Outsourcing is not a new concept anymore. Many big companies are now subcontracting their production to smaller companies.
The main benefit is cost-saving??
Having your things manufactured by a small company always saves money. You can also avoid the hassles of hiring your staff. Today, contracting out the projects is a big thing among software development companies.
Offshore development is widespread now. The primary consideration here is money. There are many countries like India which offer developers at a much lower cost.
It means that you can get the same product developed at a much cheaper rate if the job is handed over to developers in these countries.
Apart from price, there are many other things that you have to consider when offshoring your projects.
What Is Offshore Development?
As the demand for Outsource App Development increases, there is a demand for more developers. As smaller companies are also looking to have their mobile apps, the cost has become a significant factor. Mobile application development companies are looking at ways to reduce cost and produce a cheaper product.
The term Offshore Development means that developers from other countries are developing the product. There are developers in many countries like India who charge much less. It will also make the product cheaper. It is a massive advantage for the mobile application development company.
There are many other processes that are outsourced to other countries apart from software development. Companies regularly outsource customer care, cold calling, data services, and other BPO and KPO work. It is much costlier to get these tasks done in the US or UK.
It is not just cost that prompts companies to outsource. Big companies can avoid the HR issues associated with employing their staff. There are time differences which are helpful in many ways. Getting the work done by outsourced companies will allow you to concentrate more on your core business.
Types of outsourcing ?
You can Outsource Mobile App Development projects to an individual developer or a developing company. Some companies outsource the whole project to contracting agencies while others only ask them to do a part of the project. You can also outsource a project to a team of developers, being managed by your Project Manager.
Externalization of the job to individual developers is not a good option. One person cannot complete a project. You need experts in different stages of the project.
Hence, it is better to hire remote developers or hand over the project to a development company.
Apart from offshore outsourcing, there are two other methods.
Nearshore outsourcing refers to giving your job to a company or developer in a country close to yours. For the USA, Outsourcing Development in Canada or Mexico can be called Nearshoring. Usually, the countries are in the same or nearby time zones.
The other method is onshore outsourcing. In this case, the company exists in the same country. Being a smaller entity, they will do the job at a lesser cost. This kind of offloading has the advantage of better control.
“The aspect of wanting more for less money is only part of the story. It’s more important that we are getting the talent that is the best in the world.”
– Daniel Marowitz,
head of global banking at Deutsche Bank
There will be no cultural or language differences. You can have a one-to-one discussion any time you want.
Let us recall what we know about outsourcing by now.
- The main advantage of Mobile App Outsourcing is a reduction in cost. Countries like India have developers who work at a much lesser price than the US or UK.
- It is being done in various areas apart from application development.
- It eliminates a lot of HR problems for big companies.
- Companies can concentrate on their core business when they outsource the development work.
- You can focus on Outsourcing Apps to individual developers or a company.
- The outposting can be for part or full project. You can also hire a team of developers and manage them.
- Externalization to single developers is not good practice as you require many other experts also to complete the app development.
- Outsourcing can be nearshoring or onshoring. Nearshoring is giving the project to countries near you and onshoring is handing over the project to other companies in your own country.
Advantages Of Outsourcing
- Outsource App Development Cost is 70% less compared to the cost when you do the job outside Europe or North America.
- You don’t have to make any investment for the new project when you outsource.
Shorter Development Time
- An outsourced Software Development company is dedicated to your work and will work round the clock.
- Application Development Outsourcing can reduce your time-to-market and get an edge over your competitors.
- External teams won’t have to face the internal distractions that in-house teams face. It saves a lot of time too.
Getting The Skills You Don’t Possess
- The offloading team can provide the skills that you lack in your in-house team.
- Mobile App Outsourcing Company can have a much faster growth without employing people with these skills.
- Offshore App Development team size won’t worry you. You can always add or reduce the subcontracting teams, which you cannot do with the in-house team.
- There is no need for spending time hiring and training your employees.
Excellent Talent Pool
- Externalization helps you to get the best talents for the job. You can select the experts that you want.
- Your Mobile Development Outsourcing company will have people who are experts in the project that you want to get done.
- You can also get a team that is familiar with the latest technological developments.
- When you hire your employees, you have to worry about compliance with rules regarding employment.
- IT Outsourcing Companies will take care of all the legal hassles associated with employing people.
Reduce Your Risks
- The in-house team may not have the required experience in the project you want to complete. That could pose a considerable risk.
- When contracting out the project, you can search and hire an IT Outsourcing Company that has a similar experience, thus reducing the risk of success of the project.
The Downside Of Outsourcing
- You can never be entirely sure that the quality of the product will be at par your demand.
- The projects they list in their portfolio could be their best ones, done by the best Outsource Mobile Application Development team. You may not get that best team for your project.
