HIRE OFFSHORE SOFTWARE DEVELOPERS: HOW TO DO IT THE RIGHT WAY?
When it comes to custom software development, shortage of skilled IT professionals and high development costs are among the prominent problems that companies encounter while trying to kick-start their projects. As a solution, companies now turn to outsource by hiring offshore software developers to work on their projects.
Yet, just like any other business endeavor, outsourcing involves risks. In this article, we examine both the advantages and risks of hiring offshore developers, so that companies, especially outsourcing first-timers, can hire the right software vendors for their projects.
What Are the Common IT Projects and Services to Outsource in 2019-2020?
Below is the list of sought-after outsourcing services that business organizations frequently acquire from offshore software vendors:
- Custom software development
- Software testing outsourcing and maintenance services
- IT business consulting
- AI & Machine Learning Consulting & Solutions Development
- Training and consulting
At TP&P Technology – Leading Software Development Company in Vietnam, we offer a range of services including custom software development, business solutions consulting (CRM, ERP), and other enterprise solutions for diverse industries.
With experience completing numerous projects for clients worldwide and extensive domain knowledge, our teams of Vietnam offshore developers are able to work on a wide variety of projects that required the latest advanced technologies or other popular tech balancing between your particular business requirements, budget, and quality.
Why hire offshore developers?
According to a report by marketreportsworld.com, the global IT Outsourcing market is projected to reach a CAGR of 4.42% during the period from 2019 – 2022. Such statistic illustrates a steady and growing demand for IT outsourcing. Among the reasons that lead businesses to outsource, cost-saving always comes up as the key factor that drives outsourcing. For example, as of December 2019, the gap between the salary of software developers in the U.S. (avg. $85,229 per annum) and in Vietnam (avg. of 462,000,000 VND, equivalent to $19,954), which shows a staggering contrast of more than 400% difference.
For overall project development costs, all offshore IT outsourcing services providers offer a number of choices in terms of cooperation models (e.g. fixed cost, offshore development center, time and material, etc.) for clients to choose from. To successfully outsource and save costs, it’s critical that companies choose the best suitable engagement model, matching all their project unique requirements.
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Nevertheless, product quality still plays an important factor in offshore IT outsourcing, and sometimes cheap might not actually be the best. As mentioned before, hiring offshore developers involve risks, let’s consider all of the benefits and drawbacks of offshore IT outsourcing:
Critical Advantages of Hiring Offshore Developers
According to a survey by Deloitte in 2018, cost-saving is an important criterion for outsourcing, however, in addition to cost – IT outsourcing, when done right, can offer various competitive advantages by transforming the way business organizations operate, and optimize the working processes to become more agile, and efficient.
Below are the key benefits of hiring an offshore software vendor:
Lower Development Cost
Cost-saving is among the most attractive benefits that companies enjoy when outsourcing their software development project. As mentioned previously, due to the significant gap in salary, on-shore companies in western countries can hire offshore developers in emerging markets (e.g. Vietnam, Malaysia, Philippines, etc.) to do the same IT work at much lower rates.
Access to the large pool of talents
In addition to lower costs, organizations in the US and other countries can hire offshore programmers to quickly fill in the skills gap found in emerging technologies (e.g. Blockchain, Machine Learning, etc.) due to the shortage of local IT talents.
In recent years, Vietnam arise as an attractive IT outsourcing destination for business organizations worldwide thanks to an abundance of skilled developers who are young, dynamic, and well-versed in a wide range of technologies.
Outsourcing to offshore IT vendors allows companies to focus on their core business activities, by delegating their non-competencies IT tasks to offshore developers, ultimately boosting productivity.
Speed up Time-to-Market
By having access to a great pool of talented developers on a wide range of technologies, companies can quickly extend their development team capacity, thus speeding up the development process and shortening the time to deliver their product to end-users.
In addition, an offshore company can provide other kinds of outsourcing services such as BPO (business process outsourcing), IT managed services, Administrative tasks, and more. By outsourcing those trivial tasks, businesses can free up their time and resources for other activities.
Drawbacks of working with offshore programmers
When it comes to offshore software development outsourcing, along with various benefits also come disadvantages which many companies might encounter when working with the offshore development team
Among the most prominent barriers is cultural difference, including the English language, which leads to communication issues blocking the progress of the development project.
The solution to counter this issue is to conduct a direct interview with offshore developers to test their English, communication skills and see if they are the right fit for your organization.
Sometimes, it’s best to conduct on-site visits to verify the facility as well as develop the capacity of the offshore companies. This leads to extra costs and time for traveling. To make it worthwhile and efficient, companies should have a shortlist of the potential vendors so that they can visit all at once, saving time and costs.
For many projects that require advanced or high-level technologies, it is important to make sure that the offshore development team is well-equipped with the necessary tools and experience in the technologies needed for the final software product.
Other factors such as quality standards, project management, documentation, and software development methodologies are also some of the typical problems found in outsourcing.
