A complete guide to Offshore Software Development

Offshore software development is a valuable resource for companies looking to expand their technical team or launch new development projects. In 2021, the market for offshore software development reached $526.6 billion and is expected to continue growing in the future.

To give you a better sense of what offshore software development is, we have put together a comprehensive guide. This guide provides an understanding of what offshore development entails, how it works, its benefits and drawbacks, the countries that are commonly used for offshore software development, and the associated costs.

What is Offshore Software Development?

Offshore software development is a business process outsourcing method where a company outsourced some or all of its software development to developers located in another country.

For this, companies either hire individual freelance developers or an entire development team through a dedicated company. Offshore software development companies typically have teams of software engineers and developers that can serve as an extension of a business.

Whether for a specific project or on an ongoing basis, offshore software development is an efficient way to quickly scale without the need of hiring and training employees.

How is Offshore Software Development different from Onshore Development?

The difference between onshore and offshore development is quite simple: 

  • Onshore software development refers to the practice of hiring contractors that are based in the same country as the hiring company. This results in similar business practices, hiring costs, and data policies. 
  • Offshore software development companies are based in a different country, which is often what enables them to offer lower costs. 

For a more detailed overview, read our blog post on onshore versus offshore development.

The benefits of Offshore Software Development

There are a number of proven benefits to offshore software development:

1. Reduced costs

Outsourcing software development to offshore teams can significantly reduce the cost of hiring the right people for many companies in North America and Western Europe.

Most offshore software development companies are located in countries with lower costs of living and favorable currency exchange rates, which helps save money.

Additionally, by outsourcing this function, companies do not have to pay for recruiting, employee benefits, or any holiday time. 

2. Access to an affordable global talent pool

The Western hemisphere is seeing a severe shortage of tech talent, and the current economic downturn in the industry also means that there is not enough budget to hire local professionals.

Offshore software development companies offer a global talent pool of dedicated professionals from countries that are investing in building technical expertise through educational programs.

3. It’s easier to scale up (and down)

The ability to scale quickly to meet customer needs is a crucial factor for success in the tech industry. Traditional hiring methods can make this difficult to achieve.

However, by working with an offshore software development company, companies can rapidly assemble a team of professionals who are already accustomed to working together, enabling them to start working on a project right away.

Additionally, when the project is complete, the team can be easily disassembled.

4. You get more time to focus on your core capabilities

By outsourcing a project or function to an offshore team, companies can focus on their project’s core capabilities and be more strategic in their efforts. This frees up time to develop the product roadmap, rather than getting bogged down in the operational details.

The challenges of Offshore Software Development

Offshore development is a common practice among software companies, but it can also come with certain challenges:

Time zone differences

When working with teams located in different time zones, you may need to rely on asynchronous communication, which can take some time to adjust to. However, once a good rhythm is established, the process should feel smooth.

Cultural influences 

Another aspect to consider is that different countries may have different working and communication styles, which you’ll need to adjust to, depending on where you choose to outsource your software development.

Less control over hiring

Some offshore providers may try to increase their profit margin by hiring lower-priced engineers, which can negatively impact the quality of their work. It is important to find a provider that can be trusted.

To learn more, you can visit the article on these challenges of outsourcing software development offshore and how to tackle them.

When is the best time to get Offshore Software Development? 

The best time to hire an offshore software developer depends on your business needs and requirements. However, it may be beneficial to consider hiring an outside team if:

  • Your projects need specific expertise that you don’t have in-house, consider hiring offshore talents.
  • Your startup needs to quickly scale its technical capabilities.
  • You want to add new features to your software without disrupting the current tasks of your in-house developers.
  • You have a limited budget but still want to compete in the market, by hiring teams from countries like Nepal and India, where you can access top-notch resources at a low cost.