Language And Cultural Differences
- Software or app development needs close collaboration between your team and theOutsourcing Developers.
- Language and cultural differences could prove to be an obstacle in code collaboration.
- The time difference is a possibility in offshore development. It is not easy dealing with this.
- You, or the development team may have to work or to have live discussions at a time when you may not be at your productive best.
Before we decide that offloading is the best option for developing mobile applications, let us see the advantages and disadvantages of onsite development as well.
Onsite development is a process where you Hire Offshore Developers yourself. They will be your employees and work from your office.
Advantages Of Onsite Development
- The people who join your Outsourcing Development Company are convinced of your idea and will do everything to make it a success.
- Their future also depends on the success of the app and hence will put in all their efforts.
- As they are looking at a future with you, they are not likely to ditch the project halfway through.
Aware Of The Bigger Picture
- Developers who sit in your office know everything that is happening in the company. They are aware of the developments in other departments.
- You are always in touch with them and can change directions at any time.
- They can contribute more when they are in touch regularly with the sales and marketing teams.
- A person employed in the company will look at the long-term goals of the company.
- They will look for products that disrupt markets and generate revenue for a long time.
Disadvantages Of Onsite Development
- Developers come at a high price nowadays. You need to pay a considerable salary to employ one.
- Other costs of health insurance, etc. will add up to a vast amount.
- When you hire for yourself, you need to look at skills beyond a particular project. It will take a long time to find a developer of such powers.
- You may waste your time searching for such a person and divert from your other businesses.
- It is not enough to employ new developers. You need to equip them too.
- The cost of additional equipment and the space required to accommodate your new employees will be very high.
Things To Do Before Outsourcing
Outsource Android Development is not something to take lightly. You need to prepare yourself well before you go scouting for an offloading company. Proper preparation will ensure that you get the right agency and they do the work well. You must make sure what you want before you hand over the job to the outsourced companies.
Identify your target customers and see what they need. You must understand their pain points and see that your app has remedies for them.
Study your competitor and see what they have and what they don’t. Find out the technologies your competitors are using and understand how you can improve upon them.
You should have a clear roadmap. Chalk out the milestones very clearly. You must also ensure that nothing in your app goes against legal guidelines. It is essential if you are building an app that uses personal details. It is also applicable for apps that include in-app payments.
The next thing you should analyze and decide is the skills that you will require. You should find out what capabilities and tools your app needs. It will help you in selecting the right talents. Study the various types of subcontracting and the then choose the one that will suit you best.
- You should do a lot of preparation before you outsource.
- You should know your target customers and their pain points. You should ensure that your Outsourced iPhone App Development addresses the issues.
- Chalk out a clear roadmap and set up milestones.
- Ensure that your Mobile Application Outsourcing adheres to all the legal requirements. It is especially essential if your app uses personal data or has payment modules.
- Have a clear idea about the skills, tools, and capabilities that you require for building the app.
- Find out about the various offloading methods and decide on the one that is most suited for you.
Choosing The Outsourcing Agency
Once you have done your research and preparation, it is time to select your Outsourced Development Team. There are thousands of offloading companies around the globe in different countries.
How do you choose the one that is best for you?
The best thing to do is to get a reference from any of your friends. You can also ask different clients about Software Development Services. There will be at least a few who would like to talk about them. You will find both good and bad points. You can use this when you interview the company.
Contact many Overseas App Developers and talk to them about your needs. Discover their capabilities. The companies that offer you the best solutions for your requirements are the ones you need.
Discuss in detail. Use all the information they give to shortlist ten companies. You should have a list of ten Mobile App Developers to select the one you want.
You must not base your decision purely on their portfolio or presentation. Try to see their blogs, profiles in social media sites, writing, codes, endorsements, etc.
See if they have contributed to any of the communities. You can also get them to do a test project so that you know exactly how they work.
Tips On Conducting Offshore Development
You need to set the standards for quality first. If you have a benchmark for architecture and code standards, you can be sure of getting a good quality in Application Development Outsourcing.
You should record your quality standards and share these with your outposting company. Regular audits and reviews of codes will help to maintain the standards.
Negotiate the rates and fix deadlines. The cost of offshore development is already low. Your negotiation should focus on delivering quality and proving their capabilities. Be strict on deadlines and ensure that the subcontracting company sticks by them.
The external team must sign NDA and non-compete agreements. Make sure to protect yourself. You must lay down the intellectual property rights and terms of confidentialities. They must understand these and adhere to them.
Regular communication is essential for the success of any Software Development Outsourcing project. You must track the progress of the project and ensure that the agencies meet your deadlines.
Get weekly updates on progress. Keep a communication line open and see that there is regular two-way communication. It will help in the smooth development of the project.
