7 Hidden Costs of Offshore Software Development

June 18, 2019 / Bryan Reynolds

Reading Time: 5 minutes

Do you want to outsource your software development consulting project? You’re probably looking for a custom solution that tackles your specific business needs affordably. If you’re looking for the most cost-effective solution, you may be considering outsourcing your software development to an offshore software consulting team from another country.

Offshore software development is where you hire an overseas team to develop software remotely. It refers to outsourcing to a software consulting services company in a country in another time zone. According to HackerRank, some of the countries people outsource to include China, Russia, Poland, Ukraine, and India, among others.

Offshore software development appeals to many people due to the upfront cost. After all, why hire someone in California for $150 an hour, while someone in India can do the same thing for you at $50 an hour?

7 Hidden Costs

Hiring someone offshore for app development, product development, digital transformation, cloud services, or custom software development may seem cheaper upfront. However, it is not a great long-term plan. Here are seven reasons why:

1. Poor or Slow Communication

It’s harder to communicate with an offshore development consulting team due to time differences and language barriers.

Poor and slow communication can significantly slow down the speed of doing business. A considerable time difference may make it difficult to communicate in real-time daily. Thus, your project may not allow for quick decisions and alterations, which is not a great long-term solution.

Suppose your offshore software development companies take too long to provide your groundbreaking business with the software and app development, digital transformation, or custom software development services you need. In that case, this set back will cause frustration and lost money. You can quickly be overtaken by a competitor just because you were too slow in your software development process.

On the other hand, it’s good to find out soon if an idea is not viable. You wouldn’t want to work on a mobile or web app development for 12 months only to figure out that your software development company is not meeting your software requirements. Such threats are why proper communication is imperative for a successful, timely project.

2. Cost of Documenting Requirements

Outsourcing to an offshore software and web development team usually requires very detailed, technical instructions. If you are not a developer yourself, getting these documents in order will incur a cost of its own. An onshore software and web development team would not require this level of detailed instruction.

Unlike with an onshore team, an offshore team can’t just go off a description of your problem and desired software development solution and some UI design requests. Frequently, their software services solutions end up being too technical, without much user experience factored in and can result in a need to redo the software onshore.

Not to mention the legal documentation required for rights reserved and copyright regulations. Using an outsourcing company offshore comes with added difficulty. For example, in India, the copyright regulations behind development services can vary compared to in the U.S.

3. Traveling Costs Can Add Up

The average time it takes for typical offshore software development services is 4.5 months. Let’s say you want to have monthly onsite visits with an India development center, for example, with two representatives from your company during this time. The cost, time, and business impact can be huge in your offshore software and product development process.

But you can get a representative from offshore software development companies to come over to the US, right? Although this can be cheaper, it will still have a cost and time impact. Here’s an example:

You get an engagement manager to come, spend time in the US, and learn all about your business before starting the software development process. You may have them stay for a month to prepare them for the thorough custom software development and project management services process.

While this may help your business, it will be expensive to take care of the outsourcing company representative's airfare, lodging, food, and labor costs. Whether you’re traveling out or your offshore software development experts are traveling in, offshore software development company services’ travel costs can really add up.

4. Cultural and Legal Risk Factors

When you involve two different countries with different languages, cultures, politics, and legal frameworks, you invite unique challenges. Here are some hidden costs of hiring an offshore software development company you may want to think about:

  • What happens in case of legal issues?
  • Will currency fluctuations make the entire cost of the project way higher than projected?
  • Trade wars happen. What if the US limits trade with that country?
  • Will the project fail if one of the lead offshore developers resigns, gets terminally ill, or dies?
  • Can a single natural disaster affecting the offshore software development company wipe out your entire investment?
  • Are you sure your intellectual property is protected by the laws in the offshore developer’s country?

Cultural challenges can be costly. American developers are known for speaking up. They can offer a totally different suggestion from what’s in the client’s brief, based on their expertise and years of experience.

India programmers may have a point to offer but then decide against it to deliver “according to what the client wants.”. Fixing a custom software development error that wasn’t previously mentioned can be costly. And you definitely don’t want to be slapped by some unprecedented legal issue that will set you back millions of dollars for custom software that doesn't have to be outsourced from offshore software development companies.

5. Increased Costs of Project Management

If you want to outsource services to offshore development companies at a massive scale, you must factor in a percentage of vendor selection costs. Costs involved here include documenting requirements, issuing RFPs, evaluating responses, negotiating a contract, and legal fees.

You may need to hire a full-time project manager and other development center consultants to work on this. Extra costs can come from hiring an outsourcing adviser. Keep in mind that it may take months to get the right software development company partner.

6. The Cost of Unexpected Errors

Some offshore developers will give you excellent services at a lower rate. However, it’s not always that easy to find the best-fit solutions.

Quality control can be difficult if you don’t know your team well. The way projects are handled in the US may differ from how they are in your target country., like development companies in India. The offshore software development company may be using recent graduates or inexperienced developers who haven’t gotten their feet wet yet. Outsourcing doesn't ensure a pleasant user experience.

Your business needs are unique. Just because an offshore company has worked for someone else doesn’t mean it will work for you. If you’re unable to synchronize your custom software needs and business practices with the offshore developer, it may result in a poor final product.

Fixing custom software development, product developments, or other development services errors may cost more than getting the work done right the first time.

7. Expensive Infrastructure Challenges

IT is a fast-moving sector. The core infrastructure keeps getting upgraded. New software and hardware may be available in only the US and a few countries at first, meaning not all offshore custom software development companies are up to date.

A reputable offshore development company may have a robust infrastructure. However, they may not always have what’s needed for your unique situation and custom solutions. You may need much more than just the basic infrastructure, like servers, operating systems, enterprise applications, databases, and other custom software included further software development services, app development solutions, and cloud services.

You can have infrastructure challenges at different scales. For example, you may prefer to make payments using a processor that’s not available in Ukraine. You may want to use communication and project management software that’s not available yet in India.

Costs of using alternatives may add up if not adequately addressed.

Outsourcing Locally is the Cost-Effective Solution

These issues may affect the success of your project. Distance, communication, and cultural challenges may make your project drag for way longer than it should. And all these challenges to offshore software and app development services come with hidden cost implications.

To avoid these software and app development and consulting issues, get a reputable local developer, such as Baytech, a full stack development company. Here, you share the same time zone, law, and culture. You have better control over the software development progress and can mitigate unexpected costs. You’re also assured that US laws well govern your intellectual property.

Baytech Consulting is a local software company that delivers high-quality software solutions for visionary and successful businesses in South California.