Starting a software development project is challenging; if you do not pay attention, your costs may exceed the revenue. If you need in-house expertise to complete the project, consider doing business with an offshore software development company. Outsourcing has become highly popular in the last decade which is why finding an outsourcing company should be easy. 

With the help of offshore outsourcing, you can get access to a global pool of talent. In this blog post, we will go through the major challenges and opportunities in offshore software development. 

Major Challenges of offshore outsourcing

Offshore outsourcing has become popular but it does have its challenges which can be mitigated if you understand them in depth. 

  • Unexpected costs

One of the major reasons that people outsource their projects is to cut costs. Most people assume that offshore outsourcing is a more economical option. Sometimes you may have to extend the budget for good output. If the outsourcing company has high-level executives and technology, they are not going to be a cheap option. 

The challenge lies in outsourcing your project successfully while still saving money. 

  • Data Privacy

Another misconception about offshore software development is that your company’s personal details are at risk while dealing with an offshore company. You should not make any assumptions as dealing with any offshore software development requires a pact. This pact ensures the security of your intellectual property. 

This type of pact is called a Non-Disclosure Agreement which restricts both parties to leak any type of information about the other organization. It is a myth that dealing with IT outsourcing companies will lead to data leaks. Since whenever you deal with a company that provides outsourcing services, you will have to sign an NDA. This contract takes care of all the concerns. You can be sure that none of the IT outsourcing companies can leak your information. 

Not all companies are the same but a decent outsourcing company will follow the contract strictly without any need for interference from your side. Of course, you will have to do the same. You cannot leak any information about the internal functioning of the outsourcing company. The challenge is that people assume the worst about offshore outsourcing before getting to know the details.  

  • Quality standards are not upto the mark

Businesses are attracted towards offshore software development because they think that it can bring down the cost of labour for them as they no longer have the need of assembling an in-house team. The problem with this is that it is extremely difficult to ensure that a level of quality is maintained throughout the entire process. 

You cannot entirely know how professional a team is because you have not even met them in person. IT outsourcing companies can look good on paper but they may have ineffectual management which can lead to project failure. 

One of the main reasons that businesses do not choose outsourcing services is because they have doubts about the offshore team. This is true if the project is extremely important for the business. They may invest in an in-house team and monitor the project more closely instead of investing in outsourcing services. 

  • Differences in culture

If you are outsourcing your project to a company that is located at a completely different location in the globe. Then their team is supposed to be different from yours which opens many cultural barriers. These IT outsourcing companies have different cultures which may affect their policies. While the world is connected with the English language, there are many problems like accent and punctuation. 

Team meetings can be difficult if it is difficult to understand what the other party is saying. Other than that, the outsourcing company may have a different leave structure. This means that they are not working on days when your team is at work or they are working on days when you are on leave. 

While the internet makes us feel globally connected. It is one thing to form an acquaintance and another to successfully complete a project with a team that has a totally different culture and language. 

It can be done but it is definitely a challenge. 

  • Communication

If you decide to go with an offshore software development company, you are going to have to come up with an effective method of communication. Because you cannot visit the company physically to ensure that your offshore software development is going well.  You should ensure that each of the IT outsourcing companies has a proven track record of being transparent with their customers. Businesses that provide outsourcing services should be efficient in using communication apps which makes project management easier. 

Technology has paved the way for applications that make it easier for you to monitor the progress of your entire project. Applications like Skype allow you to communicate with anyone around the globe. Many other project management applications also exist to tackle the challenge of effective execution. 

  • Lack of technical knowledge

An offshore software development company boasts about its team’s technical knowledge. However, you can only know if the claims were true after the project starts. There have been cases in the past where offshore teams actually didn’t have much technical knowledge. 

While it is a good idea to outsource a project, you need to set up a method to evaluate the technical skills of the offshore software development company. 

You should also know about the leading practices in software development and if the offshore firm follows these practices or not. Overall, you need to strictly evaluate a firm before you fall for its sweet words. 

  • Legislation Issues

Many businesses want to do cross-trading and expand their global presence. To do that, they need to follow all the rights of confidentiality, liability, data protection, and regulation compliance. Some countries have a data protection act like Europe has GDPR which protects their data from leakage to any other country. The European countries are not open to cross-border trading. With this understanding, you should contact an offshore software development company that knows these laws and abides by them. 

