Outsourcing is the transfer of operational functions to value-based suppliers. The goal is to reduce the number of services within the company as well as shorten the supply chain.
Outsourcing is usually done to reduce costs. A significant reduction in development, production, and fixed costs is possible. A company that wants to focus more on creativity may find it more cost effective to outsource to a company specialized in that area, thus enabling it to limit costs while reinvesting savings. Therefore, both a strategic and functional improvement is possible for the company.
By removing a manufacturing department, a company can move its factory elsewhere or use one of another company's. In the service sector, this method is also commonly used.
Based on distance, outsourcing is usually divided into three categories. Offshoring, Onshoring, and Nearshoring.
Outsourcing is the process of sending work to another country. The company could partner with a New York-based developer or software agency. Unlike offshoring, onshoring is the act of moving business processes within the borders of the country for a lower cost. Processes and functions are usually located near a client's location, especially in the case of large clients, as close proximity may be part of the working arrangement.
With immediate access to a customer's factory (often within a few feet of the premises), a business is able to supply customers the quickest and most suitable service, tailored to suit the market requirements and able to meet their requirements accordingly.
Onshoring improves the cost structure and allows great flexibility within companies. Furthermore, it is more efficient and effective to coordinate and communicate production.
Onshoring refers to the relocation of business processes to a lower-cost location within a country, as opposed to offshoring. It is often the case with big clients that functions and processes are located near each other, as close proximity may be a requirement of the working agreement. Suppliers in the automotive industry are a good example. When working in close proximity with their customers (often directly next to their premises), a company can offer the most effective service and tailor it to the needs of their market, meaning they can provide their clients with just-in-time deliveries.
Outsourcing reduces costs significantly and increases flexibility within organizations. Additionally, communication and coordination between production personnel are more efficient and effective.
Nearshoring means outsourcing to a country nearby. Let's consider the case of an Israeli company that outsources to Ukraine. Often, nearshoring is the outsourcing of business processes, especially information technology processes, to companies in nearby countries.
A nearshoring model offers optimal solutions for companies that wish to automate processes in order to maximize business efficiency while reducing barriers associated with traditional offshoring. There are many advantages of nearshoring such as reduced time-shifting, fewer cultural barriers, faster but also more cost-effective travel, and no or little time-shift.
Ukraine is another country where companies outsource. Offshoring involves the relocation of the operating activities to another country, regardless of its geographical location. Offshoring can be divided into two subcategories: Nearshoring (neighboring countries with or without a shared border) and Farshoring (distant countries such as countries in East Asia).
Offshoring is often employed to reduce a company's personnel costs. Its success is, however, dependent on several factors - one of which is communication. Likewise, all peripheral devices need strong internet connections in order to communicate effectively. Because of the same language spoken by the two teams, nearshoring is usually chosen as an alternative by IT firms that are targeting highly qualified international employees.
Culture and time zones pose communication challenges in offshoring. Our blog post explains how to hire an offshore development team. Let's look at some benefits of offshoring.
Offshore Software Development Benefits
Companies outsource software to distant locations due to these reasons. Offshore software development: what are the benefits?
Outsourcing software development is popular due to its flexibility. With offshoring, you can add or remove teams. It may not even be necessary to start with the whole team.
You can hire professionals when you need them rather than at every step. Software development and flexibility are as important as each other.
Foreign professionals are often part of software development or IT teams. If your team lacks a mobile developer and you need to build a mobile version of an application, you can easily hire one from another country. Offshore workers need no additional training, so they are ready to work immediately after hiring. Thus, a project can be started quickly.
If you have an in-house IT department, outsourcing to a remote team will allow your team to focus on routine tasks. Network maintenance, cybersecurity, and network problems fall under the IT department's responsibility. Outsourcing relieves your team of some work. High-quality routine operations are ensured by the shared responsibility.
One of its benefits is lowering project costs. People who have worked on software development know how expensive it can be, particularly in hiring and onboarding experts as well as purchasing the necessary infrastructure. Outsourcing eliminates these issues and is therefore more cost-effective. Furthermore, some countries charge less for the same level of education and skills. You can consider Ukrainian software development as an example.
Moving the development process offshore can provide a new perspective. If you are a company looking to expand internationally, global expansion is crucial. You can evaluate your company's position more easily if you consider the remote perspective of foreign professionals. If you wish to access eCommerce developers' knowledge and experience, for example, you can hire them.
Offshore Development Models
There are two main categories of outsourcing software development. Project-based outsourcing and specialist-based outsourcing are the two types of outsourcing. Learning how to outsource software development begins with determining which model is right for your project.
During project-based outsourcing, developers are hired to work on short-term projects. Payment rates are generally fixed in order to facilitate a swift delivery of goods.
Companies usually hire remote programmers because they lack in-house software developers. The term refers to this. There is no restriction on how long the project should last. The client company's project manager or lead developer oversees the development, but the agency provides the developers.
Now that we understand the steps to outsourcing software development, let's examine which ones you should follow.
Where to Hire Offshore Developers?
Finding the right software professionals is the next step. A developer can be hired separately or by an agency before putting a team together. Due diligence is required here.
Choosing the right outsourcing partner is one of the most important factors to consider. The most popular offshore software development destinations are Asia and certain European countries. Developing in Asia is more popular, but you have to remember that the work quality might also be less.
Be careful about this. The most important factor is the quality of service, not just finding the cheapest service. That being said. Ukraine, India, China, Philippines, Vietnam, Mexico, and the like are some of the countries you might consider outsourcing or outstaffing to.
Communication may be affected by location due to cultural compatibility. The most popular outsourcing locations have a low English literacy rate. Consider how a communication gap may affect the project, and not how this makes them less qualified. Hire c# developer with less communication gap since the ability to communicate your project defines its further success.
