What Is Offshore Software Development – And Why It’s Time To Yourshore Instead
Most of us have heard of Offshoring as it relates to billionaires (ie, the rich and famous put their money in offshore accounts so that the Tax Man can’t get his sticky fingers on it). Some might even say this is the cool version of Offshoring
And although we here at TurnKey are incredibly hip, that cool version of Offshoring isn’t what it refers to in our software development world. Instead, offshore software development is all about making your software engineering efforts go farther, faster –and all at a reduced cost. We’ll break it down for you like this:
- WTF is Offshoring?
- What are the three main factors that led to the growth of Offshoring?
- What are the different kinds of Offshoring?
- Which regions are best for offshore software development?
- What are the main advantages of Offshoring?
- What are the key considerations when starting an offshore development program?
- What is the key to success when Offshoring?
- What is Yourshoring–And Why Is It Better?
- Some final thoughts
WTF is Offshoring?
Offshoring—or to be more precise, “Offshore Software Development” – describes the process by which (the smartest) software companies look beyond their shores for software development talent since they can’t find enough high-quality, affordable software developers locally.
Offshoring has become increasingly popular over the past 15 years, and is now a common—if not required—practice among tech startups and high-growth software firms.
What are the three main factors that led to the growth of Offshoring?
- The first factor was the explosion of software companies. The more that software eats the world (as a famous Silicon Valley venture capitalist once said), the higher the demand for people who can make said software. But as companies boomed and people got hired, there weren’t enough high-quality software developers to go around—at least not in the hometown (or the home country) of the company. So they began to look abroad.
- The second big growth factor in offshoring was the rise of cloud computing. We’d like to give a shout out to the O.G. Amazon Web Services (AWS), and then Google Cloud, and Microsoft Azure, for unchaining developers from their servers. Being able to work untethered changed the software development game by allowing companies to now hire top software engineers anywhere in the world that had a stable internet connection.
- These first two factors were more than enough to drive a relentless increase in offshore software development. But there were still those last remaining CTOs and VPs of Engineering who were on the fence about whether remote teams were a viable development solution. COVID-19 forced literally everyone to work from home. And there was shockingly little loss in developer productivity, finally making believers of those last stubborn birds on the wire.
What are the different kinds of Offshoring?
There are a few different subcategories within the term “offshore software development” that are important to know:
- Outsourcing: If a company has a one-and-done project, but they don’t have the manpower in house to get it done, they might outsource the gig. It’s generally a short-term software development contract where there are clear milestones and a deadline in place. All the software developers are employed by the agency that places them and work for a range of different clients. Think prom date versus going steady.
- Offshoring: When a software company wants to expand their team or augment their staff, and they look offshore for new development talent, it’s called Offshoring. The talent can be hired directly (although this has a boatload of legal and financial challenges for a company who hasn’t navigated these waters before) or the software development company can use an offshore development firm. The best case scenario is when the software developers who work for these offshore firms are fully dedicated to the client. Most of the time this isn’t the case, which is far from ideal.
- Nearshoring: Nearshoring means you (or your agency) are hiring close to home. For example, if your company is based in the United States, then Mexico would be a nearshore option for you. And if you’re headquartered in Germany, hiring software developers in Ukraine would be considered Nearshoring.
Which regions are best for offshore software development?
Today there are several hot spots around the globe for offshore software development. But the biggest, deepest geographical buckets that hold most of the market share are:
- Eastern Europe: This region is known for having the deepest pool of specialized tech talent in the world. From AI to machine learning to thorny engineering problems, Eastern Europe is a great place to offshore if you are building highly technical software or pushing the pedal hard on innovation.
- Latin America: Split between Spanish-speaking tech hubs like Mexico, Colombia, and Chile, and Portuguese-speaking Brazil, Latin America offers a ton of great offshore development options. Because its shores are closer to the United States, time zones align which makes this a popular option for companies who prioritize real-time collaboration and communication.
- India: Often considered the “granddaddy” of offshore software development, India was the first true Offshoring powerhouse. India’s large population makes it best known for being able to handle very large offshore development projects where huge teams of programmers are needed.
- Asia: Though loaded with tech talent, the difficult time zone alignment with the United States makes Asia a bit more of an up-and-comer in the offshore software development world. The most popular offshore hubs in this region are Vietnam and the Philippines.
- Africa: Consider this the rookie region. Offshore software development tends to aggregate in a handful of countries, especially Nigeria and Kenya. Look for this region to become a mainstay over the next 10 years as a young crop of new programmers come of age and the local infrastructure (power, internet reliability, etc.) gets built out.