  • Time zone differences

One of the major issues that come to mind while thinking about working with a distant company is the time zone difference. When their team will be at the office, your team will be resting and vice versa. So, how will you effectively collaborate and communicate?

The issue can only be solved if your partner is ready to dedicate a team to the night shift. If everything goes business as usual, then communication will keep getting delayed. Your emails or communication will be received by them during the night and so on. This will result in a significant delay in finishing your project. 

While many offshore outsourcing companies have dedicated nightshift teams, you should always be clear about this from the start. You cannot assume that they have a night shift team and that your project will be allocated to that team. 

From the beginning, be clear that you want a dedicated nightshift team and the time difference will not matter anymore. 

Benefits of offshore software development

If you have outsourced your project to an offshore IT firm, you face many challenges, but you also stand to reap many benefits from such an action.

  • Lower costs

Lower development expenses are achieved by hiring experts in countries that have lower living costs. This way, you can hire the top talent and still save the bucks. 

The average base pay for a US-based software engineer is $1,13,729 per year. 

Whereas, the average base pay for an Indian software engineer is $8558.55 per year. 

So, it will be much cheaper to form a team of highly skilled India-based software engineers without making sacrifices for the project’s quality. 

  • Scalability

Having a huge staff of engineers without knowing if your project will succeed or not is risky. That’s why offshore outsourcing always works well for startups. They can choose the expertise, the number of developers, and the partnership duration. When you see how your business fares, you can upscale or downscale accordingly. This gets difficult if you have an in-house team of developers working for you. Startups are more scalable in the beginning if they outsource a large number of tasks. 

  • Focusing on business

Investing in outsourcing services helps the founders of a business focus on the core business model and objectives. Now, they do not have to waste their time learning a bunch of technical skills. Truth is that a lot of expertise is needed to develop a fully functional application. It is impossible for founders to learn these techniques and apply them on the first try. Using outsourcing services is always the safer option! As a founder, you can now focus on the core product or different aspects of marketing the product.  

How to hire the best offshore software developers?

By now it is clear that offshore outsourcing is challenging and not easy. However, if it is done correctly, your business will reap the benefits. It all boils down to hiring the right developers or choosing the right offshore IT organization. How can you ensure that you make the right choice? 

Take these things into consideration if you ever have to make such a choice. 

  • Experience

Anyone can claim to be an industry expert, but you should only do business with firms that have client reviews to back this up. If the firm is filled with professionals, they will take care of everything for you and all you have to do is effectively communicate your needs. 

  • Technology

Does the firm has expertise in any specific technology? There are many generalist IT companies out there. The truth is that every organization has a strong suit, even if they do not know about it. You should move forward with companies that know where they excel. A jack of all trades is a master of none, you don’t want to move forward with a mediocre IT company. 

  • Development cost

It is necessary to find an outsourcing firm that provides a suitable quote. The quote should not be too high as it would cancel out the benefit of outsourcing. On the other hand, if the quote is too low, then you will pay for it with bad quality. You should do business with a partner that sends you a reasonable quote for the services. 

  • Commitment

It is necessary to find firms that are committed to your vision. However, organizations that say yes to everything you ask pose a serious threat. It often means that they will fail to deliver on multiple fronts. You should seek organizations that challenge your ideas and make you think in a different direction. With such companies, your business and project will truly grow! 

  • Time and Process

Building software is a complicated process which takes several months. It is necessary to have a clear timeline for the project. This way, you will know if you are ahead of the schedule or falling behind. If you are falling behind, you can communicate your problems with the offshore team and they can escalate the process. 

You need a team that has done this multiple times and they will not have a problem delivering you excellent software on schedule.

  • Ownership

You should ensure that the IP right remains yours. This way you can take the project to some other firm if the current firm is disappointing you. Other than that, you also need to look at the code lock-in terms. Ideally, the code should easily be transferred to you, once it is completed. All these steps ensure that you have ownership over the project. This should make you feel safe while outsourcing a critical project to an offshore firm. 


Most businesses know that they cannot do everything by themselves. That’s why outsourcing critical services have become the trend these days. You can benefit from offshore outsourcing by gaining access to technological expertise not available locally, cutting costs, and getting your product in the market quickly. In conclusion, outsourcing software development to an offshore firm can be a boon for your company. However, you need to adopt the right strategies to get the expected outcome.