Outsourcing
Table of Contents
Offshore software outsourcing gains more and more popularity each year, and no wonder why. When you select the right agency, you get more than a service provider. You get a reliable partner, who supports your project along the way and does everything to deliver your software's best design and functionality.
Today we’ll discover why to outsource software development offshore, what your business can get from such outsourcing, and delve into 2024 numbers and trends in this domain. Keep reading!
Along with offshore development, there is also onshore and nearshore software outsourcing, and we cannot discuss one without talking about the others. What's the difference between them? It's pretty easy; let's puzzle it out!
The onshore outsourcing model involves hiring the development team in your own country. The team might work remotely in different states, cities, and even time zones (within the country). For example, if you operate from Seattle, USA, your team can be located in Denver, Boston, or Atlanta. Although you won't face cultural, language, or time zone differences, in this case, onshore outsourcing has high development costs, becoming its most undesirable characteristic.
Nearshore outsourcing software development means working with an external team located in a nearby country. For example, your headquarters is in Canada. Then, you may consider hiring teams from Mexico, Argentina, Brazil, or Chile. This model provides more affordable developers' hourly rates. You and your team have a small or no time zone difference; even if you have it, there is a large time zone overlap. Nevertheless, communication and cultural differences may arise.
Offshore software development outsourcing is a sort of business process outsourcing where businesses use the services of remote development teams. We can characterize offshore teams by the following characteristics:
For example, if your business operates from the US, you choose a dedicated development team from Ukraine, Poland, or Romania. Despite the distance, the development process remains pretty much the same as for an in-house team: from requirements definition to designing, development, and testing, and finally, deployment and further maintenance.
While considerable time zone differences may concern, offshore outsourcing software development companies offer various communication means and project management tools to ensure a seamless development process. Regular meetings within overlapping hours help clients stay informed, and the team receives feedback.
What's going on in offshore software development outsourcing in 2024? We have collected top trends backed by reports and interviews on the topic.
The growing demand for IT security services is based on the expected growth of cybercrime, rising from $9.22 trillion in 2024 to $13.82 trillion by 2028. As attacker methods become more advanced, businesses put more money and effort into securing personal and financial data and intellectual property to avoid fraud, reputation harm, and revenue loss.
The average cost of a single data breach accounted for $9.44 million in the US in 2022 and will continue increasing. Additionally, 81% of Deloitte survey respondents noted that they use external services, including IT offshore outsourcing providers, for cybersecurity.
IT skills shortages are a growing concern for businesses worldwide. The report indicates that by 2026, 90% of businesses and organizations worldwide will face IT skills shortages. In-demand roles include AI engineers, data scientists, cybersecurity and cloud engineers, and solution architects.
Highly specialized software engineers remain in high demand, even as their numbers have steadily grown over the past five years. Experts in domains like AI, machine learning (ML), big data analytics, the Internet of Things (IoT), robotic process automation (RPA), and DevOps are particularly sought after.
Cross-platform app development reduces costs by enabling the creation of universal solutions for both web and mobile platforms, allowing businesses to reach a wider audience from the start.
Additionally, market trends, as highlighted in the market.us report, include rising revenues from custom offshore software development, highlighting the growing reliance on third-party partners for high-quality services. Offshore development capabilities align more with modern software demands, offering businesses flexible, scalable, and cost-efficient solutions to meet evolving market needs. This combination enhances product accessibility and accelerates time to market.
Faster development and low cost are the main driving forces of low code development. Such platforms offer cross-platform accessibility, reusability, visual modeling, and reporting. Although good for building MVPs, they are not suitable for complex app development. This skill gap is partially covered by offshore outsourcing software development, where you can find the professionals for your project.
The global low-code development platform market is estimated to be $24.8 billion in 2023 and is projected to grow to $167 billion by 2030. The outstanding benefits of low-code development include revenue growth, monitoring capabilities of such platforms, and support in replacing legacy systems.
The rise of cloud-native services is connected to their benefits, foremost cost efficiency, scalability, development speed, and agility. Statista shows that the most popular cloud-native technologies are data storage, code repositories, and Kubernetes-native CI/CD tools. 50% of global businesses use cloud storage in production.
Netflix and Uber are among the most prominent users of cloud-native services, which allow them to respond quickly to changing market conditions and update and scale their applications.
What does it mean to build a cloud-native app? The idea is that your IT offshore outsourced team builds, deploys, and maintains the app or project directly in a cloud environment. While this approach is favorable for complex apps with large data sets and boasts enhanced scalability and no reliance on physical infrastructure, do not forget about the cons. There are still concerns about data security and accessibility (depending on the internet connection) that cloud solutions can encompass.
