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Increasing competition requires businesses to respond in new ways. No longer can they pay top dollar for in-house software development, as these functions add significantly to business costs. Moreover, doing business in that way holds key personnel back from driving more business innovation, as they must work practically around the clock just to keep the lights on. How can companies halt this vicious cycle? Offshore software development provides a solution.

Offshore software development provides such tasks as coding, support and maintenance, app development, web design, and customized solutions. It thereby provides the perfect solution for many firms.

Businesses save time and cost overheads on local recruitment. Also, firms benefit from more rapid time to market. Moreover, companies now use offshore software development to push boundaries. Increasingly, they create new products and services while also optimizing customer experiences through more efficient back-end processes. These factors can differentiate a company from its competition in the digital era. Offshoring is a perfect solution to spin up creativity and turn your business into an innovator and creator.

This article introduces offshore software development and its main benefits. Relying on a remote team to produce software and applications will enhance your business enormously. We also discuss here what makes a good fit for using offshore software development as well as how best to use these services. Finally, we summarize the trends in offshoring as well as how remote working and dispersed teams affects the profession.


What Is Offshore Software Development?

Offshore software development is the practice of carrying out new software development and other associated services abroad. Its primary driver is to reduce costs by taking advantage of relatively inexpensive overseas labor and skills.

IT and software offshoring utilize service providers and freelancers to develop new software products. These professionals carry out maintenance and updates on existing solutions through remote support services. They also develop extensions to software such as mobile applications and API integrations. Roughly 80% of the world’s largest companies utilize some offshoring to carry out various business functions.

The offshore software development market consists of several large providers, mid-market firms, smaller outfits, and freelancers. India has traditionally held a large share of the market. However, but there are increasing trends toward offshore labor in Asia and South America.

What Are the Main Benefits of Using This Method?

Offshore software development companies offer a range of benefits that Western organizations of all sizes can capitalize on. Lowering costs of software development is one of its primary drivers. By taking development activities offshore, firms can minimize expensive hires in developed markets. Accordingly, they can also lower the costs for recruitment, retention, and training.

Access to new and specific skills is also another major benefit of offshoring. The practice makes it possible to hire highly skilled individuals for a fixed time for specific project requirements without committing to the overhead costs of permanent hires. This avoids keeping expensive resources on the bench between projects. It also ensures you can recruit exactly the right specialist at the right time. Offshore companies with good experience working with European and Western clients will understand the value of this service and help navigate the talent selection process for each project.

Quicker time to market is another big reason companies choose offshore software development. Skilled technicians carry out work faster and speed up testing. Both customers and businesses benefit. Offshoring software development also enables greater levels of innovation and creativity across all stages of the pre-production lifecycle.

Freeing up staff in higher-cost markets is also a driver of offshoring. Without the burden of software and application development to contend with, on-shore teams can focus on providing cutting-edge business functionality. This saves both money and time. It also enables business growth at the local level while offshoring delivers the program elements.

Who Should Use This Service and When?

Western companies of all sizes can thereby more readily respond to customer demand and improve existing services. This naturally leads to better customers retention.

This approach benefits smaller companies that lack the finances or time to hire permanent employees. Offshoring can also help larger firms to fill skill gaps and shortages quickly without the time and recruitment costs.

Larger organizations can use offshore software development to avoid the need for a permanent headcount in high-cost markets. Instead, they can capitalize on skilled labor pools offshore to manage multiple products and projects simultaneously.

What Are the Main Trends of Offshore Software Development?

Offshore software development is trending globally. While India remains a popular destination for Western companies for offshore development tasks, additional markets are also emerging. Each market comes with its own pros and cons. However, the overall trend is toward diversifying the offshoring market.

Another key trend in offshore software development has to do with additional layers of data security. Regulations such as GDPR increased the need for more stringent data handling and processing. Accordingly, countries with large offshoring service provisions tightened up security. Countries such as India ramped up data integrity certifications and security provisions to meet and surpass the needs of various national and international regulations.

