How to hire an offshore software development team: in-depth guide

Offshoring can be a great opportunity for your business – and it’s a booming market, valued at $112.6 billion.

However, to make the most of it, you need to hire the right offshore software development team.

But, who should be on your offshore development team? And how do you find and hire the right one?

We’ll cover this (and more!) and give you a detailed guide on finding a team that’s the right fit for your project.

Let’s dive in!

What is an offshore software development team?

We’ll cover the basics first – what exactly is an offshore software development team?

An offshore software development team is an outsourced development team you hire that’s located in another country, specifically one that’s geographically far away from you.

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So, if you’re based in the U.S. and hire a team from Poland, that counts as offshoring.

Some of the most successful companies out there employ offshore teams:

• Amazon
• Google
• Microsoft
• Slack

There’s a good reason for that – offshoring development can significantly reduce your costs and help you plug skill gaps in your team.

Next, we’ll cover why you should hire an offshore team in more detail.

Benefits of hiring an offshore development team

Here, we’ll cover the top benefits of hiring an offshore development team.

Lower development costs

The main benefit of hiring an offshore development team is that you’ll significantly lower development costs.

In fact, according to a Deloitte survey, 70% companies listed cost reduction as the main reason why they outsource offshore.

So, how much can you save by offshoring development?

If you outsource offshore, you can cut development costs by up to 53% compared to in-house development.

source: Existek

By offshoring development, you’ll minimize costs like:

• Hiring and onboarding costs
• Rent and office maintenance costs
• Employee benefits
• Training costs
• Administrative and management costs

But, the main reason why offshore development reduces development costs is lower labor costs and hourly rates in offshore destinations.

Here’s a comparison of the average hourly rates by role and region around the world:

Average hourly development rates by role and region

As you can see, if you’re based in Western Europe or North America, an offshore team can be 3x-4x cheaper to hire.

And if you partner with the right company, you’ll get the same quality for a fraction of the cost.

So, it’s no surprise that offshoring development is so popular.

Easy team scalability and flexibility

Another major benefit of hiring an offshore software development team is easy team scalability and flexibility.

What this means is that you can easily scale the team up and down, depending on your specific needs.

Here’s an example – let’s say you’re a startup and the MVP you’ve built has just started getting traction in the market.

And now you need to quickly expand your team to meet this new demand and rapidly iterate on your MVP.

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Hiring an offshore development team is your best bet in this situation.

And once you don’t need a big team, scaling it down is much easier than laying off in-house staff – you’re just lowering your commitment to a vendor.

On top of that, you’ll avoid costs like:

• Training and onboarding costs
• Turnover costs
• Reputational damage (if you’re scaling down)

And that’s why hiring an offshore team is a good idea.

Access to a global talent pool

If you decide to go with offshore development, you’ll get access to a huge pool of talent from around the world.

This is particularly useful if you’re having trouble finding the right experts locally for emerging technologies like:

• Internet of Things (IoT)
• AI
• Blockchain

Hiring an offshore software development team will give you access to the top talents in those fields.

And the best part? They’re much cheaper to hire, too.

But, there’s one underrated benefit of building an offshore team – increased cognitive diversity.

Here’s a few of its top benefits for your organization:

source: Herrmann International

These benefits don’t just exist on paper, either.

A study by the Harvard Business Review found that cognitively diverse teams adapt better to change and solve problems faster.

And that’s a pretty good reason to hire a global team.

Key offshore software development team roles

Here, we’ll cover the key roles you should have on your offshore team.

Software engineer

Software engineers are the backbone of every software development team.

They’re the ones who turn your requirements and design into a working product.

But, they do a lot more than just writing new code – here’s how engineers actually spend their time:

source: The New Stack

So, they spend just a third of their time writing new code, with the rest spent on:

• Code maintenance
• Testing (if you don’t have QA engineers)
• Meetings and collaboration with other team members

In a nutshell, they do the heavy lifting on your offshore team – and that’s why they’re indispensable.

Product manager

The product manager is a high-level, strategic role whose job it is to define your product’s vision and strategy.

And they’re an essential part of every good offshore software development team.

Their key responsibility is creating a product that can succeed in the market and this includes:

• Defining key KPIs for success
• Creating a strategic roadmap
• Feature prioritization

Or, in other words, they balance between user, tech, and business needs in order to create a successful software product.

source: Atlassian

They oversee the development process from start to finish and ensure the team hits project milestones on time and within budget.

But, they don’t manage every day-to-day task – that’s the project manager’s job.

Project manager

On an offshore software development team, the project manager handles day-to-day tasks during development.

Their job is to ensure that development is completed on time, within budget, and within scope.

Here’s an overview of their main responsibilities:

source: Inceptone

But, the 3 most important tasks they have are:

• Monitoring progress and setting deadlines
• Team coordination
• Planning tasks and timelines

To put it simply, their job is making sure development stays on track and that the rest of the team knows what to do.

And that’s why they’re essential.

