generating, growth-enabling business because they don’t have the internal capacity to accommodate them. However, without the right tech team in place, it’s quite likely to happen.
If you’re looking for a long-term solution, then outsourcing your software development to an external vendor isn’t going to work. You want to scale your team, and it needs to be done fast. This is where an offshore development model can prove to be invaluable.
By starting offshore development, you gain access to a massive pool of qualified engineers who aren’t outsourced help, but a value-adding extension of your business. They will be a part of your business for years going forward, enabling you to take on more projects, and generate higher profits. And because the talent pool in countries like India is huge, you don’t ever have to worry about talent scarcity either.
Read more about when is the best time to start offshore developmentWho should use offshore software development?
Typically, offshore software development is leveraged by service-based companies whose core business is non-technical. These are businesses that are experts in their respective industry, but are unable to keep up with the ever-changing technology. It can be something as simple as transforming their existing website, or a complex project such as developing a value-adding digital product for their customers.
However, because of their lack of expertise in all things software, their technology is not cutting edge and requires a lot of developers to maintain and build. With local engineers costing well over €50 an hour, offshoring is a neat solution where they can hire developers full time and at a fraction of the cost. The development teams they build can also help implement new ideas further down the line.
In other cases, companies may already have an in-house development team but are unable to scale up and take on bigger contracts. They want to increase the value of their business and grow with the times but are struggling to. Since new developers are expensive and hard to find, a dedicated offshore team might be an ideal solution.
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