What are the main advantages of Offshoring?
Where do we start?! So. Many. Advantages.
- You get access to a broader pool of software development talent than you can find locally. Offshoring expands your options by a factor of 10x.
- It’s easier to find highly specialized software developers. Experts in a given technology or application are often a needle in a very large haystack. Want more needles? Dive into different (faraway) haystacks.
- It is much more cost-efficient. Offshore developers are usually in locales with lower costs of living and more manageable salary expectations. This means your dollars go much further than with an all local team—you can often double your product development velocity for the same spend.
- There is no administrative headache or hassle. Setting up and managing a foreign subsidiary takes a huge amount of time and resources, and opens your company up to a range of unwanted liabilities. (Pro tip: Hire TurnKey and sleep like a baby.)
- It’s more flexible. When you don’t have fixed infrastructure you can add or reduce development teams as needed. This makes it significantly easier to scale your engineering efforts over time.
What are the key considerations when starting an offshore software development program?
Getting started with offshore software development might seem daunting, but the rewards definitely outweigh any challenges. Here are the top items to consider before you head down this yellow brick road:
- Define the problem(s) you are trying to solve for. Write out the most compelling reasons for considering offshore software development. Carefully defining your “why” upfront will light the path.
- Build vs Buy. Are you going to try to create the offshore infrastructure yourself or are you going to hire an offshore agency (like TurnKey) to manage it for you?
Pro tip: Signing up for the DIY model means signing up for headache and risk. The only companies that we see choosing this path are ones that also market and sell their product in that remote country or region—they have to set up the foreign subsidiary anyway. If that’s not your situation, rely on the wisdom of an offshore partner like TurnKey. Playing darts in the dark is less fun than it sounds (and it doesn’t even sound that fun to begin with).
- Research and choose a region. Of the list of locations you read through earlier, which of the geographies are the best fit for your needs? Choose the location that is most closely aligned with your development objectives.
- Create an organizational structure for managing the offshore software development team. The most important step here is to assign an Executive Champion to own the governance of the offshore software developers, and be sure that you follow the same development process company-wide.
- Outline a strategy for team integration. You need to build a culture that inspires staff, unleashes your team’s intrinsic creativity, and creates exponential value. (Hint: We can help!)
What is the key to success when Offshoring?
You’re building a product, running a company, and potentially trying to workout more than once a quarter.
So the key to success is: Hire pros to hire your pros.
While doing it internally seems like a good idea, a DIY approach can quickly become a cross-functional headache for everyone involved including product, HR, legal, and recruiters. Meanwhile, you still don’t have the software developers you need.
What is Yourshoring–And Why Is It Better?
Hiring an offshore development firm when you need to hire remote talent is the way to go, but remember the list of disadvantages outlined above? Choose wisely.
In fact, when we were running our own SaaS-based businesses, we got so tired of dealing with suboptimal offshore agencies that we decided to create our own using a model that yields all the benefits of remote software development but without all the nasty downsides.
We call this model Yourshoring because (unlike other firms) your remote software developers work within:
- Your team: Developers are custom recruited so that each one is a perfect match with your existing team.
- Your culture: Teams are fully integrated into your culture (not ours), which results in happier developers and much less churn.
- Your roadmap: Teams are 100% dedicated to you—you have total control of what the team works on and when.
In other words, TurnKey builds remote software development teams entirely around your needs.
And then on top of all this goodness, we also offer best-in-class customer service. We’re based in Silicon Valley which means we are local, responsive, and in tune with what you need. Whenever there’s trouble, we’re there on the double!
Some finale words
Offshoring is a solution that can give you everything you need: specialized software development teams that are available, high-quality, and friendly to your bottom line.
The only hitch is knowing where to hire and how to get the (many) logistics tied up in a bow. The answer: hiring a company (like TurnKey!) who can connect the Offshoring dots for you so you can get back to what you do best.
In the software development world, Offshoring is when companies like yours hire much needed, high-quality talent from another country, where specialized developers are more widely available.
Great question. Offshoring is like a long-distance relationship. It’s a team that integrates into your culture and works as an extension of your team at headquarters. Outsourcing is kind of like the kid you took to prom and never dated again. Filled a gap, met a need, delivered a corsage (or in this case, a project), and moved on.
There are tons of benefits, but in a nutshell, opening up to a pool of talent overseas means you can find a broader range of high-quality, specialty developers while saving costs. It allows you to flex and contract your team as needed, and means you can fold talent into your culture, which eliminates communication snafus and work style glitches.
Simple—call TurnKey today!