Offshore App Development: Major Advantages and KPIs
A difference between in-house, offshore and dedicated team development?
At TRIARE, we have expertise in every stage of web and mobile app development, from the discovery phase to post-release support. We’ve built dozens of applications and websites that are helping businesses grow and improve. Our clients are always wondering how we organize work throughout navigating different parts of projects between each other. Our answer is that only a well-balanced team can maintain a high level of quality and management. And that is what they search out trying to find the appropriate development company to solve their business needs.
In this article we will talk about the most popular model of cooperation – Offshore Development Team. What are the challenges of managing InHouse Team and why Offshore Development can be an alternative solution to increase business success. We will end up with a few things you should consider when selecting an Offshore App Development company.
Due to the enormous cost reductions and service enhancements made possible by offshore development, it became a crucial component to the business strategies of the majority of multinational corporations. Moreover, mid-size ventures now have the possibility to take advantage of this approach as well.
Given the intricacy of the app development process, offshore outsourcing poses some risks, but if you find the right team, it’s a great way to achieve goals and streamline your operation rapidly and affordably.
Let’s examine how offshore app development operates and why business owners opt for this kind of cooperation.
What Is Offshore App Development?
Offshore outsourcing is a business approach where a corporation hires external contractors or whole outsourced teams situated remotely to handle non-core tasks, such as development. Offshore app development is a part of this strategy that has become particularly popular.
Outsourcing in general is on the rise: more than 70% of businesses intend to increase their use of outsourcing, according to a study by the National Outsourcing Association. With application development being one of the most frequently outsourced IT tasks, increasingly more companies are seeing the benefits of it and planning to hire external organizations for building apps.
Advantages of Offshore App Development
We’ve already mentioned that offshore development gives you a wide reach to the market of experienced IT specialists. Plus, if your company operates in Northern America or Western Europe, hiring teams from Asian or Eastern European countries will be much more affordable than hiring locally.
On top of that, offshore app development teams can provide you with the following benefits:
- Domain knowledge
The majority of outsourcing companies focus on a few industries and grow a specific expertise tailored to those industries. You might want to partner with offshore developers who’ve already built something similar, right? They’ll know about potential risks and the latest technological advancements that are relevant to the niche.
- Turnkey solutions
Outsourcing companies frequently offer a whole team of developers, designers, testers, project managers, and business analysts. This way, your project won’t be fragmented across different specialists and you’ll always have a holistic view on the progress.
- Team accessibility
Developers employed by outsourcing firms frequently function as teams and gain experience of working together, learning how to navigate different parts of projects between each other. With a well-balanced team, your app will be brought to life faster and more effectively.
- Outstanding execution
Due to intense competition, offshore mobile app development businesses are always motivated to maintain a high level of quality and management. Companies that stay afloat will organize clear communication with you and deliver the results on time.
Challenges in Managing In-House Teams
Having an in-house team means hiring people locally, onboarding them, assigning them to teams and tasks, etc. This approach provides the highest levels of communication and trust, as well as a seamless team structure, but it takes a continuous effort to hire and manage in-house teams.
Here are the major risks to consider that are associated with building teams internally:
- High costs
Hiring professionals locally can cost you more, and apart from the salaries, you’ll need to pay for office rent, software licenses, and other expenses. With offshore app development, you can find specialists of the same or even higher level at lower hourly rates and don’t have to deal with additional expenses.
- Team management
It takes a lot of time and effort to develop a professional in-house team, as well as to keep the team motivated, improve their skills, and prevent employee turnover. As we’ve mentioned, dedicated offshore teams cover that part.
- Interrupted work
Unanticipated sick days, vacations, and layoffs can cause significant delays in project execution. While in outsourcing, a missing team member can typically be replaced by a vendor in a remote team within a few hours.
Disadvantages of Hiring an Offshore App Developer
Trusting your app development to an offshore team comes with certain risks:
- Time zone differences
Due to different time zones, working with a partner from Asia can be challenging for a US-based company. In this situation, you should search for offshore locations with business hours that coincide with your own.
- Cultural differences
Due to cultural differences, working with individuals from different regions of the world can lead to misunderstandings. This may not be a significant problem if the team has the skills and knowledge you need, but be aware of this aspect in building communication with external specialists.
- Language barrier
A lack of proficiency in the English language can cause issues. When talking about possible cooperation, check if the key people from the offshore team can understand you and communicate everything clearly.
