What is Offshore Software Development?

Offshore Software Development refers to the process where an organization hires a dedicated software development team from another country to work on a project. This team handles tasks like software product development, custom software solutions, and more, functioning similarly to an onshore team, but operating from a different location.

Additionally, it's important to understand the concept of an Offshore Development Center when discussing Offshore Software Development . Offshore Development Centers are companies or organizations that provide software development teams to international businesses.

Offshore Software Development is a popular model in the IT industry, similar to the outsourcing model. For example, my company is based in the US and hires a company in Vietnam to develop and maintain their web app. In this case, the US company refers to the company in Vietnam as its Offshore Development Center. While the company in Vietnam acts as an outsourcing partner, handling software projects for the US company.

It can be said that Offshore Software Development is gaining increasing attention from CTOs and being widely adopted in their businesses. According to a study by Deloitte, 70% of companies use Offshore Software Development services to cut costs. Beyond reducing operational expenses, CTOs also reap numerous other benefits.

Differentiating Between IT Outsourcing Models: Onshore, Nearshore, and Offshore

Offshore Software Development is a popular solution for reducing project costs while quickly accessing software development talent. However, offshore outsourcing is just one of several IT outsourcing models. You may also encounter onshore and nearshore models.

• Onshore means that the company and the outsourced development team are located in the same country (e.g., a US business outsourcing software development within Silicon Valley or to another city like San Francisco).

• Nearshore refers to hiring a development team in a neighboring country or within the same continent. This model provides a balance between the proximity of onshore and the cost savings of offshore.

• Offshore occurs when the company and the development team are located on different continents. And it offers the greatest cost savings but with potential time zone and communication challenges.

With these three models, choosing the right option depends on your project needs, budget, and the level of collaboration required.

Offshore Software Development Benefits

In this article, we’ll focus on the offshore software development model. As mentioned earlier, the biggest advantages Offshore Software Development offers are cost optimization and quick access to talented developers. Let’s take a closer look at the specific benefits:

• Access to Skilled Developers:

The current shortage of tech talent can be a significant challenge. Offshore software development allows you to tap into talent-rich countries with abundant, well-trained IT professionals who specialize in various technologies. These developers are often adaptable, dynamic, and eager to learn new skills, making them a perfect fit for diverse project needs.

• Reduced Operational Costs:

Hiring and training in-house experts requires substantial investment in recruitment, salaries, and infrastructure such as licensed software and hardware. Offshore software development helps cut down on these expenses, saving on office space, infrastructure, and labor costs. In fact, it’s estimated that total project costs can be reduced by up to 30%. Offshore Development Centers typically provide access to affordable labor and already have the necessary resources and infrastructure in place, significantly lowering costs.

• Faster Project Delivery:

Developers from Offshore Development Centers are often experienced professionals who can expedite project timelines. They closely monitor the development process and quickly address any issues that arise, ensuring minimal risks during the project build and delivering high-quality products.

• Focus on Core Activities:

By outsourcing software development, businesses can focus on their core activities. Instead of managing a large internal development team, Offshore Software Development helps to reduce internal pressures. Additionally, working with an offshore team gives you access to new expertise, as overseas partners bring valuable knowledge and experience that your business may lack.

Challenges

While Offshore Software Development offers many benefits, it also presents some notable challenges. The distance between your company and the offshore team can introduce issues. Here are some specific challenges to consider:

• Cultural Differences: Language barriers can lead to miscommunication, delays, and unmet expectations. Additionally, differences in work styles and problem-solving approaches across countries may cause conflicts that hinder collaboration.

• Time Zones & Distance: Working across different time zones can complicate scheduling meetings, exchanging information, and addressing issues promptly.

• Team Management: Effectively managing a remote team requires robust project management tools and strategies to ensure smooth collaboration and accountability.

Proper planning and proactive solutions are key to overcoming these challenges. 

Factors to consider when choosing an offshore center

Choosing an offshore development center is an important decision for your business. To ensure the success of your project, you need to carefully consider the following factors:

• Human resource quality

Human resource quality is a core factor that determines the success of a project. You need to carefully consider whether your team members have the necessary professional skills and use the right technology for your project. By reviewing the CVs of your team members and interviewing them personally, you can more objectively assess their experience and professional skills.

• Technology and facilities

The next factor that you need to consider when choosing an offshore software outsourcing center is technology and facilities. This will directly affect the efficiency, quality and security of your project. Does the offshore development center use the core technologies that are suitable for your project? Do offshore development centers have online meeting rooms to facilitate communication and remote working? Such questions should be considered carefully. You can also ask them for ISO certifications, which will give you more confidence in the quality of their services.

• Reputation and Experience

Always check references, past clients, and completed projects of your potential offshore software development partner. This information will give you insight into the performance of the offshore development center, the style of the workflow, and the quality of the software product.

• Security Capabilities

In an increasingly technology-dependent world, cybersecurity is more important than ever. Make sure the offshore development center you choose has up-to-date security protocols to keep all your data and software products safe. This is true regardless of the software development model you choose.

Case studies of Offshore Software Development at BHSoft: SNS Data Analysis System  

BHSoft, a leading software development company in Vietnam with over 10 years of experience, is a trusted Offshore Development Center for global businesses. 

One of our notable projects was a collaboration with a Japanese firm specializing in manufacturing solutions. This client provides advanced CAD-based automated design systems, structural analysis tools for construction and civil engineering, and environmental assessment simulations, among other services.

In this project, the Japanese firm needs to develop an SNS (social network service) data analysis system to predict and prepare for natural disasters based on social media data, specifically from Twitter. 

As they wanted to focus on their core business, they opted to outsource the web development to an external partner. Among many potential Offshore Development Centers, they chose BHSoft to handle this crucial task.

The main challenge was managing the massive volume of Twitter data, which slowed down the system. However, with our extensive experience in GIS and big data analytics, BHSoft quickly identified a solution. We optimized the Twitter data, ensuring the project ran smoothly, and the system operated efficiently, providing the client with a seamless experience.

Following the project, this client has remained a loyal partner of BHSoft for an extended period and plans to continue our collaboration. They expressed high satisfaction with BHSoft’s services. They noted that the system runs efficiently, is user-friendly, and that our Offshore Software Development team has displayed great professionalism.

The SNS Data Analysis System handles large volumes of data without overloading, enabling the client to gather critical data for more accurate natural disaster predictions. By working with BHSoft, the client has significantly reduced operational costs and seen a revenue increase of approximately 30% compared to the same period last year.

Why choose the Offshore Development Center at BHSoft?

We hope this article has provided valuable insights into Offshore Software Development. If you have any questions or need further assistance, don't hesitate to contact us.

BHSoft is proud to be one of Vietnam's leading software development companies, committed to helping clients achieve their business goals with top-tier digital products. With a team that is experienced, dedicated, and professional, we have earned the trust of businesses around the world.