Lower cost for coding and development is not the only result companies would like to get when they hire offshore developers. Outsourcing has both its advantages and disadvantages. This guide will help you learn about the pros and cons of hiring remote teams and will teach you how to find the right vendor.
Today, outsourcing is at the height of its popularity. The key reason for this is the desire of buyers to save on costs. It’s no wonder, as there is a great gap between the average software engineer’s salary per year in the USA (around $70,000) and in Ukraine ($20,000), for example.
Just compare the salaries of developers by country through reading our “Ruby on Rails Salary Survey 2018”.
However, despite the attractive perspective of saving costs, most buyers have doubts and wonder whether offshoring is worth it. Are there any risks, drawbacks, and pitfalls associated with using offshore developers services? Let’s weigh up all the “pros” and “cons”.
7 Key Benefits of Hiring Offshore Developers
We gathered together the top benefits of hiring remote employees; these can factor into your decision on outsourcing. Here are the main advantages of outsourcing as reported by US companies that have experienced this type of recruitment.
A lot of US companies mention that the greatest benefit of outsourcing is offshore software development costs. Due to lower labor costs in other countries, they can hire employees that demand less than those from development companies located in the United States.
Buyers admit that they are able to hire qualified people outside their country at lower rates. Besides, US and European companies experience difficulties in finding qualified staff. There is an abundance of talented specialists in Ukraine, for example. This country is well-known for being one of the most attractive tech hubs in the world for those searching for tech geeks.
Companies can also take advantage of the tax incentives offered by other countries. For example, in Ukraine, the supply of software is exempt from VAT until January 2022. Software includes system administration, software programs, operating systems, websites, online services, etc.
Some buyers say that using the services of offshore development companies helps them to focus on major business initiatives rather than having to deal with non-critical project management issues.
When it comes to the quality of the software developed by offshore teams, this topic always introduces a kind of ambiguity. There is one thing you should remember about quality: the success of the project and the quality of the product doesn’t depend on the country where it is released but on the people who developed it; on how passionate they are about what they are doing.
Improved Time to Market
In most cases, the time zones of buyers and software development vendors differ. The difference ensures continuous development and enhances time to market.
An offshore development team can also provide a complete range of managed services, which commonly may include marketing, media, supply chain managed services, business-to-business integration, power, and information services. By outsourcing these services, companies can free up their time and resources for major activities.
5 Key Disadvantages of Cooperating with an Offshore Development Team
Below are the most common disadvantages reported by the organizations that used outsourcing.
The difference in language may lead to misunderstanding and misinterpretation of your words. Miscommunication causes some problems because good communication between a customer and a developer is the key to accurately extracting the requirements for the software to be developed.
Sometimes you will need to visit your vendors and spend some time in their country. It will cost a bit of money if you decide to travel to India, for instance. However, some vendors located in the European countries are much more easy to reach.
Technology differences also cause problems. It is important to ensure that the hardware and software platforms used by offshore teams are compatible with the intended platforms on which the final software product will run.
Differences in culture, software development methodologies, project management, quality standards, documentation, and corporate ethics are also included in the list of the most typical drawbacks of outsourcing.
Risks of Working with an Offshore Team
Along with the risks of not getting the quality or quantity of services you expect, there are other important factors to consider. Offshore outsourcers should think carefully about the legal risks. Often, foreign laws are inadequate when it comes to protecting intellectual property since there is no specific law to protect US companies. Note that many US laws, such as the Industrial Espionage Act of 1996 protecting trade secrets, do not apply outside of the country. There is always a chance for the code developed offshore to be sold to US and non-US competitors. That’s why you must consider signing an agreement in which these risks are explicitly stated.
It is recommended by Diceus experts to proceed slowly with offshore proposals, plan for a legal agreement, think of security, and have contingencies in place to protect the IP should a breach be suspected. International companies should conduct in-depth research on offshore partners and employees. The financial strength of offshore companies should be considered as well as the retention rates for employees. Unfortunately, even though it seems obvious that there would be a need to conduct this research before hiring out offshore development work, many US companies are still too blinded by the attractive cost savings to pre-examine potential partners. Oftentimes, such research is never implemented or is poorly conducted, leaving businesses at risk.
What Is an Offshore Development Company and What Are the Most Popular Projects and Services to Outsource?
An offshore development company is one located in a country with a great tech talent pool and that offers IT services at rates lower than in your country of residence. Here is a list of most frequent services companies get from software engineering providers:
- Custom design
- Software development
- Migration to the cloud
- Training and consulting
In terms of software development, our company, for example, offers comprehensive systems for ERP, SCM, CRM, and other enterprise-grade solutions for different industries, including insurance, fintech, healthcare, and construction. Based on our extensive experience in these domains, we are able to offer the technology stack that is best-suited for your sector.
Each IT solutions provider has its own engagement models and SDLC processes. Usually, outsourcing vendors offer a simple several-step process. However, to ensure success consider companies providing end-to-end services, from business analysis to maintenance.
What are the Signs of Failed Projects?
Understanding all the risks associated with outsourcing software development allows you to notice in time if things are not going well. For instance, say a company noticed that its outsourced projects were not going well when it did not receive reasonable estimates for tasks and when developers did not show up at scheduled meetings — it would be too late by the time managers recognized a significant lack of project management skills. The outcome would be that the quality of the code developed was poor and there was no documentation. One way that this could have been prevented was to have set up processes within the team effectively.
