The Risks And Benefits Of Offshore Software Development

The Risks And Benefits Of Offshore Software Development

We live in an age of burgeoning technology – in an age where rockets are re-useable, cars drive themselves, and watches keep track of our pulse, it’s easy to imagine that developing a mobile application by partnering with an offshore development team would be easy to manage.

With VoIP technologies like Google Hangouts, instant communication platforms like Slack, and project management tools like Trello, it would seem that we’ve reached a truly global era in business and the development of products.

And in many respects, this is true – plentiful and vast industries exist today either due to the existence of global production and supply industries, or rely on the global market that fuels today’s global economy for resources, customers, or both. Many of the rare earth metals that make phones, watches, laptops, or virtually any electronic device come from regions in Africa or Australia – without a global supply line, none of us would have phones – or be reading this blog, for that matter.

What I’m trying to convey is that we do live in the future – it just isn’t to the point where we can collaborate on the level that mobile app development requires, while communicating on a global scale.

The myth of offshore development

There’s plenty of misinformation about offshore development – the main one being the quality of code. A good developer is a good developer no matter where they are or what language they speak (but they’d better know their programming languages) – offshore developers aren’t bad at what they do.

While it’s very true that applications developed by offshore companies can lead to unsustainable codebases, low-grade products, or un-deployable platforms, developers in India or Ukraine can be just as experienced (or inexperienced) as developers in Japan or the US.

The problem isn’t people – it’s the communication of ideas.

Complicated ideas and concepts are difficult enough to understand when they are presented to us in person – just think of how many companies today struggle with disseminating and promoting company culture amongst their own employees – communicating the “feel” of a company’s mission is a challenging task.

And with the addition of different time zones, and distances measured in the thousands-of-miles, communicating the high-level, detailed concepts that are crucial to the decisions of app development can become a nightmare.

So if you’re in the UK, hire a UK development team – and if you’re in Bangladesh, hire a Bengali development team. The most important preliminary step to a successful app is a throughly-vetted development partner; a company that you can trust to deliver a full-fledged product, and trust to understand the mission of your app.

risk and reward of offshore mobile app development

Research the risk & reward of offshore development

The benefits of offshore development

There are benefits to making use of offshore development companies:

  1. Cost: Development companies almost universally charge based on an hourly rate. Developers in countries with a lower cost of living will report lower hourly rates than high-cost-of-living countries. While a developer’s rate in the US may range from $100 – $150, a developer in Asia would range from $20 – $50. If managed properly, this can lead to significant savings.
  2. Quality: “Quality” could just as easily be listed in the “risks” section of this blog. By hiring an offshore developer that lives in a country with a lower cost of living, you stand the chance of getting a high-quality product for a fraction of the cost of a highly-skilled developer in your country.
  3. Cultural insight: This is the most substantial benefit to hiring an offshore development team. If you are targeting a market in Sri Lanka, you should hire a development team from the region. The insight the team will bring to the design choices of your app will help your app feel familiar to your specific audience, and increase its chances of market penetration.

The risks of offshore development

Despite these benefits, there are many more opportunities for the risks associated with offshore development to take hold.

  1. Hidden costs: While offshore development does come with a lower hourly rate, this is more often than not negated by the fact that development will usually take twice as long. The main reason for this is…
  2. Communication: Couple language barriers with high-latency internet connections and having a verbal conversation with your team in a different country, and communication can become a real challenge. Communicating the technical aspects of an issue a developer is working on can be downright impossible sometimes. For systems that require integrated maintenance provided from your own IT department, clear and efficient communication is a necessity.
  3. Management: For many of the same reasons as communication, managing an offshore team can be an organizational nightmare. It is recommended to hire a project manager that is local to your offshore team, and will work to bridge the time difference your development team and your company will experience.
  4. Data privacy, security, and governmental regulation: As unfortunate as it is, it’s necessary to be wary of IP theft when dealing with offshore developers, which makes it especially vital to throughly research your development partner. If a developer in another country steals your intellectual property, there is very little recourse available to you. Security and privacy are two other pressing concerns when utilizing offshore codebases – some countries’ intelligence agencies will work with developers to include backdoor access in order to extract users’ personal data for means of cyber espionage. 