Cloud-based outsourcing, on the other hand, means using cloud infrastructure for data storage and management via third-party cloud service providers. It helps create more efficient, cost-effective, scalable, and adaptable solutions.
The approach means working with several service providers to achieve your goals. For example, you could hire offshore software development companies to build new apps, another company for quality assurance, or other business tasks and processes. Multi-vendor outsourcing allows companies to access diverse expertise, technologies, and knowledge, while lowering risks.
The combination of offshore and nearshore models allows businesses to get round-the-clock productivity from their service providers, extend project capabilities, and bring a broader talent pool to the project, leveraging specialized skills from multiple regions.
Cost-effectiveness: Low overhead costs, lower developer hourly rates, and no infrastructure expenses make offshore software development appealing for companies and corporations, helping to save a sufficient amount of project costs.
Access to narrow expertise: IT talents are in demand and considered scarce resources. Outsourcing allows you to select professionals with different domain expertise and knowledge.
Balanced workloads: By outsourcing the development team, you can focus on the main business objectives and tasks without worrying about project delivery, as all this work is now your partner company's responsibility.
Low risks: Your offshore development team will leave no knowledge or skill gaps and use the best development and project management practices to ensure timely project delivery.
Faster deployment: No need to spend time on hiring, onboarding, and training — with offshore outsourcing, you get a development team ready to build the solution you have in mind.
High quality: Your outsourcing company strives to deliver quality results as much as you do. The external team usually consists of individuals with a genuine interest in the project and unconventional thinking.
Quick specialist acquisition: With offshore software development outsourcing, you don't need to search for professionals yourself — your partnering agency does all their work and takes little time.
Scalability: Off-site hiring allows you to easily regulate the team's structure and size according to the workload and tasks. You can request more developers or an extra QA engineer, and they will soon be found.
What types of apps can offshore agencies handle? There are some examples of projects that they can help you with.
1.Custom software development
Offshore software development outsourcing companies can help you create custom solutions for your business, no matter the innovative web platform, electronic medical system, eCommerce store, or reporting software.
2. Web development
Web development includes creating web apps, using PWA technology, building eCommerce stores on platforms like Magento and Shopify, and full-stack web development, as well as taking only backend or frontend tasks.
3. Mobile development
No matter if it is iOS or Android or cross-platform app development, offshore teams can professionally handle all of them. This category also includes wearable and hybrid app development, as well as prototyping and UI/UX designing.
4. Enterprise software development
Enterprise software is complex by nature and requires seasoned specialists to manage. Offshore software outsourcing has the proper resources and professionals for custom enterprise app building or legacy system modernization.
5. MVP development
Prototyping and building an MVP is a great option, especially for startups, where business ideas should be proven and tested before full-scale development and launch. It allows you to check your target audience and unique selling points and analyze feedback for further improvement.
While there are many freelancers on the market, we advise you to look for an offshore software development outsourcing company to reduce risks connected with quality, timely delivery, and project management. You can browse agencies on the internet, look for specialized B2B portals like Clutch, GoodFirms, or DesignRush, or ask your business apartments for recommendations.
Other sources for finding a reliable software development partner include:
There are several aspects you should pay special attention to to successfully choose a suitable offshore outsourcing software development company.
Eastern Europe is a popular offshore outsourcing destination for many US businesses due to its various advantages. The region boasts highly skilled, well-versed developers who have access to the latest technologies. Many countries have a high English proficiency index, so there are no communication gaps between clients and development teams. Geographical proximity to the Western world ensures a good cultural fit, leaving no room for misunderstandings.
Latin America is an attractive destination for offshore software development outsourcing due to its closer geographic location and little to no difference in time zones. The region has quite qualified developers and affordable hourly rates, while issues may arise in English proficiency and cultural differences.
The region boasts low prices for software development, making it the most affordable place for outsourcing services. Its vast talent pool is combined with competitive pricing. Some considerations may arise from cultural barriers, language, and complex regulatory and compliance standards.
According to Global Software Outsourcing Rates Comparison, in 2023, the average hourly rates for offshore developers were the following:
Offshore software outsourcing is a great option for businesses that pursue technological advancements and talent across the globe.
Need help with software development? Get in touch and discuss your idea with our experts. We'll make free estimates on the project's cost, timeline, and required resources. We'll support your idea all along the development journey and ensure its seamless launch.
US-based and operating globally, NEKLO spearheads digital transformation initiatives for businesses worldwide. We deliver software solutions complying with your market and legislation.
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