Pros and Cons of Offshore Software Development every CEO needs to know

Pros and Cons of Offshore Software Development every CEO needs to know

The foundation of every successful business is an adequate workforce. When companies prioritize innovation, growth, and brilliance when forming their team, there are more benefits to it than they realize.

However, building an excellent in-house software development team requires a substantial investment. Hiring software developers internally results in more expenses, including labor cost, renting office space, insurance, furniture, utilities, and so much more. They have to be able to match according to the industry standards, and it’s not cheap.

For small and medium-sized enterprises, software development offshoring is a feasible alternative. They can afford competitive rates without compromising the project quality. To further give you an idea about offshore software development, here are the pros and cons of this business model.

Pros of Offshore Software Development

Knowing the pros of offshore software development can help you decide if this can work for your business.

Reduce Your Development Costs

It is imperative for businesses that have only been starting to reduce their costs as much as possible. Whether you are forming a startup or small enterprise, you have to allocate your budget accordingly. Otherwise, your venture can likely fail.

To focus on the core of our business, it’s best to offshore software development. Hiring software developers outside the US tend to be cheaper than the local market rate. You can find those with the same skill-set and experience to fulfill your business requirements at a lower cost. This option allows you to acquire the best talent without sacrificing the quality of work.

You can utilize the savings to invest in market research, marketing, and performing advancements to improve your products and services’ functionality.

Access to a Diverse Talent Pool

Expanding your horizon allows you to discover a diverse pool of skilled software developers. When you don’t put geographical restrictions to sustain your business, you can explore endless opportunities. You can select a country that has a reputation in tech and find people suitable for your team. For instance, Microsoft and Hewlett-Packard recently started an educational program in Latin America to further develop their skill set in the IT industry. This will lead to a major influx in IT talent throughout Latin America including Argentina and Uruguay.

Ultimately, gaining access to a global talent pool is way cheaper than the latter.

Offers Flexibility

Hiring internally means that you are bound to keep them for the long haul. However, you may find your in-house team struggling to complete piling tasks on the intended timeframe. To strengthen your workforce without spending much, hire offshore developers. You can always halt the contract when you don’t feel like you need them anymore. There’s less commitment involved, and it streamlines the workflow.  Accordingly, you can always opt for offshore developers, especially for short-term and seasonal projects.

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Cons of Offshore Software Development

Despite the numerous advantages of offshore software development, you cannot go down this path without considering its potential disadvantages.

Security Risks

There are security risks involved when offshoring your software development team. Working with them consists of sharing confidential ideas about your project. There can be situations when they potentially steal parts of your concept to earn or establish it as their own. They are geographically distant from you, so making disputes can be complicated. However, you can prevent this in the first place if you have them sign an NDA.

A non-disclosure agreement can protect you if the other party compromises the data you have shared on the duration of the project. It protects your confidential information during the development of the product or software.

Poor Project Quality

Although this only happens occasionally, you cannot always guarantee that they can produce high-quality work. This issue is why you need to communicate to check your offshore worker’s progress and consistently provide valuable feedback.

Often, companies test the offshore team before deciding whether they will take them to finish the rest of the process. It is also an opportunity for you to see their strengths and weaknesses. This testing stage prevents you from wasting your time working with an offshore team that is bound to fail.


Similar to any remote work arrangements, this setting can sometimes result in miscommunications and misunderstandings. More often than not, English is not their first language, so they may not understand some expressions and terms. They might also find it difficult to express themselves better when they struggle with the language.

Moreover, communication-barrier can also arise from time-zone differences. Emergency messages placed outside of the office hours may take a few hours to receive a response, considering they are only just waking up or about to sleep. For requests and approval for actions, it may take until the next day to get their response.

However, most offshoring teams adjust their working hours according to the American market, which allows them to communicate with clients efficiently. These issues are also nearly non-existent when outsourcing to Uruguay and Argentina due to their strong proficiency in English, cultural proximity to the United States, and similar time zones.

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