Different steps involved in Offshore Software Development

Here are the basics steps to follow when starting with offshore software development teams: 

  1. Identify your requirements: Determine the reason for needing offshore support, the type of expertise required, and how the team will need to work with your team.
  2. Ask for recommendations: Seek advice from people who have worked with an offshore team and find out if they would recommend them.
  3. Search trusted publications: Check online platforms and review sites for crowdsourced recommendations on reliable and skilled software development providers in your area of interest. 
  4. Choose your preferred region and time zone: Ideally, you want to be working with a team where there is some overlap in working hours. This will make it easier for you to be available if they have any questions, and for you to have direct contact with the team as you provide feedback.
  5. Prepare a shortlist of candidates: Narrow down your options to two or three companies to interview. 
  6. Conduct interviews: This will be an opportunity to ask any questions you have about the type of work they’ve done in the past, how they work with clients, and what their typical timeline for a project is. You can follow this with a more technical conversation to ensure the team you want to work with understands your tech stack. 
  7. Sign the contract. 

With these 7 steps, you can get started on offshore software development. In fact, to stimulate the process you can try building your own offshore development team by answering a few questions below and get a downloadable report to reference.

Step 1 of 6
Which stage is your project in?
Step 2 of 6
What do you need help with?
Step 3 of 6
What’s your tech stack?

This might not be a comprehensive list; we just need to understand the basics of how your company operates.





*Select all that apply
Step 4 of 6
What talent would you like to add to your team?


Step 5 of 6
What does your current dev team look like?

Help us understand the best way to fit into your current organization.





Step 6 of 6
We’re matching our talent pool to your needs – your team sheet will be ready in a minute.

Who should we send it to?

Want someone else from your team to get this report?

The best countries for outsourcing Software Development 

There are various countries worldwide that offer offshore software development services at competitive rates. Five of the 10 most popular countries for this type of work are:

Nepal 🇳🇵

  • Nepal has a comparatively low cost of labor, making outsourced software development relatively inexpensive at an average rate of $25 to $40 per hour.
  • The country also recently revitalized its education systems to prioritize digital skill sets. More than 5,000 university graduates go into the tech and business process outsourcing sectors every year. 

India 🇮🇳

  • India has one of the largest populations in the world, and the number of outsourcing software development locations is proportional.
  • Their education system focuses extensively on sciences and mathematics, with 2.6 million STEM graduates every year. The average rates span between $25 and $50 per hour.

Ukraine 🇺🇦

  • While in the midst of regional conflict, Ukraine is still one of the most popular countries for offshore software development.
  • They blend affordable rates ($30 to $55 per hour) with a wealth of expertise in many software areas and a high number of English speakers. 

Poland 🇵🇱

  • Competing with other countries in the region, Poland has a strong software landscape, with over 100 companies dedicated to software development.
  • The country is a member of multiple organizations (including NATO, WTO, and EU), which ensure that data is shared and stored safely. Rates span between $35 and $55 per hour.

Argentina 🇦🇷

  • Largely serving North America, Argentina is one of the most educated countries in Latin America, with a budding software engineering space.
  • Companies in the country claim to have high retention rates, making them reliable partners. Rates range between $30 and $55 per hour.

5 tips for hiring Offshore Software Developers

Here are 5 top tips for making sure you get it right when working with offshore software developers:

  1. Clearly define your goals and set clear expectations and parameters for the project to help the offshore team stay on track.
  2. Share any necessary documentation with the team in a timely manner.
  3. Work with the team to create a realistic project roadmap with specific milestones and a detailed list of requirements and specifications. 
  4. Establish clear communication protocols and tools, including how to handle time zone differences and asynchronous communication. 
  5. Provide timely and actionable feedback to keep the project on track.  

The cost of Offshore Software Development 

The cost of offshore software development can range from approximately $25 to $200 per hour. However, rates will vary depending on several factors such as 

  • the location of the company
  • their technical expertise
  • the type of support they provide
  • the risk level associated with a particular project

Companies considering hiring offshore developers should review and compare rates while keeping in mind the services that are included in each offer.

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