How to outsource software development offshore?

In the current global economy, which constantly innovates and is working towards increasing digitalization, software development has become a necessity for startups, SMEs, and enterprises alike. Outsourcing this process of software development offshore can help unlock different markets, access to talented professionals, faster delivery cycles, and reduced development costs.

Outsourcing software development offshore is the practice where a company partners up with a software development team located in a different country, and this is often one with lower labor costs and talented professionals. The appeal is quite obvious: lower prices, increased productivity, and flexibility. These benefits are quite significant, but on the other hand, as with any process, there are certain challenges associated with it too.

In this comprehensive article, we will do a step-by-step tutorial on how to outsource software development offshore. From key cost factors, common mistakes, selection criteria, and top recommendations—this is everything you need to know about offshore software development outsourcing to help you make informed and confident decisions.

Step-by-Step guide to outsourcing offshore software development

Outsourcing isn’t merely a means to hiring cheaper alternatives and cutting costs, but it’s about building reliable, long-term relationships that add value. Here’s a step-by-step approach to outsourcing offshore software development the right way.

1. Define the Scope

Most failures associated with outsourcing happen due to miscommunication between businesses. Before deciding to partner with any offshore development company, a business should clearly define its scope and its project requirements. A business should be clear on:

Core features vs nice-to-haves—What’s critical for your MVP or v1?

Budget range and timeline—Are you working with $5K or $50K? Do you need delivery in 2 months or 6?

Tech Stack preferences—Are you set on Node.js and React, or are you open to suggestions?

A clearly defined scope is crucial as it’d help your partners understand your needs, reduce and hopefully remove any assumptions, and deliver effectively.

2. Choose your Outsourcing Destination

All Geographic regions have different offshore software development hubs and offer their unique advantages.

India—Large talent pool, mature outsourcing culture, and affordable rates for all. Good for startups and enterprises.

Eastern Europe—Specialized in engineering and design, better overlapped with European clients. Slightly higher rates.

Pakistan—Not renowned for its outsourcing culture, but an emerging destination with competitive pricing and strong developers, especially in SaaS and mobile.

Latin America—Ideal for North American clients, as they have similar time zones and good proficiency in English.

Your choice depends on what you require and what your priorities are.

3. Shortlist offshore vendors

Once a region is chosen, companies should be shortlisted based on their fit with your needs and culture. Platforms and directories can be used for this purpose:

Clutch.co—Search by region, technology, and verified reviews.

G2—For software development vendors with a B2B focus.

Upwork and LinkedIn—For finding smaller teams or individual freelancers.

What to check for:

·  Experience in your domain

·  Relevant tech stacks

·  Past projects or case studies

·  Client testimonials

·   Responsiveness during initial contact

4. Conduct a Technical Evaluation

You should never hire an individual or a team based on just a sales pitch or a website. An evaluation should be carried out of their technically abilities. This can be through:

·  Asking them for recent code samples, GitHub links, or access to past projects.

·  Request a demo of a similar project they’ve worked on in the past.

·  Set up a paid pilot project or test task.

Furthermore, they can be evaluated based on:

·  Code Quality

·  UI/UX

·  Speed of delivery/iteration

·  Domain knowledge

This step helps to filter out teams that aren’t as good as their reputation suggests.

5. Set Communication Protocols

Communication is an essential part of the success of any project, but it becomes even more crucial when partnering with an offshore software development company. Strong communication processes should be established from day one. Protocols should be defined clearly.

Meeting frequency—Daily meetings or weekly check-ins?

Collaboration tools—Slack, Trello, Jira, Notion, Google Docs, etc.

Time zone overlap—Ensure at least 2-3 hours of work is shared each day.

A reliable offshore team is proactive about communication. Any team that doesn’t take communication seriously shouldn’t be considered.

6. Sign Legal Agreements

Legalities and documents should be set in order before starting a project, especially when working with offshore software development vendors in other countries. Some essential documents include:

·  NDA (Non-Disclosure Agreement)—Protects your ideas and data.

·  MSA (Master Service Agreement)—Outlines the general business relationship.

·  SOW (Scope of Work)—Breaks down deliverables, timelines, and payment terms.

It should be ensured that the agreement between both parties includes:

·  IP ownership—You should own the code and the product.

·  Payment terms—Avoid hourly billing unless there’s strong trust.

·  Dispute resolution—In case of any discrepancies or issues.

7. Start with a Pilot Phase

Before partnering up with a company and signing a long-term deal, small pilot projects like a prototype, a single feature, or a one-month sprint can be initiated. This lets you:

·  Test their communication.

