Outsourcing IT Development Offshore – Perks and Challenges

If you’re ready to begin outsourcing IT development offshore, you’re not alone.

Deloitte’s 2024 Global Outsourcing Survey indicates that 96% of global businesses outsource services to a digital workforce. But before you join them, you’ll want to know what this service has to offer.

This guide is the perfect place to start.

What Is Offshore Outsourcing?

Many outsourcing terms are floating around, so you’d be forgiven for some confusion on what they all mean.

“Outsourcing” generally refers to the process of hiring teams from third-party companies to complete your projects. Within that umbrella, you can outsource teams onshore, nearshore, or offshore.

1. Onshore – With this model, you stick to your own borders and hire within the country. Though on the pricy side, it guarantees a shared language, shared culture, and shared legal practices.
2. Nearshore – Nearshore outsourcing casts the net a little further, working with resources from neighbouring countries. It’s a happy medium between onshore and offshore when it comes to time zone differences and overall cost.
3. Offshore – On the other end of the spectrum, outsourcing IT development offshore is a global affair. Your new team may come from anywhere in the world. That means you’ll encounter a range of language fluencies, service prices, and project workflows.

🔥 Hot tip! “Offshoring” on its own has yet another meaning: setting up a branch of your business’s operations in a different country. Rather than being a third-party resource, these offshore resources work under your brand.

Why Outsource IT Development to Offshore Companies

Businesses around the world have adopted the Global Delivery Model, a framework for outsourcing and offshoring IT functions. Having global resources not only allows for round-the-clock services but also unlocks a vast talent pool.

It’s a mutually beneficial arrangement, and here’s how it benefits you.

Wide Talent Pool

With outsourcing on the table, the world is your oyster. Instead of being limited to local or nearshore experts, you gain access to diverse talent. You can use this opportunity to fuel your projects with the specialized skillsets and insights of professionals who’ve worked globally.

What’s more, outsourcing IT development offshore gives you the freedom to be picky when you make your choice. There are so many options out there that you’re guaranteed to find a perfect match.

Scalability

One of the key features of outsourcing offshore is that you can scale your workforce at will, no strings attached.

Unlike permanent hires, outsourced teams typically work on a project-by-project basis. Therefore, even if you establish a long-term partnership, you can add or remove these resources at any time.

This kind of flexibility enables businesses to adapt to changing requirements without incurring recruitment and training costs.

💡 Check this out! If you’re looking for a fully scalable workforce, IT staff augmentation is another option. These resources are a middle ground between outsourcing and permanent hires.

Faster Delivery

Outsourcing to offshore IT specialists puts your software development in good hands in more ways than one. These teams have well-documented methodologies, efficient workflows, and an internal rapport. All of these features come together to create a streamlined development lifecycle.

So, you can expect a faster time to market when outsourcing IT development offshore.

🔥 Hot tip! If your business is a startup, this may be exactly the advantage you’re looking for. Outsourcing software development for startups helps you meet tight deadlines and makes up for limited resources.

Cost Efficiency

According to Forbes, companies can cut IT operational costs by up to 70% through outsourcing.

That’s especially true when outsourcing to regions like South Asia and Latin America, which have a lower cost of living. At no compromise to quality, you can cut down on development costs and set a higher budget for core business functions.

Risk Mitigation

One of the risks of onshore and nearshore outsourcing is putting all your eggs in one basket, so to speak.

Offshore outsourcing avoids the mistake of depending on too many resources in one location. This reduces the risk of local disruptions affecting all aspects of your business.

Challenges of Outsourcing IT Development Offshore

Unfortunately, offshore outsourcing isn’t all upsides. There are plenty of horror stories out there about companies that failed to communicate effectively or delivered subpar results.

But forewarned is forearmed. To make sure you don’t fall into the same trap, let’s look at the most common challenges you may face.

Lack of Innovation

When outsourcing IT development, the last thing you want is to end up with cookie-cutter custom software. But a company that can’t come up with original ideas and present fresh perspectives can’t build you a stand-out app.

A good development team will be proactive in brainstorming innovative features all the way through. The aim, after all, should be to deliver a competitive product – not simply meet a paycheck.

At DPL, our approach is founded on “delivering value that blows away customer expectations.” That means no bare-minimum results.

🔥 Hot tip! This challenge is often associated with outsourcing IT services at a fixed cost. While it can be done well, many companies offer it as a straightforward service that follows your specifications to the letter. So, consider first what engagement model matches your expectations.

Cultural Differences

DPL’s value-driven approach comes from the principles of Agile culture.

Development companies that don’t subscribe to this methodology or take its core values to heart may hesitate to take risks. But in the fast-paced tech world, that’s not a luxury you can afford. You’ll need a product that looks and feels one of a kind.

When DPL went from a traditional corporate structure to an Agile one, employees left in droves for familiar working conditions. Changing our business model was a big step – a risky one. But the gamble paid off. Today, our Agile culture stands out as one of the best in the region.

Poor Data Security

In a survey by UpCity, companies listed lack of confidentiality (9%) and data breaches (8%) as two major outsourcing challenges.

It can’t be helped: outsourcing IT services always involves sharing some company data. And if you aren’t careful, your data might end up in the wrong hands.

That’s why it’s so important to partner with a company that prioritizes the privacy and availability of your data. DPL is proud to hold ISO 27001 and ISO 27701 certifications, showing our commitment to data security.

Language Barrier

The same UpCity survey found that 21% of businesses had difficulty communicating with their vendor. Unfortunately, language barriers play a big role in this challenge. The result is often misunderstood requirements and unexpected deliverables.

DPL recognizes how problematic this can be. To combat this, we’ve invested in the Toastmasters International club and offer our team opportunities to travel and build connections. Communication is a soft skill we take seriously.

Identity Scams

One fraudulent business practice that has the potential to ruin your project is the identity scam. Companies will pay a select few experienced developers to appear in meetings with you. But behind the scenes, your project is being handled by a team of under-skilled resources.

Any reputable company will remain transparent at all times, and DPL is no different. You’ll have the chance to properly interview the entire team before you sign the contract. And that team will show up in and contribute to every weekly meeting.

Inspired to Begin Outsourcing Software Development?

You’ve found the right page: working with DPL is never a challenge.

We’ve been in the business of developing innovative software through IT staff augmentation for 20+ years. With our dedication to quality and continuous improvement at your disposal, your project is bound to be a winner.

Tell us about your project in the form below, and let’s get started.

💡 Want to learn more? Follow the link for a more in-depth guide on how to effectively outsource custom software development.