QA engineer

QA engineers make sure your product is bug-free and satisfies quality standards.

And they should be an essential part of every offshore software development team.

There’s a very simple reason for this – having QA engineers on your team can save you a lot of money, especially if you integrate QA from the start.

And that’s because finding and fixing bugs and defects early can be up to 100x cheaper than finding them after deployment.

But, what do QA engineers do, exactly?

Their main responsibilities are:

• Finding and reporting issues
• Creating test plans
• Executing tests
• Managing bugs
• Managing automated tests

Or, to put it simply, their job is to ensure your product is actually usable and works as intended.

And that’s why they should be an essential part of every offshore development team.

Solution architect

The solution architect is one of the most underrated roles on an offshore software development team.

They ensure your product has rock-solid foundations before the team starts building it.

But, what exactly do they do? And why are they important?

Solution architects find and design the best technical solutions to solve specific business problems.

Their job is finding the sweet spot between your enterprise and technical architectures, i.e. between your business needs and technical solutions.

In short, they design how your product will work, pick the tech stack your team will use, and manage technical risks.

And that’s why you need them on your offshore development team.

Product designer

Product designers are in charge of designing your product’s look (user interface) and feel (user experience)

They’re a key part of every offshore development team and essential if you want to build a successful product that meets user needs.

Here’s a snapshot of their deliverables during development:

source: WowMakers

They’re in charge of the whole design process, from user research all the way to creating your product’s final design.

But, you might ask, what’s the difference between a product designer and a UX/UI designer?

Product designers take a broader approach and make sure their design meets business needs, too.

And that’s why they should be on your offshore team.

How to find and hire an offshore software development team

Here, we’ll show the steps you need to take to find and hire an offshore development team.

Define your goals and requirements first

The first step you need to take before hiring an offshore software development team is defining your goals and requirements.

And this means asking questions like:

• Which platform(s) are we targeting?
• What are the long–term goals for our product?
• Which features should our product have?

This will help you figure out which type of product you want to build and narrow down the list of potential partners.

A good place to start is using the SMART goals framework to set your goals.

Next, you need to define your product’s basic requirements and the core features you want it to have.

This will help you identify the technical skills you need in your offshore team and narrow down your list of potential partners.

For example, if you’re building a fintech app, a development company specializing in e-commerce won’t be the right fit.

And that’s why this is such an important first step.

Choose the collaboration model you need

Before you really start your search, you also need to choose the collaboration model that best fits your needs.

This is key because you need to know which type of offshore development team you need before you actually hire one.

Here, you can choose between 2 options – hiring an extended team or a dedicated team.

Hiring an extended team, or team augmentation, is the best choice if you need to plug skill gaps or quickly expand your in-house team.

It’s especially useful if you’re struggling to find the right experts, such as:

• AI engineers
• Cloud engineers
• Data scientists
• Cybersecurity specialists
• Subject matter experts (SMEs)

Hiring a dedicated team, on the other hand, is a better choice if you’re building a product from scratch.

A dedicated team works just like an in-house team, except it’s formed by a third-party agency or service provider.

And if you hire the right company, they’ll care about your product just like an in-house team.

Search and shortlist offshore software development companies

Once you have clear goals and know the type of team you’re looking for, you can start searching for offshore development companies.

You should search for them on:

• Google
• LinkedIn
• B2B portals like Clutch and Goodfirms

A good place to start is by searching relevant keywords  – just googling “offshore software development” will give you far too many results to sift through.

You should be specific, i.e. if you need a mobile app, you should search for “how to hire a mobile app agency” to get more relevant results.

Then, you need to shortlist the top companies that best fit your requirements and dive into their reviews on the B2B portals we mentioned earlier.

source: Clutch

These reviews are objective and realistic and will show you what working with them is actually like.

And the best part?

The companies can’t influence the content of the reviews and all of them are verified, so you don’t have to worry about fake reviews.

And that’s why they’re so valuable.

Review their case studies and previous work

By this point, you’ll have a shortlist of potential partners.

But, you need to narrow it down further to hire an offshore development team that truly has the expertise you need.

And that means reviewing their case studies and the work they’ve done for previous clients. 

So, let’s say you’re a big organization and you need an internal communication app.

In that case, a company that has experience building enterprise software should be your top pick.

But, how do you know their case studies are the real deal?

They should contain:

• The problem they solved for their client
• How they solved the problem
• The team and tech stack they used
• The impact their solution had

If they have in-depth case studies and have built similar products in the past, that’s a great sign they’re a good fit.

And they’ll help you choose the right partner.

Sign a contract and kick-off the project

The final step when hiring an offshore development team is signing a contract before kicking off the project.

But, before you sign it, you need to agree on the exact scope of work you want the team to do.

And that’s where a statement of work (SOW) comes in.

Here’s what it contains:

source: TechTarget

In a nutshell, a SOW defines everything the team will do when working on your project and what’s expected of them.

