Offshore Software Development: What Actually Works

Offshore Software Development is About Execution, Not Broken.

Offshore software development has been around for decades, but many companies struggle to get it to work consistently and some of them are stuck in this phase.

Some of these Companies have been able to decrease costs and scale engineering, while others have ended up with missed deadlines, oversized and bloated code bases that make their stakeholders frustrated with the same question at the end of every project: “why is this not working for us?”.

The real issue isn’t that there is something wrong with “Offshore Software Development”, the issue is how it has been implemented and executed.

In this Guide, we will break down what works in Offshore Software Development today based on the following components:

• Delivery Models and Engineering Practices
• Decision Frameworks

Modern Definition of Offshore Software Development

The modernized definition of Offshore Software Development is to Tier out a development of Software Engineering responsibilities to an ATE located outside the United States, either for the purpose of reducing costs, accessing talent more quickly, and scaling production capabilities at a greater rate.

While Offshore Software Development works primarily for this purpose, the 21st century has evolved how companies are approaching Offshore Development, including but not limited to:

• Dedicated Offshore Development teams (for size) and
• Offshore Development Centers (ODC’s)
• Long-term Product Engineering Partnerships and integrating Hybrid onshore–Offshore development Models

Potentially the most successful Companies will treat Offshore teams as an extension of their core Engineering Team rather than just another disposable vendor that adds limitedThe Concept of Working with Offshore Team Members as case workers, rejection of difficult-to-find instructions, and reduced time and loss of project pressures are all factors that negatively affect the quality of offshore software project results and the programmer’s job satisfaction.

2. Selecting an offshore software development company based only on price means making a decision that increases the cost of a project after many months of delays, defects, and software debt.

3. Offshore software developers typically do not have the same level of technical leadership available to them as do developers working on projects in-house. Therefore, they are likely to spend their time working on short-term projects that will provide only temporary relief from software development problems.

4. There are many ways to increase communication between offshore developers and clients. One way is through providing clearer specifications and providing the same specifications at least monthly, as well as providing to all responsible parties (offshore clients and developers) a list of answers to common questions.

How to Succeed When Working with Offshore Development Teams

1. Use a Dedicated Offshore Team for Software Development

The use of a dedicated offshore development team will provide stable Velocity and will develop long-term relationships with your team members and clients. Using this model, the team will develop the necessary knowledge to support the continuing growth of an Offshore Product.

2. Utilize Strong Client-Side Product Ownership for Offshore Teams

When Offshore Teams are organized correctly they will yield better results than other business models. Consequently, it is advisable to eliminate confusion and create a clear line of ownership of your business project.

3. Utilize an Architecture-First Approach When Developing Offshore Software

The normal practice in offshore software projects is to build products in stages. That is, you initially create a rough product, and then over time you refine the product. However, when you utilize an Architecture-First Approach, you will have a complete view of the product you are trying to build and you will not be forced to reverse-engineer your project.

4. Keep Your Offshore Products Simple

Depending on your own specific requirements, building simple products is an option. For instance, a simple product might be a quick fix for a problem. Building a simple product eliminates the needEngineering Leadership Integrated Into Delivery

Engineering Leadership Integrated Into Delivery

Successful offshore engagements should always include:

• A dedicated technical lead or architect
• Code Reviews as Standard Practice
• Clear Performance Benchmarking
• Accountability for Technical Decisions

These will enable the offshore teams to remain proactive and not only react based on the past, but also forecast the future.

Cost Versus Reality of Offshore Software Development versus the Onshore

Offshore generally will be less expensive than onshore software development, however cost comparisons must be based upon more than the hourly rates.

What is more Important than Rate is:

• Speed to Market
• Quality of Deliverables
• Long-Term Maintainability
• Team Stability
• Reduction in Rework

When an offshore team is operated efficiently, it has the potential to outperform poorly managed onshore teams, especially when working at larger scales.

Selecting an Appropriate Offshore Software Development Company

Offshore software development companies do not define their working relationships in an identical manner.

Look for These Indicators:

• A Focus on Long-Term Relationships
• Transparent Communication Processes
• Stable, Senior Engineering Human Capital
• Clearly Defined Engagement Models
• Proven Delivery Frameworks

Red Flags to Stay Away From:

• Unclear Timeframes and Pricing
• A High Rate of Developer Turnover
• Promising Speed
• No Ownership or Accountability
• When selecting an offshore partner; location should take a backseat.

Models of Offshore Development That Are Actually Scalable

Dedicated Offshore Teams

Most Suitable for SaaS Platforms, Long-Term Products, and Continuous Development.

Offshore Development Center (ODC)

Best for Businesses Creating Large Engineering Organizations Outside of Their Own Country.

Hybrid Onshore/Offshore Model

If You Have a Product Strategy Onshore and Need to Scale Execution Offshore.

Outsourcing for Short-Term Projects is the Least Reliable Model for Complicated Software.

Important Trends In Offshore Software Development

There is now more emphasis on the use of AI in developing and testing software.

Many companies are shifting towards cost models based on the delivery of specific outcomes instead of charging hourly. This allows clients to be charged based on what they receive rather than per hour for an individual’s time.

Some businesses are now placing more weight on the security and compliance portions of their offshore software development projects.

The emergence of hybrid nearshore and offshore strategies is also becoming increasingly common, as businesses look to benefit from both short-term and long-term proximity to develop and deploy software.

Also worth noting is the trend towards using product-focused engineering teams in lieu of staff augmentation in an effort to increase client ROI on offshore delivery.

Businesses that recognize these trends and take advantage of them will see increased levels of return on investment from offshore delivery.

When Should I Use Offshore Development?

Offshore development can work best when:

• You want to create a product and have created a well-defined product roadmap.
• You have scalable engineering needs.
• You are looking for long-term cost effective solutions.
• You are looking for processes and taking ownership of the product.

Offshore development is not well suited for:

• A product without a clear idea or definition.
• Short-term experimental project for creating a prototype.
• Teams that are not willing to invest in collaboration with the offshore development team.

Conclusion: Offshore Delivery Is A Strategy To Enhance Your Capability And Competitiveness.

Successful offshore software development is a long-term strategy, not a tactic to reduce costs. Companies that invest the time and resources into establishing offshore software development will benefit significantly from the creation of competitive advantages.

Key Elements to Successful Offshore Software Development: Ownership, Investment, Strong Communication, Strong Leadership and Long-Term Focus.

If these five key elements are present, offshore software development has the potential to be a competitive advantage for your organization.

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