Hourly rate, time, and scale

These are the variables to the equation for determining the cost of your app; the more time it takes to develop, the cost rises… the higher the hourly rate, the cost rises… the larger the scale of your app, again, the cost rises.

hourly rate time and scale to develop a mobile app offshore

Consider hourly rate, time and scale

When comparing the cost of developing an app using an offshore developer versus an onshore developer, the key factor is time. While an offshore developer’s hourly rate will usually be lower than an onshore developer, developing an app with an offshore developer is a longer process – sometimes adding two or three times the amount of total hours to develop. This discrepancy in development length is usually exacerbated by communication issues and time-zone differences, and in turn, significantly reduces the savings of the lower hourly rate of offshore development. 

By increasing your time to market, your app’s chances of success will lower, and by increasing the chances of miscommunication, your app’s codebase has the possibility of being less robust than an app developed onshore – leading to the necessity of almost immediately updating your app as soon as it hits the App Store or Google Play.

With these factors in mind, the cost of developing an app offshore or onshore usually even out – and while either option comes with their own benefits, the risk of miscommunication is a factor every CTO or team lead should consider when deciding between offshore or onshore app development.

Why Custom POS Apps Are More Effective Than Legacy Systems

Virtually all restaurants use some type of point-of-sale (POS) system. Many systems are commercially available, but restaurant owners can also build their own POS apps for mobile devices.

The initial cost of developing an app is often offset by their long-term advantages over legacy systems like Aloha. Long terms benefits of POS apps for mobile devices include:

  • direct cost savings
  • customization
  • greater security
  • improved customer support

Costs

A custom POS app can incorporate the latest innovations in software technology, whereas legacy apps are primarily technology vendors.

Developing a new app allows you to invest in new technologies, features and security measures, while legacy POS systems primarily invest in services such as support contracts and upgrades. These services typically account for the majority of the cost of using a legacy system.

Although there is an upfront cost associated with custom apps, you actually own it once it’s developed. Legacy systems usually have an initial cost as well as a subscription fee that can cause the total cost of ownership for a commercial POS system to exceed the development cost of a custom app.

Developing an app specifically for the Android mobile operating system (OS) is less expensive than porting it over from another OS since Android has an open source.

Furthermore, a legacy POS system’s functionality doesn’t increase over time unless you pay for an upgrade, which may not provide any benefits for your business. You only pay for the features you need when you develop a custom app, allowing it to contribute to both the short and long-term financial success of your business.

Customization

Restaurants can vary greatly in their method of operation, from dedicated food service to businesses that provide other services such as cafes and nightclubs. This variety means that there is no single POS app that can meet the needs of every restaurant, which makes customization especially beneficial for these businesses.

Restaurants often require unique setups for their POS systems due to the range of possible hardware, menu configuration, and workflows. The increasing need to make changes in a POS system quickly also means that it’s more likely to be hosted on a cloud platform rather than a web browser’s backend. The right permissions on a cloud account allow you to manage your restaurant at any time and from any location so long as you have internet access.

Additionally, a cloud platform eliminates the need to update the POS system for each device individually. Changes to the system can be synchronized across multiple devices automatically, without the need for downtime that legacy systems typically require for updates.

The customizations needed in restaurant POS apps also include changes made by staff members, including…

  • changes in the specials
  • changes in item availability
  • end-of-day closeout
  • item modifiers

Customized apps can improve communications between the front and back-of-house operations by sending orders directly to the kitchen display while providing the appropriate notifications to the servers. This capability can lead to a one-house system, which is still quite rare for restaurants.

Additional customizations for POS apps include the ability for staff members and managers to provide guest experiences and other comments on individual orders.

Security

The primary security concern for POS systems is that they collect payment card information, so they need to comply with Payment Card Industry (PCI) regulations. A PCI-compliant POS app is therefore essential for protecting the personal information of guests.

