Offshore Development: 8 Keys to Success
Making offshore development work is a skill that every IT executive should learn. There is a severe lack of IT talent in the USA, UK, Australia, and other countries. One way to scale up development teams is by leveraging offshore software development. Let’s find out how to do it well.
Perhaps the biggest and most accurate problem is that everyone has a friend that tried offshore development. Literally, every entrepreneur has heard these stories.
When everyone you know tells you they had a bad experience, it is hard for you to even try. Because of such horror stories, many entrepreneurs don’t give offshore software development a shot.
On the bright side, many entrepreneurs found success in offshoring. Aside from knowing how it works, picking the right country can make a big difference. Some known global offshore development hubs are Russia, Belarus, Colombia, Uruguay, and the Philippines.
But as the old adage goes, “there are no mistakes, only lessons.” In this article, we’ll dive into the common offshoring mistakes entrepreneurs make. And, we’ll also discuss how to make offshore development work.
8 Tips for Offshore Development Success
Just because you know people who have had a bad experience with offshoring doesn’t mean it doesn’t work. At Full Scale, co-founders Matt DeCoursey and Matt Watson have gone through the peaks and valleys of offshoring. Let’s share with you tidbits on how to do offshore development successfully.
1. Avoid the “Cheapshoring” Mistake
You may get emails and LinkedIn messages from offshore development companies offering developers for $15 an hour. That would sound both intriguing and interesting, right?
However, many people make the mistake of hiring offshore developers for a low price. It often leads to software projects failing miserably. In this sense, there are things to consider before hiring to avoid “cheapshoring.”
First, you never want to hire junior developers as a team. Like any team, you need the right mix of developers working on a project. It includes senior developers, mid-level, and junior developers. It may also make sense to add a QA specialist and project manager to the team.
Second, you get what you pay for to some degree. Offshore developers typically cost $15-45 an hour. Their rates depend on location, skill level, and programming language.
Even though you’re hiring offshore developers, you still want high-level talent that fits into your plans for success. Don’t make the mistake of “cheapshoring” because you will get what you pay for. Like most things in life, it may only cost 20% more to go first-class.
2. Understand the “Offshore Formula”
Matt DeCoursey, one of the co-founders of Full Scale, has an entire section of his book, Million Dollar Bedroom, dedicated to offshore development. In the book, he discusses what he calls the “offshore formula.”
The formula is pretty simple. If you hire someone for $100 an hour, they should provide 4x the value of someone you hire for $25 an hour. This value could be in the work output, knowledge, management, and anything essential for project progress.
In the US, it is common to pay a contract developer $100 an hour. The question is, do they provide 4x the value of their equivalent in the Philippines via Full Scale?
Odds are, the answer to that question is almost always no.
That said, we don’t always recommend that you offshore 100% of your development. The best formula for success is having the strategic development leadership and product ownership done in your local office.
You should then aim for a ratio of 1:1, 1:2, 1:3, etc. For every developer hired locally, you can maximize their expense down and scale up the team via offshore developers.
3. Use Offshoring, Not Outsourcing
You can’t outsource innovation. The magic that makes your product unique and amazing isn’t something you should outsource to someone else. However, it doesn’t mean you can’t leverage offshore resources to get it done.
You need to understand the difference between outsourcing and offshoring. Outsourcing is turning the keys over to someone else to do a project or task. For example, it’s like hiring someone to clean your pool.
If you want to complete a project but don’t intend to retain any of the developers later, then outsourcing might work for you. Think of offshore developers as employees that work for you remotely.
By building your offshore development team, you are not turning the keys over to someone else. Your offshore development should still be part of your long-term team but they just happen to work remotely.
In any company, your employees are your #1 asset. Your offshore team can be long-term employees and assets to your company.
At Full Scale, our goal is to help businesses build their offshore teams. We want our software developers to be a critical part of your success. To learn more about managing an offshore development team, tune in to Startup Hustle TV and the Startup Hustle Podcast.
