In a nutshell, a software development company is a business entity that designs, documents, programs, creates, and maintains applications, frameworks, and other software components. Taking it offshore or hiring a company in another country to do the job for you means you have an offshore software development company.

This trend of hiring talent overseas and cutting cost among U.S., European, or Australian companies has led to the emergence of the business process outsourcing (BPO) industry. Western companies normally outsource services to Asian countries like India, China, and the Philippines and Latin American nations such as Mexico, Brazil, Argentina, Colombia, and Chile which have very competitive labor costs.

Western companies believe that they are able to realize thousands of dollars in savings by outsourcing their work to these countries without jeopardizing the quality of services.

Outsourcing companies, including contract centers, software developers, and shared service centers, have sprouted like mushrooms in Asian and Latin American countries.  Some western companies tapped major outsourcing companies such as Accenture, Convergys, and Teleperformance while others chose to establish their offshore units in these countries.

Different Approaches to Outsourcing

An offshore software development company outsources different activities relating to IT programming such as creating, implementing and maintaining applications. Outsourcing the entire application programming and maintenance can be very risky to the software development company.  As such, it is important that the process is handled by a legitimate outsourcing company.

It is also essential for the software development company to know the different challenges that the business will face should it pursue the transfer of technology to the outsourcing company. Birth pains will definitely arise, but when handled well by the right people, it can turn out to be a success in the long run.

Another approach to outsourcing is hiring a team of developers who will serve as a dedicated squadron for the business. With this type, the software development company will have a project manager to check the work of the dedicated developers and programmers from the remote team. This is commonly done by those who need a specialized group of people to handle a department of their company.

Companies that house hundreds and thousands of developers and programmers are examples of these entities.

Project-based remote teams that can be found via “freelancing sites” online can do some part of the development and programming for the software development company. As this type of work arrangement can last after the project is done, companies normally opt to venture into this type of outsourcing especially for projects that do not demand a lengthy evaluation process.  This is ideal for short-term projects.

Benefits of hiring an Offshore Software Development Company

The primary reason companies venture into outsourcing is its cost-efficiency benefit. It takes no rocket science to understand that the exchange rate can greatly affect the price of a commodity or service.  It is easy to understand that when a company earns based on local rates and pays its employees just 1/3 or 1/4 of the cost should they do it offshore, then it is a good business venture. While a local developer would cost over US$300 a day, an outsourced developer may cost as low as US$50 a day, leaving the company with a $250 savings.

Whether the company hires a group of dedicated developers or invests money in infrastructure for an in-house offshore company, the venture is still profitable, especially in the long run.

Another benefit of outsourcing is the wide availability of human resources. It is a given that when a company ventures offshore, a major consideration in choosing the right people includes their ability to converse in or speak the same language.

It will be tough for a U.S. company that sells an American brand if their salespeople can hardly speak the English language, right? Finding the resource that will work to one’s advantage is necessary.

In the Long Run

Outsourcing work to offshore companies is no longer a new concept among businesses.  It has been around since the early 1990s.

Setting up infrastructure in foreign countries is primarily done because businesses anticipate that this will eventually benefit them in the long run. One might wonder why companies spend a lot of money in building infrastructure in foreign countries, instead of sticking with what they have in their home countries. The answer to that is simple: investment and growth.

Companies are investing in other countries with the aim of achieving faster expansion.  While technology giants such as Microsoft, Google, and Facebook keep their main development teams in the U.S., they also have developers working in different parts of the world to ensure that they stay ahead of the competition.

For your software development needs, it is important that you have an expert partner you can depend on.  In Scio we are a software development company that can give you the flexibility and agility to become highly competitive in the digital age. Contact us today!

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