A well-written SOW will ensure the whole team is on the same page before kick-off and minimize misunderstandings.

Also, you need to discuss the pricing model for the project – fixed price or time and materials.

Here’s a comparison between the two:

And if you want to learn more, we recently hosted Benjamin Huskic, founder of The Quality Gate, on The Roadmap and he shared his take on when to go for each model:

But, here’s a quick tip – the time and materials model is usually the better choice.

It matches the actual man hours and resources used during development and is the fairest for everyone involved.

Once you’ve defined the SOW and decided on the pricing model, you will sign a formal contract with the company.

And that’s it! Now you have an offshore software development team and can kick-off your project.

Top questions to ask an offshore software development company

Here, we’ll discuss some top questions you should always ask an offshore software development company and why they’re important.

• Which similar projects have you worked on?

Asking this question will show you if a company is the right fit and has the expertise you need for your project.

You’ll find out if they have the right skills and experience you’re looking for.

• Which services do you offer?

A company’s services will show you if they can meet your requirements and if they’re a potential long-term partner.

You should be looking for a full-service development partner who can build your product from scratch and help you grow it after launch.

• What development methodology do you use?

The development methodology they use directly impacts how they develop software and the quality of development.

Agile methodologies like Scrum and Kanban are the gold standard for modern software development, so you should make sure they use them.

• Do you offer post-launch support?

If a vendor offers post-launch support and maintenance, they can be your long-term partner.

• What is your pricing model?

The pricing model the vendor uses will determine how much development will cost you in the end.

• Do I have direct contact with the development team?

Direct communication with the team you’ve hired increases efficiency and gives you full control over the project.

And, if you hire the right team, you’ll be able to use their full range of skills.

How much does it cost to hire an offshore team?

There’s no black-and-white answer on how much hiring an offshore development team will cost you.

The cost can vary wildly depending on several factors like:

• Project complexity
• Team size and seniority
• The duration of the project
• The team’s location

But, it’s still cheaper than onshoring or hiring an in-house team.

Here’s an example – let’s say you’re based in the U.S. and you’re looking for a team of 4 software engineers, a solution architect, a UX/UI designer, and a project manager.

And we’ll assume that the project will take 80 man days to complete – how much would a team like that cost?

For starters, here are the average hourly rates in the U.S. and some top offshoring destinations:

Hourly rates in the U.S. vs. offshore destinations

If you hired a team from a U.S. company, it would cost you a minimum of $441,600, assuming they offer the lowest rate.

But, the minimum cost for the same team in Croatia is $163,200 – that’s 63% cheaper!

Of course, hiring a real team won’t be this cut-and-dried and the total cost can vary wildly from company to company.

But, it goes to show just how cost-effective offshoring development can be.

Expert tips for successfully managing your offshore software development team

Finally, we’ll give you some top expert tips on successfully managing your offshore team.

Set clear project milestones and deliverables

When working with an offshore software development team, one of the most important things is setting clear project milestones and deliverables.

This is essential if you want to successfully manage your project and team.

But, what exactly are milestones and deliverables, anyway? And why are they important?

Here’s a quick comparison:

source: Motion

In simple terms, milestones are key points during development, like the end of each phase, while deliverables are the concrete results of each phase of development.

They’re important because they’ll help you track the team’s progress and help them understand your expectations.

This way, the whole team will be aligned with your goals and will know exactly what they need to do in each stage of the development process.

And that’s key for successful development.

Set up clear communication channels

Clear communication is key to successful development.

And if you hire an offshore development team, it’s even more important.

That’s why you need to set up clear communication channels from the start – your team should always be able to easily reach you (and vice versa).

Clear and open communication with the team you hire will allow you to get the most out of their experience and expertise.

Here’s DECODE co-founder and CEO, Marko Strizic, sharing his take on how it benefits you during development:

But, how do you ensure you communicate effectively with your offshore team?

The key is using both synchronous and asynchronous communication methods – don’t rely on just one method.

source: People-First Jobs

This way, your team will always be able to reach you and you’ll collaborate more effectively.

And that’s key for successful development.

Plan for time zone differences

Time zone differences are one of the main challenges of managing an offshore software development team.

Let’s say you’re based in Austin, Texas and you hire an offshore team from India.

The team will be 10 hours and 30 minutes ahead of you, so coordinating with them will be difficult.

source: Time Temperature

Your working hours will overlap for only a couple of hours every day, so real-time collaboration might be severely limited.

Luckily, you can plan for and mitigate this.

Here’s what you can do:

• Rotate meeting times
• Schedule flexible working hours
• Set up communication windows
• Hold regular progress meetings

This way, you’ll minimize the impact of time zone differences and get the most out of your offshore team.

And that’s exactly what you should want.

Offshore software development team: FAQs

Need an offshore development team for your project?

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We can build your product from scratch, from validating your idea all the way to post-launch maintenance and iteration.

If you want to learn more, feel free to reach out and we’ll set up a quick meeting to discuss how we can help you with your project.