What are the benefits of hiring offshore software developers?
Define your needs and goals
To determine how to outsource your project, you must first know what you want. Most people don't take this step seriously enough, but it's obvious. What kind of application would you like to build? Would you need a certain type of developer? Can they have these skills? What infrastructure is needed for the project? When will the product be available? What are the quality benchmarks? What will you do to test the product? What is your budget proposal? Plan for contingencies in what way?
The following questions, and many more, must be answered before setting out in search of developers if you want to successfully outsource software development. In addition to including every conceivable aspect of the project, your list of needs and goals should be as comprehensive as possible. Additionally, you should be able to distinguish between the necessary and the nice-to-have set priorities.
Define your Budget and Hire c# developers
If the payment rates for a developer are out of your budget, you can't hire them. When negotiating the cost of the project, ensure that the agency details which services and infrastructure are included in the total cost and which are not. Outsourcing is referred to as taking advantage of a superior infrastructure that the client (the employer) lacks.
Because of this, the total price includes using our agency's infrastructure. Don't eliminate quality at the expense of price; to the contrary, cheap doesn't always mean good. An agency must not only request an amount that corresponds to the services they provide but also to the value they deliver.
Dot net development & Reach Out to Preferred Developers
Before you begin looking for remote vendors, you will need to determine which location you wish to outsource to, what your project will be like, and how you intend to outsource it. Check out the agency's website to see examples of previous work. Request each freelancer's resume and portfolio.
You should consider the following factors:
What skills do the developers have? How experienced are they? Generally, the term "software developer" is used generically, but there are different kinds of developers, such as web developers, mobile app developers, frontend or backend developers, Full Stack developers, and DevOps developers. Ensure that your vendor matches your project requirements.
Experience: It tells a lot about a person's problem-solving abilities. A skilled but inexperienced developer faces a wider array of software problems, giving them an advantage. Senior developers are preferred because of this reason. The age of the agency should not be the deciding factor when hiring an agency. Find out if the team members are skilled and experienced.
Past Clients: Developers often list clients they've worked with in their portfolios or resumes. You can check with past clients to confirm they are the ones you think they are.
Furthermore, it is essential for you to understand how an experienced developer approaches work, their communication skills, relationship with clients, attention to details, etc. Until you speak with past clients, you cannot obtain this information.
Compatible: These factors relate to whether the agency is a good match for you, that is, are you comfortable with it? As a result, even after discovering all other factors, the value system of an agency must be considered. Which principles are important to them? What are the alignments between your organization and theirs?
Once you have obtained these details and selected your preferred agency, you should contact that agency for an interview.
Conducting a test is the best way to judge the developer's skills. Many different tools are available for assessing, as there are many different ways to do it. However, they all serve the same purpose: to determine whether the developer is worth their salt.
HOW TO EVALUATE CANDIDATES?
Unlike code tests, questionnaires examine how a developer approaches problems rather than how they code. All software is designed to solve a specific problem or meet a specific need. Developers must think beyond coding if they are to be innovative and able to meet challenges.
Coding tests enable you to assess the coding skills of potential hires. Coding tests can be conducted with a variety of tools. After the candidate completes the code, it is analyzed, graded, and considered in the final decision. Startups often hire in-house rather than offshore developers, because of coding tests.
Some employers use candidates to solve code problems under the guise of testing. Be careful because some people will oppose it. The don't necessarily have less qualifications for that reason.
If you request source code reviews of developers' real works (not samples) they might be reluctant to allow you to examine them. Source codes may not be able to be shared due to legal contracts (see below). You can, however, review the apps they have built. In essence, test the functionality (or black box) of the application. Code has nothing to do with this. You only need to review the application to determine whether all its UI components are working.
Finalize legal agreements and work conditions
This is the last step in the hiring process. At this point, you should have already chosen a developer/agency. Legal considerations should not be overlooked when establishing work conditions. A high-quality offshore development team will share some information and access about your business operations with you.
When creating applications, developers will have access to the software's source code and other key data and resources. In the absence of an appropriate legal framework, it may be regrettable how data is possessed, accessed, used, and shared. That's certainly not what you want. Hence, in your agreement, take the following documents into consideration.
The Non-Disclosure Agreement establishes the conditions for the use and sharing of sensitive and confidential information. For a certain period, it prevents the vendor from sharing such data (such as the source code) with any unauthorized parties.
The SLA specifies the scope of the project, the duties of the vendor, and the expectations of the client from the vendor. It includes details such as the service(s) to be provided, assessment metrics, obligations, penalties for default, and so on.
In an SOW, the client's responsibilities are outlined, such as payments, testing, standards, and so on. The SOW is similar to an SLA, except that it focuses more on client obligations, such as payments, testing, and so on. Obviously, these obligations are contingent on the vendor meeting deadlines, milestones, and deliverables.
A document containing information about the technical requirements of the project is known as a software requirements specification. The document outlines how the software will operate and function when it has been fully developed. During the construction process, these specifications are used to assess and test the software.
Offshoring must be treated as a partnership for you to make it work. After all, the developers are not working for you, but rather with you. Hence, you must hire offshore developers prepared with plans on how to bridge communication gaps and ensure smooth progress of the project.
Consider CI/CD (continuous integration and continuous delivery) and DDT (data-driven testing) when executing the project. Those are the steps to hiring offshore developers.
BitsOrchestra company is one software development agency that strives to build strong relationships with its clients. We are a Ukraine-based company with a team of over 40 software engineers and developers with a lot of experience working with startups on both outstaffing and outsourcing work models.