Current Trends and Offshore Software Development Models in 2023

Software | 23-02-2023 | Jayesh Pau

Current Trends and Offshore Software Development Models

SMEs and large companies prefer offshoring many software development tasks ranging from making a customized web application to building complex enterprise-level software. Whether ERP development, software support, maintenance and update, or a feature-rich mobile app development, a reputed offshore software development company can easily handle these projects while keeping you free to focus on other productive business activities.

The benefits of hiring an offshore software development company include faster TTM (Time-to-Market) and access to a vast pool of talented resources globally at a reduced cost. In this post, we are going to discuss the trends and tips to hire offshore software developers for your upcoming project. But, before moving ahead, let’s have some interesting statics related to offshore software development.

Interesting Stats

  • The IT outsourcing market is expected to gain $425.1 billion in revenue between 2021 to 2026
  • Software development outsourcing market is projected to reach 98 billion in the year 2024
  • Around 70 per cent of companies prefer outsourcing services for reducing costs and saving time
  • The market size of offshore software development is expected to cross USD 283 million by 2030

All these stats and evolving technology indicate the promising future of offshore development. It has many opportunities and benefits to offer to modern enterprises.

Let’s go through current trends and different models for offshore software development.

Current Trends and Offshore Development Models

Diversification and globalization have expanded the software development domain. Companies tend to assign their software development projects to offshore or onshore partners. This trend is known as offshore software development and onshore software development respectively. Before moving to the trends of offshore development, let’s understand what is onshore and offshore in software development.

When companies assign their projects to a software development company based in the same or nearby countries, it is known as onshore development. But, if the company assign its project to a development company located in a country far from its country of origin, it is known as offshore software development. For example, if a USA-based company give a software development company to its partner located in Asia or Western Europe, it is known as offshore software development.

Here are the top trends of offshore development models.

Adoption of Metaverse and Web3

As per the research report by Gartner, as many as 25% of people will spend at least one hour a day in the metaverse for accomplishing activities in the domains of shopping, social, education, and entertainment by 2026. Both the Metaverse and Web3 can bring change in the way we work and live. In such a scenario, we will witness more demand for offshore software developers who have insights into these two technologies.

Rising Demand for AI and ML

We see the prevalence of automation technologies like AI and ML in almost every industry sector, and this trend will give rise to the demand for AI and ML experts. Customized software with advanced features based on AI and ML can give your company an edge over competitors. Companies prefer dedicated applications with such features, and therefore, we witness a rise in the demand for AI experts.

Emerging Offshore Locations

As demand for experienced professionals keeps on increasing, countries in Asia, Latin America, and Eastern Europe have emerged as new offshore locations. Even small-scale industries and startups tend to hire offshore software developers these days and they always face budgetary limitations. Therefore, they are in search of new destinations for projects to save money without compromising on software quality.

Focus on Data Security

Security of the corporate data remains one of the biggest concerns for all companies across the world. Tales of offshore security breaches have made entrepreneurs more concerned for the safety of their intellectual property and confidential information. However, thanks to advancing cybersecurity, more businesses consider offshore software development safer than before and are willing to assign various projects.

Increased Value-to-Price Ratio

When companies hire an offshore software development team, they expect the value higher than the amount they spend on the project. This trend will continue in the year 2023 onward. The software development partner has to remain up-to-date with cutting-edge tools and technologies to meet this expectation of various companies across different industry sectors.

Improved Collaboration Tools

Different collaboration tools play a vital role in accomplishing various projects with common objectives. Today, the offshore software application development process can leverage the benefit of high-quality collaboration tools to stay on the same page as the client’s company. Tools like Asana and Trello have not only improved communication but also contribute to enhancing productivity through effective collaboration.

Difference Between Outstaffing and Outsourcing

Here it is fair to mention that outstaffing and outsourcing are completely different concepts. When it comes to software development, both these approaches are important and companies need to choose the right option as per their business needs and goals.

Outstaffing Model-

When you give employment to remote people for accomplishing your project or the client’s project, it is known as the outstaffing model. Here, your company is responsible for all outstaff employees.

Outsourcing Model-

When you have an idea and you contact another company to get a website or a mobile app based on this idea, it is known as an outsourcing model. Simply put, hiring an offshore software development team is outsourcing.

Offshore Development Models by Business Goals

When it comes to business goals or models, we can classify offshore development into three broad categories-

Fixed Cost

This engagement or hiring model is based on the fixed price of the software development project. As a low-risk approach, this model enables entrepreneurs to get their projects completed from scratch at a fixed price.

Time & Material (T&M)

This model is based on the accurate estimation of project efforts in line with execution time and resources utilized. In other words, the cost of the software development project is a direct result of time and project efforts executed.

Dedicated Development

It is one of the most popular business models. Here, the entire team is dedicated to the client’s software development project. Here, an offshore software development company assigns the client’s project to a dedicated team of professionals.

When and Which Model of Offshore Development to Choose

When discussing how to hire offshore software developers, your project requirements, budget, and other important factors should be considered. Here are the top tips to select the right model for offshore software application development.

  • When the scope and specification of the project are clear, you should opt for a fixed cost model
  • When the project is complicated and prone to continuous or constant changes till execution, the time and material model is useful
  • A long-term project that requires a lot of effort and expertise, should be assigned to an offshore software development center
  • When you want to augment the local presence of your business with the help of offshore developers, you should opt for a staff augmentation option
  • When you want a dedicated team works exclusively on your project, you can opt for a dedicated software development team

Concluding Remarks

Offshore development has multiple benefits to offer to any enterprise. However, it is imperative to choose the right model based on your business goals and project requirements to get all the benefits of hiring an offshore software development company. We hope that this guide will help you find the clear difference between hiring models and offshore development trends.


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Jayesh Pau

Jayesh is Sr. Digital Marketing Expert at Semaphore Software with 8 years of experience in Digital Marketing. Jayesh has engaged with various digital marketing strategies and strong writing skills on Technical contents like Offshore Software Development, Front-End Technologies and many more.