I can’t help but get excited about the future of offshore software development. It’s not just a passing trend anymore; it’s becoming the new norm in the software world.
The benefits it brings to startups and high-growth companies are undeniable – lower costs, enhanced staff flexibility, and accelerated time to market. These advantages have ignited the offshore software development industry, which is projected to skyrocket from $526.6 billion in 2021 to a staggering $682.3 billion by 2027. That’s a whole lot of software being developed offshore!
Through this article, I will equip you with the knowledge I have gained working in a global-first remote company that helps tech companies go offshore to stay ahead of the curve and leave their competitors in the dust. Get ready to ride the wave of offshore success as we explore the top trends that will shape the future in this ever-evolving landscape.
But, before we dive deep into those trends, you may be wondering when is the right time to jump into offshoring. Lucky for you, our CEO, Sterling, spills the beans in this short video, with his usual witty charm:
AI and ML skills are becoming a hot commodity in the global market, as more and more companies look to capitalize on AI technologies like ChatGPT or Bard by Google. This offshoring trend promises to bring with it a whole host of benefits, from increased efficiency and accuracy to improved customer service. Although there are sure to be some challenges along the way – such as getting your team adequately trained in the relevant skills – it’s clear that the potential rewards make all of the effort worthwhile.
With businesses increasingly looking to up their game using advanced technology, AI and ML professionals will continue to remain in high demand for many years to come. According to a recent report, there are more than four times as many job openings in AI as there are qualified candidates. This shortage is expected to continue to grow in the coming years.
AI and machine learning solutions are popular due to many businesses wanting to automate as much of their business operations as they can.
Moreover, many startups are turning to AI and machine learning to help them with their hiring needs. AI tools can help identify potential candidates and assess their skill sets. In addition, they can also help to identify gaps in a company’s current workforce and make recommendations for how to fill those gaps. As the demand for AI and machine learning skills continues to grow, so will the need for recruiting automation tools.
Choose a Partner That Knows How to Leverage Offshore Software Development Trends to Your Benefit.
With the rise of the internet and globalization, startups have been able to tap into whole new worlds of development talent and opportunity. Offshore destinations that have been popular for a long time – such as Eastern Europe and India – have been joined by relative newcomers on software’s global stage, such as Latin America – Brazil, Argentina, Mexico, and Colombia.
Talking about Mexico, here’s a real world example of the benefits of working in a new hotspot.
Headspace, a pre-IPO company and our dear client, faced a common obstacle in the software development industry: the struggle to attract top talent at an affordable cost locally. To overcome this challenge, they partnered with TurnKey, a trusted provider of offshore software development solutions. Together, they embarked on a journey to establish an R&D innovation center of excellence in Mexico. The collaboration proved fruitful, as the first wave of hires for the center was accomplished swiftly, with new team members onboarded shortly after the contract was signed – in just 30 days. The initial success prompted Headspace to expand their plans for the center, confident in the positive impact it would have on their business.
Also, some new locations –particularly the true up-and-comers like Africa – may not have the same reputation as more popular offshoring hubs, but they offer a number of advantages that make them appealing. For example, they often have lower labor costs and can provide access to a large pool of often untapped skilled workers. We don’t have presence there, at least not yet, but we see great potential of tapping into these talent markets.
So if you’re considering offshoring for your business, don’t discount these newer destinations—they may just be the perfect fit for your needs.
Web3 is here to revolutionize the way we interact with the internet – and if the hype is anything to go by, it might just live up to expectations. With its promise of a read/write/own version of the web and access to cryptocurrencies, NFTs, DAOs and decentralized finance, this blockchain-based web may one day even surpass the groundbreaking advances brought about by PCs and smartphones.
Industry experts at Gartner predict that by 2026, a quarter of the population will spend a minimum of one hour per day in the Metaverse for various activities such as work, shopping, education, socializing, and entertainment. The Metaverse, existing entirely online, offers a remarkable platform for users to meet, interact, and complete tasks in virtual environments. It holds the potential to revolutionize the way we work, introducing new levels of social connection, mobility, and collaboration.
From a software development perspective, both the Metaverse and Web3 have the potential to redefine how developers operate within product teams, creating a more immersive and engaging work experience. Startups have the opportunity to leverage the Metaverse’s unique elements of adventure, spontaneity, and surprise to keep offshore employees focused and motivated.
With its infinite potential, I think the metaverse is poised to revolutionize the way we work. There will be challenges to overcome—such as ensuring data security and privacy—but the potential benefits are too great to ignore.
As hard as it is to separate work from home these days, offshoring is arguably the future of collaboration. Working remotely has become much more commonplace and efficient, allowing technology businesses to tap into global talent regardless of location. You can now conduct team meetings from the comfort of your own home with just a few clicks.
Technology has enabled us to connect with people from across the globe in seconds, allowing us to bring together diverse perspectives, enabling innovative solutions that would not be achievable through traditional in-person models.
The future of collaboration will continue to move away from physical boundaries and let ideas flow freely resulting in increased productivity.
Once upon a time, an offshore software development firm was merely responsible for providing clients with quality developers. But client needs have evolved beyond just developers alone.
Top level offshore agencies (like TurnKey!) now must provide valuable services that help the client grow and scale their team in the most effective way possible.
This includes custom recruiting to make sure the team is being built with developers who not only have the right skills but also the right temperament to fit perfectly into the client’s culture; a talent management division that is in continual dialogue with the team and helps prevent churn; and a consultative arm that can provide clients with market intelligence about compensation and broader trends in software development.
