Offshore Development Model: Pick The Right One for Your Business

Updated 23 Feb 2024
Published 23 Feb 2024
Nancy Bhargava 1232 Views
How to Choose Offshore Development Model

The software development landscape is different compared to the past. It has grown a lot in recent years, and multiple alternatives, including their pros and cons, are available at your disposal.

Developing software for business is a strategic decision that impacts growth.

One of the best and trending methods is offshore software development, where a business outsources the development outside its homeland.

Accessing the wide talent pool helps them get it done at an optimized labor cost. Businesses can overcome the challenges associated with the right approach.

If you are looking to choose an offshore development model, we have created this article to help you. It’ll assist you in picking the right model that suits your business needs.

So, let’s start with what these are.

Types of Offshore Software Development Models

There are multiple types of offshore software development models. But these are classified into three:

  • By Level
  • By Business Models
  • By Services

Whatever model you choose will fall under one of the categories mentioned above. So, here are the details of these models as per their classification.

1. Offshore Software Development Models by Level

The offshore development models stand for the level of control you’ll have while outsourcing the work to an offshore software development company. It defines the level of access and type of corporation between both parties.

#A. Low-Level Outsourcing

As its name implies, product management is with a client company, and an offshore team will handle the software development and quality assurance.

You only need to focus on manual testing and test development if you are the client.

Pros of Low-Level Outsourcing
  • Comes with controlled costs due to the involvement of low-level tasks.
  • It offers better flexibility.
  • Access to a larger talent pool and greater competitive advantage.
Cons of Low-Level Outsourcing
  • Potential job loss in the market
  • Less control over development
  • High dependency on outsourced experts

#B. High-Level Outsourcing

The high-level outsourcing model refers to outsourced software development, where the outsourced team develops the product and tests it under in-house supervision.

On the other hand, the client handles the product management.

Pros of High-Level Outsourcing
  • Fine control over software development
  • It helps the in-house team focus on their prime responsibilities
  • Better scalability and flexibility
  • Cost-effective outsourcing model
Cons of High-Level Outsourcing
  • Sometimes, there is coordination between clients and outsourced software developers.
  • Likely to delay the software development process.
  • High dependency on the outsourced team.

#C. Complete Technical Outsourcing

It is also known as full-process outsourcing, where offshore software development covers all technical requirements, from developing the product to testing the final product, including team management.

It is considered one of the preferred outsourcing methods suitable for full project development.

Pros of Complete Technical Outsourcing
  • Access to the wide talent pool
  • Liberty to make own outsourced software development team
  • Reduced overhead costs
  • Complete control over the development process
Cons of Complete Technical Outsourcing
  • The project’s confidentiality can be breached
  • Communication challenges can happen
  • Limited involvement of in-house teams
  • Data and information securities risks involved

2. Offshore Software Development Models by Business Models

It directly refers to how software outsourcing companies provide value to their clients in exchange for their investment. These models’ key advantages make it convenient for a client to choose the better option.

For example, as an offshore software development company, Arka Softwares, we provide suitable options to hire dedicated developers to outsource the project. You can check it out here!

#A. Fixed Price Offshore Software Development

As its name implies, the project price and scope are determined and agreed upon by both parties, i.e., the client and the software services provider company.

The fixed price model is one of the most common and has been practiced for a long time in the software development industry.

It is the most suitable model for small and medium-scale businesses. The client who has a short-term project goal can undoubtedly choose it.

Pros of Fixed-Price Offshore Software Development
  • High clarity with cost and budget
  • Hassle-free project monitoring
  • Predictable project delivery
  • Seamless collaboration with service provider
Cons of Fixed-Price Offshore Software Development
  • Once engagement progresses, there’ll be less flexibility
  • It requires longer planning and preparation
  • A fixed route is being followed that gives limited control over the process

#B. Dedicated Offshore Software Development

When a bunch of offshore development experts work on a project dedicatedly, it is called a dedicated offshore development model.

A client can deploy the resources on a requirement basis and leverage them to extend them to their in-house team.

The clients have complete control over IPR rights.

Pros of Dedicated Offshore Software Development
  • It is cost-effective
  • Flexible for scaling up or down the team
  • Supports long-term collaboration of clients and dedicated offshore team
  • Highly confidential and secure.
Cons of Dedicated Offshore Software Development
  • It may take a longer time due to the involvement of experts
  • Limited flexibility with changed project requirements
  • Sometimes, cultural and language differences are a roadblock.

#C. Time & Material Model

The T&M (Time and Material) offshore development model refers to the pricing and project management approach. Following the model, the client pays like.

  • Time: cost per time spent by the developers on the project. It is calculated based on hourly rates. For example, if ‘X’ developers worked ‘Y’ total hours on Project ‘Q’ and the hourly rate is $20/hour, the cost will be like ’20 * Y’.
  • Material: refers to the cost of any materials used in the project or developed for the project. It includes software, hardware, or resources.

So, the cost to develop software using a time and material development model combines those mentioned above.

Pros of Time & Material Offshore Development Model
  • It is best if you require developers for fixed hours
  • Supports flexibility
  • More Visibility & Transparency
Cons of T&M Offshore Software Development Model
  • Cost control is sometimes an obstacle
  • Lack of certainty
  • It is hard to predict the actual development cost
  • Not suitable if services are needed for a longer time

3. Offshore Software Development Models by Services

Services-based offshore development models refer to software development leveraging a choice of service.

Clients can choose how to develop their software based on factors such as project size, complexity, and other requirements.

#A. Project-Based Offshore Development

Project-based service development is ideal for clients who have a defined set of project requirements and timelines.

The development work goes on a fixed trail, resulting in a faster software launch. The project-based remote-development strategy works best with low-to medium-complexity projects.