Legacy systems that reside on a desktop fall out of PCI compliance periodically due regulatory changes, and the time needed to update these systems can be substantial due to their large size. These are also more vulnerable to malware, storage limitations and frequently send unencrypted credit card data to a local server.

Custom POS apps can encrypt sensitive data before transmitting it over a secure network and storing the data on a cloud-based server, thus avoiding the risk of an on-site data breach without sacrificing convenience.

Blind closeouts are another security feature that you can obtain with a custom POS app, which requires employees to reconcile cash at the end of their shift without knowing the amount they should have.

A cloud-based approach also makes it easier to integrate a POS app with other systems such as online ordering, gift cards, and customer loyalty programs.

Support

Legacy POS apps typically lock you into their customer support system with contracts that are difficult to break. These contracts make it hard to switch apps because you don’t want to lose the money you’ve already spent on support, even if you’re not in love with the system.

On the other hand, a custom app makes technical support easier because the same team that developed the app often provides the support, including installation and services.

Get ROI by Developing an App

Among the many methods businesses employ to increase their revenue is the development of mobile apps. The funds invested in apps can generate a substantial return, but only if they are built correctly and with the right objectives in mind. Skilled programming, UI and UX design, and overall functionality are key to getting a solid ROI.

Define Your Objectives

The first step to creating a mobile app is to define your objectives. This should be more specific than just “to generate ROI.” What are you hoping to accomplish with the app? Do you want it to sell for profit? Build loyalty? Provide a valuable service? The answers to these questions will inform the type, functionality, and format of your mobile app.

Generating Revenue

If your goal is to develop an app that generates revenue all on its own, then it’s probably going to look more like a game or paid tool than an actual promotion of your brand. If this is what will work with your business model, then go with it, but keep in mind that these types of apps have to hold up really well if you expect customers to pay for them.

Promote Your Brand

Some apps can be used to advertise directly to users. You can make a useful or entertaining app, release it for free, and then utilize it as a platform for advertising products that users may find valuable based on certain parameters you set. When it’s designed well, this can be a powerful tool for increasing sales.

Build Customer Loyalty

One of the more indirect uses of a mobile app is to build customer loyalty. If users find that your app helps them with certain tasks, they will be more likely to remain loyal to your brand. For instance, an app that tracks when certain types of maintenance may be due on an automobile will be valuable for people who don’t normally pay much attention to that sort of thing.

Provide a Service

Apps can be used to provide services. This could be something as simple as allowing someone to track a package or check their bank balance, to name a couple examples. Other services may generate income directly with Cost Per Action (CPA) services. These charge a certain amount to access certain functions within the app.

Improve Efficiency

Not all apps are strictly for customers. You may design something that will improve the efficiency of business operations. For instance, an app that integrates with existing business software can improve mobility and decrease the time spent on certain tasks, thereby improving ROI.

Think Long-Term

Unless you intend to develop a paid app, there is little chance that you’ll be able to an immediate return from it. The benefits of developing an app usually come long-term in the form of increased customer loyalty and subsequent reach to more clientele. These reach into middle to long term ROI as they improve the user’s opinion of the brand and increase the odds that they’ll turn to you to satisfy relevant needs.

Simply put, while apps with this goal in mind do not generate revenue directly, they can increase revenue through attracting more customers and generating more sales of your products or services.

Solid Design

Of course, in order to be successful, your app needs to be well designed. A poorly optimized or clunky application that thwarts people’s very attempts to use it will not get far, resulting in a loss rather than an increase in revenue (long term or short term). Some keys to sound app design are:

  • Ease of use—the UI needs to be easy to navigate
  • Optimization—the programming needs to be clean with quick load times
  • Compatibility—the app should work on the intended device
  • Valuable—the app’s functionality must not get in the way of its own usefulness

When designing an app for your business, you need to make sure the app’s design matches up with your objectives. To learn more about building ROI with a mobile app, check out our other resources or give us a call at 804-451-6016.