Consider Legal Aspects When Working with an Offshore Team
With outsourcing, companies are expected to hand over a part of the control of their business process. This includes business data and confidential information which needs to be stored and kept secure according to relevant laws and regulations (e.g. GDPR).
Furthermore, many software development projects in particular industries such as Healthcare or Finance need to comply with certain regulations, for example, HIPAA (healthcare), and eKYC (Finance, Fintech), as well as others. And, equally important is the consideration of intellectual property and trade secret protection.
Hence, when hiring an offshore team, companies need to thoroughly plan for a sound legal contract to protect themselves from any legal complications which may arise. And before working on your project, companies should double-check on the necessary regulations with the offshore team of business analysts and developers, to make sure they are capable of developing the project complying with regulations.
Other factors which needs thorough consideration is the retention rates for employees of the outsourcing company. A high turnover rate may lead to other issues in the later stages of outsourcing for both vendors and their clients. Specifically, client companies may not want their project impeded by a lack of specialists, and new replacement could somehow reshape the entire project. Thus, to avoid such issues, companies should conduct research on this before starting their project.
Improper project management may derail your development project
No matter how skilled and experienced the offshore team and developers are, without proper management – a development project could be inclined to delay and derail. There are many factors that could lead to failures including: poor communications, inadequate planning and management, lack of expertise and experience etc.
Here are examples of reasons which may lead to project failure:
- Not clearly identify requirements: inadequate project planning and software requirements specifications
- Lack of communication: infrequent meetings and online calls, leading to irregular progress reports and status updates.
- High staffs turnover rates
Those are among the common reasons why software development projects delay and fail. Due to the geographical distance and time difference between offshore countries and clients, it’s crucial that client companies involve in the task of project management. This allows both the clients and vendor to keep up with project progress and rectify any potential issues before they arise.
How to work with offshore developers the right way: 5 Tips for Successful Outsourcing
#1 Carefully identify project goals
Without detailed specifics on what objectives you’re trying to achieve from the development project, the offshore development team wouldn’t know how to implement their way of achieving your project goal. Thus, focus on clearly identifying the goal to enable the offshore development team stay on the right track completing the project.
#2 Search for Expertise
The next is to look for the offshore vendor with domain knowledge and expertise in the technologies and tools required of your software product platform. Consider the vendors with strong expertise in a wide range of technologies and who understand the particular industry requirement of your business.
#3 Involve in project management
Again, as mentioned before, no matter how capable and experienced the offshore development team are, companies will still play an active role and involve in the development process. A strong commitment can make the development process go smoothly and an issues arise can be rectified on-time, before it’s becoming too big.
#4 Consider Contract Details
An outsourcing contract should reflect what was agreed beforehand in terms of project scope and requirements as well as other compliances requirements as explained above.
Proper communication provides the necessary feedback and keep both parties on the same page regarding project status and development. Frequent communication, thus, empower the vendor to strive for the best of their abilities providing the best of services.
Hiring Freelance Offshore Developers
Depends on project scope and budget, sometimes hiring freelance offshore developers could be a more suitable solution compared to employing the services provided by software companies. For many small IT tasks to a small-sized project, a team of skilled freelance offshore developers can pretty much provide services with same quality as an offshore software company. Yet, similar to hiring an offshore development team, to hire the right offshore freelancers, businesses still have to go through the same process. Here are the steps to do to hire offshore freelancer
Steps to hire offshore developers
Step 1 – Shortlist the potential candidates
Hiring the right freelance offshore programmer means that you want to hire candidates whose professional IT skills (as well as personality) are the right fit for your project. Ideally, they should be well-versed in the technologies required and also possess experience by having worked on projects similar to yours. To do so, place your jobs ads on popular industry sites with a large database of verified offshore freelancers to attract the best candidates.
Step 2 – Study portfolio and past projects
To verify their experience, it’s essential that you study the portfolio of their past projects to see what their track records are like. Better yet, ask to have a test run on the product to see the look and feel of the project (if possible). Capable freelancers will not hesitate to show you their portfolio and let you know about the technologies they are capable of working with.
Step 3 – Conduct interviews
The next step is to conduct interviews which can be done via online channels such as calls, or video conferencing. During interviews, you should ask questions to verify the freelancers’ experience, technical know-how, and development process. And if you are a non-technical person, ask somebody else with technical know-how to help you do so.
In particular, the interviewing questions should be based on what is required of the candidate for the particular position. For starters, you can ask basic questions to have a general idea about the candidates and their proficiency level. Questions about other test tasks should be done in detail to verify their programming skills.
Offshore IT outsourcing, when done right, can provide many benefits to businesses. Yet, in order to do it right, companies must have a well-thought-out process and clearly structure their requirements with detailed objectives and timelines. All in all, this requires careful planning which takes time and effort. When hiring offshore developers, companies should carefully consider all the pros and cons, and evaluate the contract terms to avoid legal complications, as well as other potential risks that might occur during outsourcing.
In case you still have any questions or doubts about how to effectively carry out outsourcing, contact TP&P Technology - A leading Software Outsourcing Company in Vietnam today.