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  • Writer's pictureKranthi Kumar

Why Offshore Development is Effective?

Updated: Jul 17, 2020

Offshore development model is one of the most effective ways for businesses to reduce their cost. Perhaps, this is why many organizations set up offshore development centers, in countries that offer them cheaper labor. For all purposes of development, the offshore team works with the core development team of the organization. It is controlled by the organization, and co-ordinated by an offshore personnel, at times.

There could be occasions when organizations set up dedicated offshore development centers with huge teams to cater to their needs. At times, it could also be just a few people who help with specific expertise or activity as well. An important aspect of the offshore model is the immense flexibility that it offers to organizations to ramp up and down, based on dynamic business needs.

The need

Sometimes, it is just not possible to hire staff for a short term project, or a unique project that needs some specific expertise that is not aligned to the business needs of the organization. At times, such projects are taken up just to keep a customer happy or to keep some revenue coming in. What is needed on such occasions is a quick way to put together a team, without much hassles and encumbrances. The team is hired for a purpose and will be dismantled after the purpose. This works out more economical than hiring, training and also keeping the people on the payrolls with all benefits. It becomes an overhead that can be avoided. Also, the time taken to hire and train may not be viable and the challenges faced in hiring, especially for specific experts are avoided.

Also, at times, an offshore development team may be set up in a different country, as a strategy to create a presence in that country. There is also an acute shortage of talented staff in many countries that is forcing them to offshore the development work to global teams. At times, organizations want their core teams to concentrate more on research to help them reduce the time to market for innovative products. Using offshore teams to deliver on the products frees up the core team to continue their work undisturbed. Also, organizations can be more customer focused in such scenarios.

The benefits

The offshore model has been prevalent and successful only because of the multiple benefits that organizations derive from it. Cost effectiveness, easy and quick access to a flexible talent pool, scalability and a few other factors drives this business model. Also, the costing can be worked out as a mix of many flexible engagement models like hourly rates or time and material model, fixed monthly retainer model, or even a mix of both or payment of delivery of certain milestones etc. The IP remains with the organization that avails the offshore development model as the work happens in the ‘work for hire mode’ only. These aspects make offshore development an attractive and viable option for many enterprises to achieve their business goals.

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