Does the Location of Your Software Development Company Matter in 2023?

Given the rate at which businesses are moving towards digitisation, there has been a major spike in the number of software development service providers. Since developing a new software application is a daunting task, many businesses choose to hire external help. No matter how big or small the project, the decision to choose a third party for this purpose requires careful contemplation.

There are a lot of options available nowadays: plenty of software companies cater to businesses of varying sizes regarding their software ventures. With so many possibilities, how do you choose the best software partner for your business, and does the location of the software development company matter?

What Is Outsourcing? Do You Need It?

The global IT services outsourcing market size was valued at USD 520.74 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 7.7% from 2020 to 2027.

–Grand View Research

Outsourcing refers to the delegation of certain business processes to third-party organisations. While this could apply to any business process, such as insurance or customer support, we will be talking about it in one particular context: software development outsourcing.

Here is an example.

Let us suppose you are running a pharmaceutical firm. You want to upgrade your finance department by installing a new customised accounting software system or healthcare software for the employees. Maybe you already have a small IT department that maintains the current software systems running in various departments of your company. Do you think they would be able to handle the development and implementation of a full-fledged software application? They probably would not have the skills or experience required for this job.

You might think, “Hmm… perhaps I could permanently hire a professional software developer (or a whole team of developers!).” That could prove to be a very expensive process.

First, you will have to go through the trouble of the hiring process. That could take weeks or even months! Let us say you successfully recruit the necessary resources. They will then be eligible for company-provided benefits as well. What if, after all these efforts, they leave in the middle of the development process? You will have to go through the hiring process again.

What will you do with your in-house development team once the project is completed? An accounting firm would not need software developers on its payroll forever, would it? If you tell them that you plan to fire them once they are done with the project, they won’t touch your offer with a barge-pole!

With so many things that could go wrong with having an in-house development team, many businesses turn to software development outsourcing: the process of you hiring a software company to develop and implement a new software system for your organisation.

This raises a crucial question about software outsourcing: Where do you find the best software developers in the world?

Possible Locations for Outsourcing – From India to the UK!

Once you have taken the final decision to outsource your project, you must make another crucial decision: Who will you hire?

The burgeoning culture of software development outsourcing has made it possible for businesses to hire a service provider anywhere in the world, opening up a world of possibilities. You could own a business in South Africa and hire someone in the Middle East to manage your tech for you! Do you want to just spin the globe and pick a spot at random? It sounds fun, just like picking out your next holiday destination, but there is much more at stake here, and a lot of factors to consider.

Factors Affecting Your Choice of Software Development Partner

Until a few years ago, businesses used to go for the cheapest outsourcing option that was available to them. The geographical location of the software development company would determine the costs, which would ultimately determine the final choice. However, nowadays, there is much more to keep in mind than that.

Let us talk about a few factors that play an important role in the decision to hire a software outsourcing company based in a particular geographical area.

1. Cost

As we mentioned before, cost used to be the leading factor in determining which country to choose for outsourcing software development. Offshoring became a common practice that was highly encouraged. Most businesses used to prefer service providers based in developing countries because they would offer very affordable, almost too-good-to-be-true software development rates. The workers in these countries would demand lower wages, and everyone wanted cheap labour. However, doing so meant that they would have to compromise on a lot of other things, some of which we will discuss in the points coming up next.

2. Quality of Service

A lot of people believe that the value quoted on the price tag is directly proportional to the quality of the product. This is true in most cases. When you go shopping and see a certain product priced at an unbelievably low amount, don’t you automatically start having doubts about its quality? The same applies to the service sector.

When you are partnering with a software outsourcing company, you may be forced to compromise on quality in exchange for affordability. If you are one of those people who cannot tolerate sub-standard work, then the US or UK, for example, are some of the best countries to outsource software development to.

3. Level of Skill and Expertise

Most software development outsourcing companies, regardless of their location, are very careful with their hiring process. Since they want to be the best at providing quality services to their clients, they make sure that their talent pool is saturated with the best of the best. From business analysts and designers to developers and testers, they carefully vet everyone and select professionals who will deliver high-quality services.

4. Communication Barriers

Whether it is a simple project or a highly complex one, it is very important to establish a clear line of communication with the service provider.

The ‘coding’ part of the software development life cycle may not fall victim to a communication gap – most developers know the basics of the English language since almost all of the commonly used coding languages are English-based. However, during the initial processes, such as requirement gathering and design, you need to tell the software outsourcing company exactly what you want them to do.

Thus, in countries where English is not a commonly spoken language, you might find it a problem to communicate your needs to the developers. Native English speakers, on the other hand, would not have any problems understanding precisely what you expect from them.

5. Culture

A country’s culture plays a very important role in the way business is conducted between both local and foreign companies. In some countries, even the way you say hello to the locals can be perceived as impolite. A thumbs-up may be used as a sign of approval or agreement in your country; in Arab culture, it is seen as an incredibly rude gesture. Another concern that arises is the religious or traditional holidays that may disrupt the completion of your project deadlines.

Thus, it is important to consider the rules of politeness when dealing with people from other countries. If this seems like too much of a task, you should consider outsourcing software development to a company operating in a country that has a culture as close as possible to your own.

6. Time Zone

Keeping all other factors constant, the time difference factor itself is very simple to understand. The location of a software development company determines the timings during which their team will be available. The work hours of a company based in Hong Kong, for instance, would be different from one operating in the US.

E-mails and various messaging and collaboration apps have solved most of our communication problems. However, sometimes, it may be necessary to have a meeting in person, or, perhaps, a call. For example, if something urgent comes up, you would want your service provider to be immediately reachable.

If you have no such concerns, offshoring your project should not be a problem. However, if you want swift communication with your developers, you may want to choose a company whose location does not cause a major time difference issue i.e. is geographically closer to you.

7. Local Laws

In some cases, depending on the type of software application maintenance you need to get developed, there is the added concern of security and protection provided by the local laws and policies. Let’s say you want the software firm to create an app whose source code needs to be kept absolutely private, or which will be handling sensitive data, the access to which the software firm may also have. You would want to ensure that the laws in that country favour you and that your app does not become the target of a cyberattack. In the event that a cybersecurity issue does arise, you would want strict action to be taken against the perpetrators so that you face minimal loss in the process.

You may also want to own the Intellectual Property (IP) rights to the software system so that you are its sole owner. This can vary from developer to developer, so it is always wise to discuss it with them in advance.

8. Portfolio

Much like their skills and expertise, the portfolio is independent of the location of a software development company. Keeping in mind the kind of project you want to outsource, you can go through candidates’ past clients and see if they have done any projects in the past that come close to yours. You can also find customer reviews or testimonials on these companies’ websites, trusted client review sites (such as Clutch), or social media pages.

Wrapping Up

The past few years have brought about a change in trends for the best countries to outsource software development to. While the location of a software development company may be a primary factor to consider when deciding to outsource your project, there are a lot of other considerations.

The geographical location helps to figure out the costs, most importantly, as well as gives an insight into the skill levels, professionalism, and any possible communication barriers. Other than that, you will be able to know whether a particular country’s culture is adaptable for you.

With such rapid growth of the software development outsourcing industry, you can select the best onshore or offshore developers from the plethora of available options that preferably tick all of the above checkboxes.