Pros of Project-Based Offshore Development
  • Faster project completion
  • Access to a specialized talent pool
  • Well-defined requirements
  • Greater cost savings
Cons of Project-Based Offshore Development
  • Communication and cultural challenges
  • Security risks
  • Quality concerns
  • Contractual issues

#B. Offshore Development Center

The ODC, aka Offshore Development Center, is an office located at a remote location outside the country where tasks such as mobile app development, website development, software maintenance, and other IT-related work happen.

It can happen in two ways: the client can set it up or collaborate with a software development company as their offshore software development center.

Pros of Offshore Development Center
  • Best for long-term partnership
  • Greater control over software development
  • Access to technical expertise and talent
  • Better flexibility and scalability
Cons of Offshore Development Center
  • High investment is required to set the center
  • Data Security & privacy concerns
  • Time-zone barriers
  • Not suitable for short-term project goals

#C. Offshore Staff Augmentation

It is also one of the preferred methods for offshore software development. You can augment your in-house team with skilled offshore developers hired from outside locations.

It is the best way to outsource a specific task or role to the remote developers as an extended arm of the in-house team.

Pros of Offshore Staff Augmentation
  • Improved productivity
  • Faster turnaround time
  • Cost savings
  • Access to global talent
Cons of Offshore Staff Augmentation
  • Intellectual property rights issues
  • Time-zone constraints
  • Data security
  • Cultural differences

Also read: Offshoring vs Outsourcing: Which is Better for Business?

How to Choose the Right Offshore Development Models?

In the previous section, you educated yourself about the classification of offshore development models.

Most businesses also search like you do. How do you choose the right offshore software development company? Or what the right offshore development model to choose is.

So, now’s the time to know the steps to land you with the right offshore development model for your project.

  • Requirements

It all starts with the project requirements, and the whole game revolves around them. If you know the exact project requirements, half of the battle you’ve won already exists.

The better idea is to identify the requirements based on project goals, timeline, and budget.

  • Project Scope

Project scope plays a crucial role when choosing the right offshore development model.

Examples of scope are if you’re looking to develop a project quickly, your project development needs longer, or you want to hire offshore software developers for a specific task. So, based on it, you can choose the development model.

  • Teams Skillset

First, evaluate the skills of your in-house team to see whether they are suitable to develop the project in the right way.

If you require an additional team of offshore developers, you also need to evaluate their skills. Here, you can choose a dedicated development model.

  • Budget

For software development, the budget is also a constraint. So, be sure about it. If you have a limited budget and your project can be finished quickly, you can choose between a fixed-price or time-material model.

  • Team Size

Smaller teams may sometimes face a big challenge in developing software, mobile apps, or any IT product. The best way is to analyze before choosing a model your limited team can use.

If not, then the right model is – Offshore Team Augmentation.

Regardless of your model, the most important thing is to carefully decide on a software development company for partnership.

They must have extensive experience providing offshore software development services following different models.

Why should you invest in Offshore Software Development?

Multiple benefits of offshore software development make it worthwhile for a business.

  • The Best Cost-Saving Method

Offshore development helps you save a greater portion of the cost. For example, you do need to hire experts for different tasks.

While offshoring, you’ll have access to the whole team, which consists of developers, designers, project managers, team leaders, and others.

  • More Productivity

On the one hand, your in-house team will focus on the core tasks, and your offshore team will handle development tasks. Overall, it will increase your company’s productivity. It will also free you from the burden of hiring an in-house team.

  • Low Development Cost

If you want to get your project done at a low cost, then offshoring or outsourcing is the best, although there are some minor differences between offshoring and outsourcing. You can hire offshore software developers from countries like India or others for $20 per hour.

  • Reduced IT Infra Cost

One of the top benefits of offshore software development is reduced infrastructure and operational costs. With any offshore development model, you do not need to arrange any office space, hardware, software, or other things.

  • Access to Wide Talent

With offshore software development, the whole world is open, and you can hire global talent. With it, you can access a wide talent pool and skill set.

  • Scalability

You can scale up or down your software development team any time you need. Even you can scale up or down the development efforts.

  • Faster Development

Offshore development helps accelerate development efforts as it accelerates development. It helps bridge the gap between the in-house team and project development.

The Final Thoughts

In this digital landscape, software plays a crucial role in the growth of an organization. What matters is how you develop it.

Among multiple options, one of the best is to choose an offshore development model that aligns with your project requirements.

Every model has its pros and cons so you can decide accordingly. So, decide patiently and choose a software development company with a proven track record of providing offshore software development services.

As a trusted offshore software development company, we want to hear your ideas. If you have any queries, then our experts will be happy to assist you with that. Anytime, you can contact us.

Nancy Bhargava

Nancy works as an IT consulting professional with Arka Softwares. She has an in-depth knowledge of trending tech and consumer affairs. She loves to put her observations and insights of the industry to reveal interesting stories prompting the latest domain practice and trends.

Let’s build something
great together!

2 + 7 =

Client Testimonials

Mayuri Desai

Mayuri Desai


The app quickly earned over 1,000 downloads within two months of launch, and users have responded positively. ARKA Softwares boasted experienced resources who were happy to share their knowledge with the internal team.

Abdullah Nawaf

Abdullah Nawaf


While the development is ongoing, the client is pleased with the work thus far, which has met expectations. ARKA Softwares puts the needs of the client first, remaining open to feedback on their work. Their team is adaptable, responsive, and hard-working.

Pedro Paulo Marchesi Mello

Pedro Paulo Marchesi Mello

Service Provider

I started my project with Arka Softwares because it is a reputed company. And when I started working with them for my project, I found out that they have everything essential for my work. The app is still under development and but quite confident and it will turn out to be the best.