·  Evaluate code quality and delivery speed.

·  Gauge how well they understand your project and its goals.

You can consider this a dating phase. If it goes well, you can commit to a long-term engagement more confidently.

When should you consider offshore software development?

Outsourcing software development offshore isn’t just about cost but also about strategy. Here are some scenarios where outsourcing software development to offshore teams would make sense:

Tight budget. Building or assembling software development locally in the US, UK, or EU can cost 3-5x more.

Scalability. Offshore partners can quickly gather a team of 5-20 developers to help with fast scalability.

Lack of expertise. Need Kotlin, Node.js, or AI engineers? Offshore vendors usually have a broad pool of talent.

Well-defined project. Offshore software development outsourcing works more effectively and efficiently when your project’s scope and goals are clear.

Core Features. Delegating software development lets you focus on core features and processes like marketing, sales, and growth.

How much does offshore software development cost?

There’s no particular answer, but here’s a rough idea of offshore software development outsourcing rates.

The total cost depends on different factors such as:

·  Complexity of the software

·  Experience level of developers

·  Whether you’re outsourcing a team or an individual developer

Key benefits of outsourcing offshore:

Cost Saving

This is the number 1 benefit of offshore development outsourcing. Development costs can be reduced by 40-70% without having to compromise on quality if you choose the right team/individual.

Access to Global Talent

By outsourcing software development, you open up access to a pool of developers from across the world. You can hire React, .NET, Java, Python, or AI experts, which you won’t easily find at an affordable rate locally.

Faster Time to Market

Offshore teams operate in different time zones, allowing for round-the-clock 24/7 development cycles and quicker delivery.

Core Processes

By outsourcing software development, you allow the offshore team to build and manage your software while you focus on core business processes like product-market fit, user acquisition, and revenue.

Common mistakes to avoid in offshore outsourcing

There are certain risks associated with outsourcing, and here’s how you can avoid them.

• Choosing the cheapest vendor isn’t always safe. Low labor costs can result in other costs being incurred, such as bugs, rework, miscommunication, and delays.
• Poor communication can result in huge problems. Poor means of communication can result in things getting lost in translation. You should set up daily or weekly updates, define KPIs, and establish a single point of contact before getting started.
• A plan and strategy should be created before a project begins. Without a well-documented plan, your project may spiral. There should be defined milestones as well as deliverables documented in writing beforehand.
• Legalities should be considered, and documents like NDAs and agreements should be signed to protect your intellectual property.

How to choose the best offshore development partner?

There are thousands of offshore software companies, and choosing the right one can be a tedious process. Here’s what should be prioritized.

• Experience is crucial, and so a company with experience in your specific industry should be given priority ahead of others.
• One of the most important among these is the technology stack. A company or team that specializes in the tools and technologies you require should be hired, and this is a non-negotiable.
• It may seem minor, but English proficiency matters a lot. Clear English communication is essential for reducing misunderstandings.
• A company’s processes should be scrutinized. Ask about their process:
• Do they use Agile/Scrum
• Do they track bugs via Jira or Asana?
• What’s their QA process?
• Cultural compatibility should also be taken into consideration. Is the company flexible, open to feedback, and easy to work with? A short video call or pilot project will tell you more than a polished proposal.

Why Coding Crafts should be your top pick for your offshore software development services?

There’s no shortage of promising and experienced vendors from all across the world. But from personal experience working with different offshore companies, Coding Crafts consistently stands out, particularly due to three key reasons.

Transparent Pricing

It’s a noticeable pattern among offshore teams that they initially quote low hourly rates and then nickel-and-dime you on every feature. Coding Crafts, on the other hand, is transparent—you get full breakdowns of costs.

Excellent Communication

Coding Crafts assigns dedicated project managers for their clients and provides weekly demos. Their clear and constant communication ensures that you’re always in the loop.

Track Record

Coding Crafts has a proven track record—whether it’s a fintech app, an AI-powered SaaS tool, or backend development, their strong portfolio proves that they can handle complex projects.

In conclusion, despite the unique strengths of Coding Crafts, no single partner is perfect for everyone. For companies and startups that are looking for something on a budget, options like Turing or DevsTeam may make more sense. If you’re a North American company that requires developers in the same time zone, Latin American teams might be a better fit.

But if you’re looking for cost-effective, high-quality offshore development with reliable communication and delivery, Coding Crafts should be on your shortlist.