Jānis Blaus
Jānis Blaus
25 November, 2018

Advantages of outsourcing and offshore development

In previous articles, as we were covering outsourcing pricing guides and other outsourcing related topics; we quickly skimmed over the advantages of resorting to outsourcing the development of technical software projects and why to choose it over having an in-house software development team.

Financial advantages of having an offshore development center (ODC)

But, in all seriousness, this is a business decision you’re making here, you cannot just leave yourself to the whims of an article or two that you’ve read online, right? Well, we know that and as usual, we are already one step ahead of you in what you need. In this article, we are going to do an in-depth analysis as to why and how outsourcing software development processes can actually work better for your business future. And why you probably should consider having an offshore development center to handle either a part of or all the technical aspects of your software company.

Reducing the development costs has to come as the FIRST point

First of all, let’s break down the costs. We briefly explained that having one in-house developer does not simply cost the salary of this developer. There are more complicated costs that accompany hiring one developer; those costs range from insurance to tax details and you, as a business owner, are probably able to figure out the rest. So, without further talk, let’s get into the math. We have already covered the part on how to calculate how much hiring an in-house software developer actually costs in this article, so we will quickly go through the part that calculates the true cost of hiring a web developer. The short version of the equation is that the actual cost of hiring one software developer is about 2.7x the salary of that developer. So for example, if you’re hiring an in-house software developer who will make a $100.000 a year, this software developer will be adding about $270,000 total cost to your business. That is the first thing to keep in mind while you’re deciding whether to get an in-house team or resort to an offshore development center. On a side note, I do strongly recommend that you check the previous article I’m referring to here; it has some juicy stuff as well. So, without further ado, let’s get into the cost of outsourcing especially to an offshore development center. During this year, 2018, the income of a software developer in countries your business can outsource, which are mainly countries that have a developing economy, have gone up. However, it will surprise you how affordable, even with the raised salaries, these prices are. Eastern Europe countries, for example, are considered very well sources of low-cost high-quality when it comes to software development. For the purposes of our example here let’s examine two of the most famous Eastern European countries of providing software development outsourcing services, Poland and Ukraine. In those two countries, software developers make between 27,000 and 45,000 a year!  Can you imagine the reduced costs your business can achieve just by outsourcing the development of projects to an Eastern European software company or even have an entire offshore development center? And if that is still considered to be over your budget and what your company can afford in the current moment, you can always look east where outsourcing your software development process all the way to customer service is going to cost even less! In Asian countries like India and China, a software developer makes an average annual income of $7,000 and $27,000 respectively. What a shock, huh? But a good one, don’t deny it. Keep in mind that deciding to outsource individual projects will save you extra expenses as you will not even be paying entire salaries, merely the hours worked on your projects. If you decide to delegate the whole annoying process of development, testing, support, and customer service to an offshore development center in a country, the technical talents of this country will still provide better value for less cost. It’s a guaranteed win-win, my friend.

The non-financial benefits of offshore outsourcing

This part is not going to be as cut-clear as having solid numbers laid in front of your eyes; however, being a successful business owner is more about seeing behind the scene rather than just focusing on the numbers, that’s more of an accountant deal, not a businessman, right? We will point out a few points without much talking and detailing and then it’s up to you to do further contemplating what is best to do for your software company. I meant, it is your business after all.

Improved focus on the strong points of your business, allowing them to become the core of your software company, the thing that will lead to better surviving and growing chances for the company in a very competitive industry.

The ability to make use of facilities and resources that would have been too expensive in, say, Western Europe or North America.

The efficiency that comes by default with specialization will improve the quality of the entire software development process of your company. Meaning that, when the entire process is completely run by specialists, there will be less wasted time, less unfortunate incidents, and so on.

A better competitive advantage that will be added to your software development process since you will have the ability to add on or change the set of skills in your development team without extra costs or prolonged hiring process.   Anyways, these, of course, are only a few of the advantages of outsourcing or having an offshore software development center in a less costly country with the same, if not better, technical skills.

If you are a business owner that specializes in software development and you're starting to consider this solution for your business technical process, follow our blog. We have many other topics coming up on how to decide where to outsource and how to measure the technical skills of a team before deciding to hire it, and how to manage and deal with an offshore development center. So, stay tuned!

Latest from the Netcore hub

Guides, research, opinions and sometimes just some crazy tech rumbling.
Explore, comment and join the dicussions.