The Cost of Offshore Software Development: Everything You Need to Know

The presence of offshoring has been prevalent for quite some time. Increasing labor costs in western countries is one of the significant reasons behind the upsurge in businesses opting for offshore development. With the unpredictable challenges of Covid-19 presenting new challenges, enterprises are more aware of the myriad benefits offshoring offers. So, with the changing business environment, it’s imperative for organizations to evolve at a higher pace. And, offshore software development is a perfect solution for this.

With organizations striving to stay ahead in today’s digital landscape, offshore development has gained significant momentum. Through offshore development partners, businesses in developed markets get access to highly skilled programmers in emerging technology countries with favorable arbitrage. But, offshore development sometimes brings several unexpected extra fees. Here we share everything you need to know for estimating the cost of offshore software development.

How to calculate the cost of offshore software development?

According to Deloitte, 70% of organisations consider cost optimisation reduction as one of the top reasons for offshore development. Estimating the cost of offshore software development can be tricky when not working with an expert partner and has some extra steps, but in most cases it still represents a fraction of the price of hiring locally. So, consider these aspects when figuring out the cost of offshoring a team of developers for your tech project.

• Having a clear idea of your project makes it easier for an offshore company to understand what should be delivered.
• Defining the complete scope of the project can help you and your service provider to give a more accurate estimate of offshore software development cost.
• Do not confuse estimation for the final cost.
• Getting the right developers for the job can help decide the major cost of the project.
• The additional costs can vary depending on the project.
• Technical support, solving unexpected bugs, documentation, and helping with the takeover of the ownership of the operation of the project are additional services that come with additional costs.

After understanding all these, you can see the complexity of calculating the cost of offshore software development. It’s fair to say that sometimes software development is not as easy as many think.

Well, it is clear that offshore development has been experiencing an upward trend for the last couple of years. When opting to outsource software development, you should expect to save not only on the developer’s salary but also on hiring, benefits, social security contributions, and overheads. In most cases, organisations will save quite a bit of money and time by offshoring to high-quality software development service providers. Even though there are some additional costs, offshoring generally proves to be more cost-efficient than hiring an in-house development team. And, the talent overseas is often more abundant than at home.

Components affecting offshore software development costs

1. Size of the project

The size of the software project influences the development costs. The higher the number of features and other factors, the higher in number the team needed and so is the cost of offshore software development. And, depending on the size of the project the efforts and overall costs will increase accordingly.

2. Technical considerations of the project

Technical aspects including software architecture, UI/UX designs, tools and methodology selected, third-party integrations, etc. impact the cost of the project. Ultimately, it relies on the scope of the software product or ongoing service you are looking to build.

3. Time to market

Bringing your product early to the market or giving it more time will impact the development costs. Also, deadlines influence the software project in several ways. If you have an extraordinary idea but the timeframe to complete the project is shorter, it will affect the R&D, planning, and overall development. In such a case, you will have to hire an extended team of experienced engineers to get things done efficiently and quickly, incurring higher costs.

4. Skills and expertise of the team

The knowledge, experience, and skills of your offshore development team directly impact the project costs. If your project is complex, you need a qualified team of senior developers and this adds to the overall project costs.

5. Additional costs

The offshore development organizations may charge extra for maintenance and support, some licenses, infrastructural costs, etc. They may even charge in case the partners want some modifications. So, to avoid any ambiguity, such factors should be clarified beforehand.

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