Hackernoon logoBenefits & Risks of Offshore Software Development Every CEO Should Know by@dana-kachan

Benefits & Risks of Offshore Software Development Every CEO Should Know

Dana Kachan Hacker Noon profile picture

@dana-kachanDana Kachan

Marketing Consultant, Speaker, Author

Here we provide the essence of everything the CEO must know before making a decision on collaboration with offshore software development companies. All truths and hidden pitfalls uncovered.

When starting a new project, every business owner tries to estimate all the risks and benefits awaiting at every step of this journey. Naturally, the start of offshore software development requires getting into details of this collaboration model too. Here we talk about all pros, cons, risks, benefits, and pretty many other things that may come in handy for CEOs who decided to involve an offshore software team in their projects. 

First of all, what is offshore software development?

Offshore development implies collaboration with a software team based overseas.

Many corporations in the US choose offshore product engineering as a cheaper alternative to onshore outsourcing.

The offshore team can take full responsibility for the product build-up or creating just some of its features.

This approach allows in-house teams to focus on other projects or aspects of the same project. Anyway, it may save a lot of time, costs, and effort for the company. Aren't you still sure about whether it's worth trying out? Hopefully, further insights will help you make a better-informed decision. 

Obvious & hidden benefits of offshore development


Companies daring to start with offshore software development access a wide variety of benefits coming with this choice. Although outsourcing software development to offshore companies might seem too risky for some product creators, most of them choose this approach anyway, as its advantages are significant.

Reduce your development costs

Want to build a software product at a minimum budget? Offshore development is then a must-try option for you. By collaborating with teams from other countries, you grab the chance to build your product with fewer expenses. The most popular offshore software development destinations are usually countries with lower overall labor rates. Consequently, software development services are cheaper there as well.  

Access to a diverse talent pool

When you choose to collaborate with a software team based offshore, you automatically access a diverse talent pool available at that company. You can benefit from offshore development a lot, as software companies usually offer a full-stack development suite and the talents for hire to implement it all. 

Whether you need a UX architect, JavaScript engineer, Python developer, interface designer, or quality assurance expert, you can find the right person among the dozens of teams available in different countries. 


Competence of the workforce

Offshore development countries like Ukraine, the Philippines, China, Vietnam, India, and others offer well-trained software engineers for hire. Software development is very prestigious and very popular among the youth in these regions. Local governments support the IT direction in education and encourage youngsters to get more involved in IT-oriented disciplines. It allows bringing up a new generation of IT talents that can become valuable assets of offshore development projects.

The opportunity to scale quickly

If you want to scale your product quickly, offshore development is for you. It enables companies to focus on different product aspects simultaneously and improve them more effectively. Moreover, by combining your in-house team’s and offshore partner’s efforts, you can develop new features and grow your product faster. Many companies work according to the best offshore development practices that ensure fast product scaling.

The ability to focus on your core business

Another significant advantage of the collaboration with offshore software development companies is the ability to focus on your core business while an external team of experts is working on your product creation. 

Cons of Offshore Software Development - Is it really as risky as people say?


You might have already heard that offshore software development is a risky game. Of course, every approach has its light and dark sides. So, it's time to take a closer look at the dark one. Below, we provide a shortlist of risks that may appear when you start collaborating with an offshore service provider.

Communication barrier

There is a risk of misunderstanding on the offshore development project, caused by poor communication between stakeholders. Many countries, considered as the best for offshore software development, don't speak English well. Although IT communities have a much higher English proficiency level than average citizens, there is always a possibility that communication barriers may arise on the project. 

In this case, a list of the recommended countries with high English proficiency might be helpful. The most popular of them include India, the Philippines, Vietnam, Poland, and Ukraine.

Cultural gap

The cultural gap is one more commonly faced problem on offshore software projects. What seems fun and very understandable for your team might be perceived differently on the opposite side of a Zoom or Skype call.

You can notice the difference in understanding of many things between your teams, from religion to the concept of "timeliness" or "quality." However, software companies with vast experience in providing services for their offshore clients are more used to the so-called ‘Western” mindset, and the cultural gap is felt just lightly there.

Security risks


One of the most frequently discussed risks in the media is the security of software projects built with an offshore team. Many say that security questions arise often when you deal with offshore companies, as they may have no enough expertise in the latest cybersecurity innovations. However, do all of them, indeed? The statement is based on the clients' real negative experience, but it is not the truth for all. 

It entirely depends on the company you work with, and you should choose the partner attentively. We recommend checking out previous clients' reviews, paying particular attention to what they say about cybersecurity on their projects, and reading about what the company itself says about security technologies it uses and creates for its clients.

Poor project quality

Like a previous subject of risk, the project quality depends on the team. Of course, there is a lot of negative feedback and prejudices on collaboration with offshore software engineers based on the idea of the insufficient level of education in these countries and the "unreliable" mentality of local developers. 

However, many offshore service providers have already earned the trust of world-known organisations, like Microsoft, Google, HP, and others. All you need to not misstep is detailed research on the best offshore software development companies. 

Time zone difference

Time zone difference is another most often arising inconvenience when you start working with an offshore team. When it's a daytime in your country, it may be the night in theirs. So, it might be challenging to agree on a meeting for a comfortable time for everyone. Most offshore software companies claim that they are flexible and adjust to the client's timezone. 

However, in reality, it's not always true. Of course, there is another side of the coin. There are really well-organised teams that complete all milestones timely and readily update you on the project's progress on meetings adjusted for your timezone. 

Wrapping it up

This is a brief overview of all pros and cons of offshore software development. I hope that these insights will be useful for you and help you decide on the best option for your project.

Offshore development is a great approach widely accepted and used by even giants like Vodafone, Google, Apple, etc. Of course, there is always the possibility of project failure and ineffective collaboration. However, in-depth research on potential offshore partners may eliminate it.


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