The software development offshoring market also embraces cloud technology. IDC estimates that almost 70% of businesses are deploying cloud technologies in at least some capacity. Of those that are not, the same study found that the vast majority of those are actively looking to move to at least some cloud services.

Cloud services have helped facilitate the trend toward offshore software development because of their additional collaboration functionalities. The utility-based model that many cloud service providers offer also lends itself well to the offshoring model because it can be scaled up and down according to project demands and workloads.

How Do Broader Trends Affect Offshore Software Development?

The broader trends toward automation and artificial intelligence also lend themselves well to offshore software development. Automation in software development facilitates rapid developments to adapt to customer demands. The automation trend also reduces administrative burdens and manual touchpoints in business processing.

Cutting-edge software development providers use AI to test and improve the quality of their products. Time to market is thereby enhanced, as this practically eliminates bottlenecks.

Plan Work Wisely with Remote Teams: Tips on Good Practices

For offshore software development to work well, strong collaboration is key. Project requirements need to be clearly defined from the outset, and all team members should be briefed on the end goal. This breaks down silos, thereby enhancing the quality of the end product.


Plan for Effective Communication

Planning work methodically and communicating timelines and expectations to all offshore team members is the best practice for optimal outcomes with software development. Treating offshore teams as an extension of in-country teams also works well. This is good practice for delivering the best outcomes. To do so, ensure all team members, not just team leaders, are introduced via video call to the rest of the team. Being able to share experiences and collaborate effectively is vital for the overall success of the project.

Rely on the Cloud for Improved Collaboration in Offshore Software Development

The use of cloud-based collaboration and project management tools greatly enhances cutting-edge software development by facilitating effective collaboration. It is important to note, moreover, that smaller teams tend to function more effectively than larger, sprawling teams. Smaller teams enable tighter team spirit, greater visibility across each other’s activities, and more productive communication.

Invest in Effective Leadership

Installing leadership for both the onshore and offshore teams is also a good tool for optimizing the entire team’s efficiency. Efficient communication flows can be introduced within this framework. Best practices and standards can be applied. Whether it is the communication of overall project goals or ensuring the standards and coding quality are consistent across the extended team, this approach makes for a productive multi-directional communication flow.


Hold Regular Meetings

Having regular meetings also helps offshore teams feel involved in the bigger picture of a project. Daily or at least twice-weekly video calls keep every team member focused on the task and its overall project deliverables. During these sessions, team members should be encouraged to be open and collaborative about any issues, best practices, and other important project information.

Keep Track of Everything

Tracking work on common platforms is also a great way of keeping everyone on task and comfortable with deadlines and requirements. A good project management tool also makes it easy to plan tasks, schedule workloads, and issue assignments according to skills and availability.


Trends Toward Remote Work Will Increase the Popularity of Offshoring

As labor costs continue to rise in Europe and the US, software development offshoring continues to grow in popularity. Contributing to this trend, the demand for software development skills in Western economies far outweighs the supply.

Market demand for software-based products in Europe is also one of the main trends contributing to the rise in popularity of offshoring. Moreover, as software becomes more deeply embedded into all aspects of modern life, from shopping to governmental functions, the demand for more and better products will continue to grow.

Customer expectations with regard to software are increasingly demanding, as well, and consumer experience needs to be at the center of successful solutions. Since well-built software tools enable creativity and communication, the customer flow and experience can be second to none.

According to the Economist Intelligence Unit, Europe is still coming to terms with how to fully capitalize on the potential of software for digitizing modern life. The research firm estimates that, directly and indirectly, software contributed more than 910 billion euros to the combined EU economy in 2020. This represents more than 7% of the region’s total GDP and covers all facets of life from agriculture to manufacturing and healthcare.


This article has outlined the basics of offshore software development and its potential benefits to Western businesses. It has described the key use cases companies can apply to offshoring practices and delineated best practices for getting the most value from relationships with offshore organizations.

As individuals, businesses, and the public sector continue with rapid adoption of software, continuous development of new and existing software services is essential. Only in this way can the technology sector ensure delivery of the high-quality software that customers have come to expect.