There are many indications that projects are foredoomed to failure. The most obvious ones are signs that point to no or poor communication and a lack of planning, management, experience, etc. Here are some signs that should sound the alarms that things are going wrong:
- Vague task description in project plans and SRS documentation
- Software features that are out of sync with the documented requirements
- Irregular schedules
- Sporadic or non-existent progress reports
- Inability to list the names of specific employees who will work on a project
- Too much reliance on subcontracted labor
- Poor-quality work
- Over-reliance on the phrases “trust us”, “no problem”, etc.
- Irregular meetings and calls
These issues are among the main reasons why software development projects fail. When dealing with offshore outsourced projects, the chances of these signs increase.
The physical proximity of team members is essential for creating and maintaining a team spirit that is key for project success. Indications of incomplete or improper planning will appear when deadlines are not met. It may be harder to detect signs of inexperience because the vendor may intentionally hide it. Some signs of inexperience are fairly obvious, such as poor documentation techniques, while others are less obvious. But no matter which danger sign is noticed, it is critical to rectifying the situation as soon as possible to help prevent project failure.
How to Get What You Paid For
The requirements for your software originate from potential users. To write these requirements, technical writers need to be close to the user. Write your own requirements in an accurate and clear manner.
To get proper requirements, you must be sure that these are written in a country where people will use the application to be developed. You may hire a domestic technical writer to eliminate language and culture differences. Check if the initial requirements match the design prototype. Ask your vendor for an SRS documentation. In addition, you can engage an independent resource to review the document. Don’t wait until the end of the project to review the documents containing information about test cases, bug fixes, retrospectives, etc.
5 Ways to Successful Outsourcing
Focus on Goals
Allow your outsourcing partner to implement their own way of working. Trust that they are the ones who want what’s best for your business. Concentrate on what you want to achieve, and not how you want it to be done.
It is important that you look for someone with knowledge and expertise who will always try to deliver software developed according to industry’s best practices. Look for outsourcers with vast expertise; who have similar goals and will understand your business.
No matter how good your vendor company is and no matter how much expertise they have, you still need to stay involved, because nobody knows your business as well as you do. Your commitment can have tangible effects on the final product.
A clear business agreement is crucial to successful outsourcing. Contracts must reflect what was agreed on during the negotiations — specify the scope of the project and focus on the business outcomes that both sides want to achieve.
Clients must clearly express their expectations; this will empower the supplier to deliver the best services. Be specific about your project objectives.
Step-by-Step Guide on How to Hire Offshore Developers
“Find a developer and do not go broke” is the task that faces all IT startups and other kinds of businesses. With recruiting resources, you can drown in beautiful resumés of candidates with minimal experience, while intelligent experts either start up themselves or ask for big money. For information on how to hire offshore developers, where to look for the right specialists, what to ask at the interview, and when it is worthwhile to outsource tasks, keep reading our guide.
Step 1 - Place the information about the vacancy
Finding a qualified programmer is a different task than finding a UI designer or a project manager. When hiring sales employees, their experience is clear in the process of primary communication, whereas it is simply impossible to understand the level of programmers without rigorous testing. You will need to place information about vacancies on large portals and on other industry sites containing resumé databases.
Step 2 - Filter resumés
On global resources, it takes a lot of time to search for the right specialists and filter the resumé. Social networks can help — friends of friends always find the right people. You can publish in thematic groups — it works. You can get about 20 resumés with proposals in a week, but in most cases, these are either people with no experience or programmers who made one application and imagined themselves as gurus.
Step 3 - Check out your candidate’s portfolio
As for the portfolio, you must pay attention to the completed projects. Often, there are candidates with a huge number of languages and platforms listed in the resumé or proposal, but with a low instance of completed projects. At the same time, there can be a large number of developers who are interested only in the languages and tools they use and not the results from their own work. Often, these candidates change jobs every year, jumping from startup to startup.
Step 4 - Hold an interview
If you like the resumé, invite the programmer for an interview. It can take place in several stages: emailing, online communication with a group of technical specialists during which they ask the candidate questions about the development process, experience, and technical knowledge, and, after that, face-to-face meetings.
Questions at the interview depend on what is expected of the candidate in a particular position. It’s better to ask basic questions to check the overall level of the candidate, and the test task should be difficult in order to check the quality of the code.
Step 5 - Sort out the candidates
Every interview yields results and helps weed out an enormous number of candidates. A lot of professional programmers who received decent wages for knowing a particular language or platform often don’t know the most basic things. This is a potential problem affecting application security, performance, and code quality right from the start of development, which makes application support difficult and costly in the future. The most basic questions about security, possibilities, structures of a language, and patterns of object-oriented programming are often enough to understand the level of a candidate.
Outsourcing is good for projects with well-structured requirements when you know what you actually want to get. Before hiring offshore developers, you should weigh all the pros and cons, review all the terms and conditions of cooperating with the remote teams, and consider all the risks and ways to avoid them. In our guide, we offer a five-step process to hire the right vendor. If you still have any doubts or need any recommendations on how to make the process easier, feel free to ask us.