4. Practice Project Management & Product Ownership
Any project will fail due to poor project management. This is even more important when you are working with any type of remote employee. Here are some suggestions to improve working with remote and offshore developers.
- Ensure the entire team understands the long term goal of the project
- Plan out sprints and assign multiple work items
- Don’t leave your team asking what to work on
- Do a good job of documenting requirements
- Use a standup bot, like Suttna or Stand Bot, to simplify daily scrum meetings.
Another suggestion when working with offshore developers is to assign what we call a “B” task. If they get stuck, they can’t ask you how to get past it since you are in a different time zone. So, ensure they have something else they can work on in the meantime.
5. Establish Working Hours & Overlapping Schedules
One of the benefits of offshore development is the difference in working hours. For some, they prefer having their development team work while they’re sleeping to wake up and see what was accomplished. For offshore teams that need to closely collaborate with your local team, we recommend having 2-3 hours overlap.
Another option is to let your offshore developers work during their local time zone. Then, you can schedule 1-2 hours to have daily meetings and overlap time. If your offshore employees have good internet at home, they could attend meetings during their evening, which is likely your morning time.
Not having regular overlapping schedules with offshore developers is a common reason why offshore development doesn’t work for many businesses.
In the Philippines, the rich IT-BPM industry rosters a workforce trained to work flexible hours. This is why at Full Scale, our software teams can accommodate varying schedules depending upon our clients’ requests. In fact, our offshore developers’ time mostly overlaps with that of our clients.
6. Communicate Effectively
Software development is all about communication. Communication skills cover how well your offshore development team reads, writes, and speaks your language.
More importantly, it shows their ability to follow directions, ask questions, follow up, etc. Below are some important considerations in communication with an offshore development team:
- How well do they communicate in your language?
- Do they know what needs to be done and why?
- Do they ask questions when they aren’t sure what to do?
- Can they tell you when something won’t work?
- How often do you communicate with them and vice versa?
One common issue in offshore development is communication. Some cultures do it better than others. So, if your software developers are not great communicators, your project will most likely fail.
As an example, functionalities will not perform as intended when things get lost in translation. Developers might have challenges in organizing their questions. They need to challenge each other and ask questions. Some cultures are shyer about doing so.
This issue will be the least of your problems when you hire through an offshore development company in the Philippines. The Philippines ranks second (behind Singapore) as the top English-speaking country in Asia. At Full Scale, our software developers undergo an intensive recruitment process to ensure they excel in both technical and communication skills.
7. Pick the Right Location
As mentioned, many people have tried doing offshore development in the wrong locations. Finding success is slim when the location is not good. So, it really pays to know where to look for an offshore development partner.
In this case, one reliable factor is word of mouth. Seek a good company based on someone you know, especially if they found success with it.
At Full Scale, we see the Philippines as the best place to do offshore development. Filipino developers are mostly fluent in English and have excellent communication skills. We can find you some talented developers at reasonable rates.
8. Find Strong Offshore Development Partners
Do you know an offshore development partner you can trust? Serial entrepreneurs Matt Watson & Matt DeCoursey built Full Scale in 2018. With nine years of experience hiring developers in the Philippines, you are in good hands.
Our goal is to find excellent talent and provide them with world-class quality. This allows us to offer an exceptional level of service to our clients. Full Scale is based in Kansas City, USA. Want to meet us in the states and discuss partnering with us to build a team? No problem.
Why Offshore Development Works
There is a blatant lack of IT talent in many countries, especially the USA. Today, businesses demand thousands of developers. At this point, most companies are just stealing developers from each other and driving up the salary rates.
Every IT executive must learn how to leverage offshore resources to scale your development team. The most important thing is picking a good partner. Full Scale is here to work with you and ensure that your offshore development efforts are a huge success. Together, we can make offshore development work!
Are you ready to scale your development team? Contact us today!