Alternatives to and Other Types of Offshore Development
So, you already know that building an internal (in-house) team of app developers is both costly and risky, given the turbulence of covid and economic recession. These challenges push clients into hiring offshore specialists. But there is an alternative to offshore web development – a dedicated team model. This is a sort of outsourcing when you cooperate with a vendor to hire and co-manage professionals who will only work for you. The success of specific corporate objectives and large, lengthy initiatives are best served by this paradigm.
Working with your committed team is just like having them in the next room. While a remote team might work on projects for several clients at once, committed experts provide all of their attention to the tasks you give them. It might cost more, but still outcompetes in-house app development. To achieve the greatest outcomes over the long run, you can adjust the scope as you go.
The clear-scope, short-term goals of the remote team model have demonstrated to be advantageous to numerous enterprises. The dedicated team model is much more advantageous if you want to outsource work to professionals while controlling each step and process as if they were in-house. Both of the methods can greatly increase your company’s revenue, supplementing or even taking the place of an internal workforce. All you have to do is make a decision based on your needs. But back to the optimal model of offshore devs. What else should you know?
What KPIs to Track to Know If Your Offshore Team Is Helping Your Business?
It can be challenging to determine which business decisions will be successful and which won’t. To have clear insights on the progress of your collaboration with an offshore app development team, you should set and monitor specific KPIs.
Key performance indicators (KPIs) are benchmarks that allow you to track your progress toward your most important strategic goals. While there are many different sorts of metrics that may be used in businesses, KPIs are objectives that are important to your company’s success.
Here are four groups of KPIs to monitor closely while assessing the effectiveness of an offshore team:
- Metrics for customer relations
For a company, particularly one that is just starting to establish itself in the sector, finding leads, correctly engaging with them, and converting them into customers are essential. Customer-focused KPIs focus on customer retention, and satisfaction to provide you with a clear view of how your customer base is performing. Here are some crucial KPIs for customers to keep an eye on:
- Client Lifetime Value (CLV) is the anticipated lifetime value of a single customer.
- Customer Acquisition Cost (CAC) is the sum of all sales and marketing expenses incurred to bring in a new client.
An approximation of client acquisition can be determined by comparing these two customer-focused KPIs. These figures will show you whether you are succeeding offshore to growing clients.
- Operational effectiveness metrics
It’s crucial for small- to medium-sized companies to meet all deadlines. A single small delay might cause financial losses. Customers seek out suppliers who meet their deadlines and keep their word. Hence, pay attention to development time and issue resolution time. These operational efficiency measurements help you determine whether your remote staff is advancing your goals or preventing them from achieving. The job will be completed on time, and milestone reports will be provided by a competent team.
- Metrics for resolving disputes
Working with an offshore team requires constant communication, which is of the biggest significance. You must help someone who may not have the same culture, social structure, or native tongue. Communication problems are likely to occur in these situations. Measuring changes in managerial staff involvement with subordinates is one of the most common techniques to evaluate this statistic. When strategies for resolving conflicts are effective, there is an increase in constructive involvement and collaboration.
- Analyzing internal conflict resolution is a startightforward way to see how well your outsourcing team is managing things. When your internal activities are efficient, increasing earnings is simpler.
- Open discussions and direct feedback is an advanced but effective way to spot and get rid of bottlenecks. This approach also helps to elevate responsibility for each team member.
On a side note, responsibility is a core value within TRIARE team. It has proven to improve the lasting relations with our clients and improve projects’ performance significantly.
- Performance metrics for processes
Operational aptitude is measured across the board by process performance measurements. It aids in identifying both your processes’ strengths and weaknesses. Performance metrics encourage open communication and transparency inside the business. Here are some instances of instructive process performance indicators:
- Return On Investment (ROI) is a metric used to assess an investment’s profitability.
- Indicators of quality are the proportion of sellable products in the total output.
We could also mention some of the social impact metrics, but this usually concerns only advanced clients and select divisions within large enterprises.
Things to Take Into Account When Selecting an Offshore App Development Company
If you have read the article this far, it seems to be a useful piece. We have reviewed the comparison of offshore app development and dedicated teams. It seems to fit most of the clients and you might be within this range. The advantage is a healthy balance of delivery speed, quality of IT services, and their optimized cost.
We have also covered the limitations and disadvantages of this approach, but provided necessary tips on dealing with those. Cultural and time zone differences are being addressed by further globalization and partner offices of a chosen offshore app development company. Language barrier becomes irrelevant since most of the offshore IT companies have a soft skill filter and invest in the education of their employees.
We hope you reference it for practical use. In case you still have questions, feel free to request a free call from our experts.