Though building great software has always been the core objective for product leaders, data security has now become equally top of mind. To this end, some startups may worry that the offshoring market could make them vulnerable to data thieves or compromise their trade secrets or core intellectual property.
The good news is that as long as you do an ounce of diligence, you can find skilled and reliable offshoring partners (like TurnKey!) that provide legal and technical support to ensure full data security. This dramatically reduces the security risks associated with offshore software development.
As I was lucky to work in Agile-centered companies, I can attest to the significant advantages that this approach offers. One of the key benefits is the ability for startups to leverage different time zones effectively.
For example, suppose your main office in the United States outsources its software development to a provider in Eastern Europe. In that case, the team there will work on the code while the local team is asleep, with only 3-4 hours of overlap for online meetings and communication. This can actually help speed up the development process and make it more cost-effective since teams are working on the product continuously.
And, if synchronous work is crucial for your workstream, TurnKey Labs offers the flexibility to choose Latin America, where there is no time difference compared to the U.S., ensuring seamless collaboration. Another advantage of offshore development is the diverse perspectives it brings together, leading to improved products. The varied backgrounds and expertise contribute to the overall efficiency, creativity, and cost-effectiveness of the team, allowing for quicker problem-solving and innovative solutions. Through extensive research and hands-on experience, I have seen firsthand how offshore development can optimize productivity and drive success for startups and companies alike.
You’ve got the agility to choose the model that best fits your software development goals and objectives.
Additionally, offshore development can help improve the product because it brings together a more varied perspective. Such diversity of thought improves your team’s overall efficiency and creativity, and can help drive down costs by coming to solutions more quickly.
Establishing a legal presence in many countries can often be a daunting task, as each country has its own unique set of regulations and tax laws.
One way to overcome these challenges is to use a strategic offshore partner. By collaborating with an established offshoring provider like TurnKey, your startup can get easy access to the necessary resources and expertise to successfully expand your development team into new regions. Offshoring providers can also help startups navigate the complex regulatory landscape and navigate the labyrinthine tax code.
Our excellent legal department copes with this challenge for you! We have our Rest Easy! Promise that means you will never worry about any legal issues such as employee misclassification, low-quality candidates whose background was difficult to check or taxation issues. We optimized taxes and leave you hassle-free.
Trying to do it yourself will likely result in extreme brain fog (Take my word for it, as just researching this topic gave me a migraine!) – you are better off spending the mental energy plotting your roadmap or selling your product.
While diving into the offshoring market can be a great way to optimize costs on tech talent, it also comes with certain risks. One of the biggest is that product quality could drop if you aren’t using an offshore partner you can trust.
As a result, it is important for companies to carefully consider how they are going to ensure quality before offshoring any work. This includes setting up a clear development process, establishing product delivery milestones, and creating and tracking development metrics.
For many startups, the best solution is to partner with an experienced vendor (such as TurnKey) who can custom recruit the highest quality developers for the job.
For example, another client of TurnKey, R1, a healthcare automation leader, greatly benefited from quality service. Given strong customer growth, R1 needed to aggressively expand its development team across all key roles. But they struggled with the expense and lengthy timeframe of hiring quality experts locally, so R1 looked to TurnKey to provide the offshore engineering talent that could provide the additional bandwidth.
Our help resulted in a remarkable surge in productivity, with an impressive average of 51 releases per year, demonstrating their ability to maintain a weekly cadence. Moreover, R1 has enjoyed less than 5% average annual churn over the past 3 years, ensuring minimal disruption to their engineering needs. Here’s what they say about our work:
We understand the current offshoring and nearshoring trends –as well as the challenges that come with offshore software development – which is why we created a different, better and more effective model called YOURshoring.
YOURshoring allows you to hire a fully dedicated development team that is tailored to your specific needs and committed to your success. This is YOUR team working on YOUR roadmap within YOUR culture and YOUR rules.
TurnKey’s YOURshoring model is the best way to achieve your desired outcomes and avoid the mistakes that are frequently made with offshoring. Take it from us: we used to run software startups and stepped on all these landmines ourselves.
We built YOURshoring to encapsulate the best that offshoring has to offer with none of the negative traits that pop up when you don’t know what to look out for.
Offshoring is the practice of hiring highly skilled developers in countries with lower labor and production costs. For US-based startups and high growth companies, offshoring your software development can provide a significant competitive advantage, accelerate your speed to market and save money that can be redeployed elsewhere.
By hiring individual software developers –or a development team – in a country with lower labor costs, startups and high growth companies can save significant money on labor expenses. Additionally, offshoring can help them gain access to a much wider pool of development talent than can be found locally. In many cases, these developers are able to equal or exceed the productivity level of developers in America and Western Europe.
One of the current offshoring and nearshoring trends is the increasing use of automation. Startups are using technology to carry out tasks that would traditionally be done by human workers, which helps reduce labor costs and improve efficiency. But in order to create automation software, companies need to find developers that are highly skilled in artificial intelligence and machine learning; this means companies must look to offshore locations where there are many developers with this type of expertise, such as Ukraine and Romania.
The most popular trend has been American companies’ use of nearshore destinations, such as Mexico or Colombia, for their offshore software development. These locations offer many of the same benefits as traditional offshore destinations like India, but they are closer to the markets where (U.S.-based) startups are located. As a result, they can be more convenient to collaborate yet still incredibly cost-effective.
Here are recent articles about other exciting tech topics!
Nearshore Software Development in Mexico: The Complete Guide
Top 13 Examples of Offshoring: Companies that Were Successful and the Reasons Behind the Ones That Failed
Developer Retention: How to Keep Your Software Developers Happy
Offshore Staff Augmentation: The Ultimate Guide