If you are a tech company leader and you are planning on improving the efficiency of your technology company by bringing in the best talent and doing whatever it takes to produce the best results then this blog is for you.
We are going to talk about one of the most effective plans of action you can undertake as a company CTO.
We will talk about the solution that will not only expand the footprint of your company beyond your country or even continent but will also ensure you get to acquire some of the finest talent from all over the world.
Yes, we are talking about offshore software development.
As a software development company, you have the benefit of not being confined to a single location due to the nature of the work and this presents you with the ultimate advantage that other industries would love to have.
The global offshore software development market is already in the billions and sets today at a whopping $122 billion with an expected CAGR of 10.13% from 2024 to 2031.
This industry is expected to touch over a quarter trillion dollars by 2031 which makes this one of the fastest growing and also one of the largest segments
of software development in the entire world.
This data simply indicates to us that software development companies all over the world are looking to offshore for the best kind of software development talent.
This software development market is quite equally divided between the IT and telecommunication sectors as well as the banking, financial services, and insurance sectors.
This helps us understand that there is a definite demand for something like this in the software development market but then again, we must also understand that this is a major decision on the part of companies when it comes to choosing offshore software development options.
Such a major decision can only be taken by company executives in the form of C-suite executives. We are talking about Chief Executive Officers (CEOs), Chief Operating Officers (COOs), Chief Financial Officers (CFOs) and most definitely the Chief Technology Officer (CTO).
CTOs especially stand in this very important position to give the green signal for something like offshore software development.
We will understand what this phenomenon of outsourcing software projects is actually about and we will also understand its advantages. Along with that, we will also look at the key things to keep in mind when it comes to offshore software development.
So, let us understand what is offshore software development.
What is Offshore Software Development?
Offshore software development is basically the practice of outsourcing your software development options to individuals as well as teams or companies situated in a different location.
This different location is usually located in a different country for it to be considered offshore.
This simply means that if you run a software development company in the US and you decide to outsource some of your work to a company in Germany then that would be called offshore software development.
However, if you run a software company situated in Texas and you decide to outsource some of your software development operations to a company in New York then it will not be called offshore outsourcing simply because that outsourcing company is also situated in the US or the same country.
That is why if you decide to hire people from another country to do software development for you simply because of multiple factors such as lower labour costs or better technical knowledge then you can try out this incredible option of outsourcing development to another offshore software development entity whether it is an individual or a company.
Reasons and Advantages of Offshore Software Development
Lower Labour Costs
The first and the most common reason for offshore software development is simply cost efficiency because labour costs around the world can vary depending on the country.
This means that you can expect excellent quality of work for a fraction of the cost of having to do it in your country.
This is simply because of multiple reasons and one of the reasons is Purchasing power parity (PPP) as some currencies are weaker than others.
That is why it usually makes sense for companies to get multiple high-quality talent hires for the cost of hiding a single person in the country of origin.
This is an excellent figure from the perspective of productivity, efficiency and cost of savings.
Better Global Talent
When you are confined to a city or state and even a country you might get to acquire good quality talent but you will agree with the fact that the talent pool will be smaller compared to the rest of the world combined. There are a lot more talented people all over the world compared to a single country or a single city.
This means that if you hire from your country of origin then you are going to have a much smaller pool of talent to choose from compared to hiring people from all over the world.
This simple equation simply means that with offshore software development, you will get to hire skilled professionals from all over the world and not just that because you are also going to have the option of choosing between these skilled professionals.
If a company has the choice between choosing talented people from their town or choosing from the best minds in the world at a fraction of the cost, almost all companies will choose the second option because it is much more practical.
Scalability
Business growth is a very challenging prospect and it is even more challenging if you have to do it physically in the form of physical investments in the form of physical infrastructure.
However, if only there was an option to simply outsource your work to specialised teams and companies all over the world without the headache of dealing with infrastructure investments.
That is exactly what outsourcing offshore software development is all about.
For example, if you run a software development company and you are planning on expanding the operations of your business but you do not want to invest heavily on the ground but still be able to take in new work and generate revenue, the only logical option for you would be outsourcing that work to experts.