- Set quality standards. Record the rules and share with the contracting company.
- Negotiate rates to ensure that they deliver on their capabilities.
- Fix delivery deadlines and ensure that the outposting team meets the deadlines.
- Protect yourself by making the company sign NDA and non-compete agreements.
- Make intellectual property rights clear. You should specify the terms of secrecy.
- Get the status information of the project. Keep having regular communication.
Factors Affecting Development Costs
Let us come to the main point of discussion.
What are the factors affecting the cost of software development?
How do the Offshore Software Development Company fix the price for a project?
There are certain factors which affect pricing.
Let us see them.
- Geographical location has the most influence on the cost of application development.
- The economic development of a country plays a vital role in how much the developers charge.
- The experience of an Outsource App Development team in a particular project influences the price.
- If a team has good experience in projects similar to yours, you can expect the amount to be high.
- An experienced team will give you a better product with clean and smooth codes.
- The tech stack that you want the development team to use will decide the price.
- If you want the most modern tools, libraries, and frameworks for the project, you must be prepared to pay a higher price.
- The size of the team and the number of experts you need will also decide the cost of the product.
- You may need more people to work on a Mobile Development Outsourcing to finish it faster. It will increase the price.
The Cost Of Development In Various Regions
We have seen that the primary influence on cost is the place where you develop your app.
Eastern Europe and Asia may be offering the best prices in the world. It may cost you 2-3 times less to build your apps in these countries. These countries have the necessary experts who are much cheaper than those available in the US.
Before we go into the actual rates prevailing in these areas, let us see what expertise these regions can offer.
In Eastern European countries like Ukraine, Belarus, and Russia, IT is one of the fastest growing industries. The governments promote these industries very aggressively. People here have excellent IT knowledge and are fluent in English.
The High Technology Park in Minsk is known as the Belarusian Silicon Valley.
Ukraine is a country with excellent education infrastructure. It has helped in producing talented IT specialists.
Eastern Europe is also good because there are no substantial cultural barriers, and this helps in smooth functioning.
Central Asia is another right region for Offshore Mobile Development. India has a large pool of IT talents. Even the top mobile app development companies in India will charge much lesser than what you pay in other regions. One of the common problems you can face is communication and cultural differences.
Countries like Malaysia and Vietnam also offer Offshore Development services at very economical rates. These rates fall between prices in India and those in China.
However, one of the significant drawbacks that Malaysia and Vietnam have is poor proficiency in English. It could prove to be very difficult when it comes to communicating ideas.
- The rates in countries in Eastern Europe and Asia could be 2-3 times lesser than that in the US.
- The countries in these regions have the right IT talents.
- Governments in Belarus, Ukraine, and Russia give a lot of importance to IT education.
- India is the cheapest when it comes to development costs.
- There is a massive pool of IT talent in India which are already catering to many companies in the US and Europe.
- The common problems faced when employing India developers are that of language and culture.
- Malaysia and Vietnam offer right IT experts at fair rates. But knowledge of English is abysmal in these countries.
Comparative Rates For Different Specialists
|SPECIALTY||US RATES IN $||BELARUS RATES IN $||INDIA RATES IN $|
|Business Analyst||110 – 205||45 – 65||30 – 40|
|Project Manager||135 – 235||45 – 70||35 – 50|
|Software Architect||200 – 300||50 – 80||35 – 50|
|Designer||80 – 165||35 – 55||25 – 35|
|Jr. Developer||105 – 110||25 – 40||20 – 25|
|Mid. Developer||130 – 140||35 – 50||25 – 35|
|Sr. Developer||155 – 165||45 – 70||30 – 40|
|Jr. QA||75 – 80||25 – 40||15 – 25|
|Mid. QA||100 – 105||30 – 50||20 – 30|
|Sr. QA||145 – 170||40 – 65||25 – 35|
The above are typical hourly rates for the specialists in the above regions. These rates could vary slightly depending on the team or the mobile development company you employ.
Even in these regions, some companies work for the same rates as those in the US.
Also Read: IT Staff Augmentation vs Managed Services
Outsourcing to an Offshore Development Team is undoubtedly a good option. The money you save will surely justify your decision. With the increasing demand for apps, there is also an urge to pay less. Offshoring work is the only way to reduce cost.
When you are offshoring your work to any of the Offshore Custom Mobile App Development companies, you must take care to check the quality of their work. You must gear up for regular communication with the team sitting in a far-off country. The differences in time-zone, language and culture can all be problems you face regularly.
Despite all the problems with Offshore Software Development Company, it has enormous advantages over onsite development not just about money but also regarding other HR issues. Do your homework well and find a good outsourcing company. You could bring out a winning product at the best price.