These offshore experts have their own tech infrastructure in place and all you have to do is assign them work and pay for it and they will take care of the rest for you. It does not get any more convenient than this.
This also ensures faster time-to-market because you can continuously take in new projects and assign them to offshore teams and continuously generate revenue while also having your work enter the market at the fastest speed possible.
Risk Mitigation
When you have to do everything by yourself you are also going to have to deal with the risks alone and the accountability that comes with messing up on projects.
However, if you outsource your work, you can basically outsource the risk of that project to your outsourcing partners so that you do not have to deal with the project risks yourself.
When company executives do not have a lot on their minds, they can then focus on building business and helping it grow.
That is exactly why having less risks and less worries about risks is also a very profitable proposition in business and this is one of the many advantages that comes with outsourcing software development work.
Yes, you will have to maintain some degree of oversight and even do micromanagement in some instances along with the minimal stress that comes with project outsourcing.
The best part about this arrangement is that offshore software development companies are very serious about projects simply because it is a very competitive market out there.
This means that you can be at least 99% sure that you are going to get the kind of results you are expecting because your offshore partners understand the risks of messing up the project and losing the contract maybe to someone across the street.
Improved Focus
Time is money in any kind of business and that is also the case with running a software development business.
If the top business executives of a software development company are preoccupied with multiple projects, then they simply cannot think about strategic business-oriented goals to grow the business.
For example, if you engage an award-winning gourmet chef to peel potatoes or keep an eye on the junior chef peeling potatoes then the award-winning gourmet chef will not have the time to create new recipes and work their real magic.
Similarly, top business c-suite executives need the space to focus on future business goals and they must be given the space to think about innovation and market expansion rather than daily operation and management.
Outsourcing software development work can provide executives with that important space so that they can think about business expansion and innovation and work their real magic instead of operating as glorified managers to managers.
Access to Larger Markets
Every business needs growth and if you want to stable growth then you should pick and not focus on existing markets and existing customers.
The fact of the matter is that if you want business survival and growth then you will ultimately have to be on the lookout for new markets and new territories to operate in.
That is why offshore software development is so important simply because it means focusing on new markets.
Your initial entry into these markets will be as a project provider to these outsourcing companies but when you collaborate with one of them then you are ultimately entering the market.
You can then utilise your existing market connections to not Just provide outsourcing projects but also look for customers in those markets.
While this might take some time to do, it is ultimately the solution to creating multinational companies.
Key Things to Keep in Mind for Offshore Software Development
Do Your Research
One of the most important things you must keep in mind is market research and this will help you not only choose the country but also the company.
There are different markets to choose from depending on what you need because if you are situated in the US and looking for a company with a similar time zone then you can choose something like Latin America.
If you are looking for the best kind of software development talent at the most cost-effective rates in the entire industry then nothing can beat India.
Try Compensating Fairly
When you are going with an offshore software development option, you are already getting an amazing deal with an arrangement like that.
Try compensating the outsourcing companies well just because it is the right thing to do and also because this builds loyalty and will ensure you have a strong regional partner to back you up.
Reputation is not created in a single day; it takes time and these little factors like fair compensation and open communication go a long way.
You must also remember that it will ultimately be these partners who will be the ones to help you enter these markets as a services seller.
Set Everything in Stone
One of the most important things to keep in mind while outsourcing software development work is to simply be clear with your objectives from the start of the project.
Try having realistic expectations about the kind of work you are going to get at the kind of prices you are going to get.
Also, try communicating all your expectations to the companies and individuals and try to be as unfiltered as possible before you start the project.
If you can then you should write down all your goals and present them to the company and ask them if they are able to meet your expectations.
You should also be ready to change companies if a company is simply not being able to meet the standards and expectations you are looking for.
We hope this blog has been helpful for you to understand how offshore software development works and how it can be a winning factor for tech CTOs looking to expand business.
If you are looking for such a company with extensive experience in working with international clients and with some of the finalist levels of work ethics along with one of the most passionate software development teams then you do not have to look further.
We are here for you.
We are Think To Share IT Solutions, your reliable offshore tech partner and we welcome you to visit our website and check out everything we do.
