Manage offshore teams effectively using these 7 tips

With all the advantages and disadvantages of offshore teams, there is always a great deal of uncertainty during the cooperation between companies. This guide shows how to communicate with and manage an offshore team to avoid common mistakes and misconceptions.

Outsourcing is one of the most dynamic market segments, especially when it comes to IT and programming. There are multiple advantages of outsourcing, including paying only for a service delivered, no need to worry about hiring a skilled professional, or keeping the team motivated.

According to Statista, the application outsourcing segment is projected to reach US$108,748.6m in 2021. Worldwide is not a coincidence – US companies, as well as those from established economies, seek savings and quality services abroad, and sometimes overseas. According to SharpMinds, India currently holds 44% of the IT offshoring market, followed by China (33%), Brazil (10%), South Africa (8%), and Eastern Europe (5%).

The greatest demand comes from the US (43%) and Western European (22%) countries, followed by Japan (15%) and other mature APAC markets (5%). For many companies that decide to outsource their IT, offshore teams are a natural pick.

What is offshoring

Basically, outsourcing is divided into three main branches:

Onshore – the situation where the company decides to outsource its processes to another company from the same country. This model allows for easier integration between team members, thanks to shared language, work culture, and minimal time zone friction. The development process is typically easier to manage when the teams operate within the same business hours.
Nearshore – in this model, the company is outsourcing processes to an abroad company, but one that is in geographical proximity. A company from South Korea outsourcing to China or a company from the US outsourcing to Mexico is a great example. The distance is usually large enough to bring significant differences in wages, but not long enough to make a regular synchronization meeting a challenge due to the different time zone. Typically, a one–day trip to meet with a team is not a problem. This setup is often considered a pro because it combines cost efficiency with easier collaboration compared to offshore.
Offshore – the situation takes place when the company decides to outsource processes to a distant country, regularly overseas. When a US company is outsourcing programming to India or China, it is the clearest example of an offshore software development model. While the cost savings are significant, managing offshore team members requires additional planning and tools due to cultural gaps and different time zones. The offshore team may work while the client sleeps, which can accelerate the product development cycle when leveraged properly. However, this also means the team may need detailed documentation and asynchronous communication to keep the development process running smoothly.

Advantages of offshore teams

There are numerous reasons why companies decide to handle the code and the software development to companies that are far away from their headquarters. Offshore teams can help scale your development projects without the overhead of building a local team.

Cost-effectiveness

First and foremost, an offshore team is usually significantly cheaper than an onshore team. There are two factors contributing to the differences:

Exchange course differences,
Costs of living. Considering that, hiring an inshore developer has to be significantly higher, while the offshore one gets paid three times. Once by the employers, the second time by the costs of living differences, and the third time by the favorable exchange rate.

Considering that, hiring an onshore developer has to be significantly higher, while the offshore one gets paid three times—once by the employers, the second time by the costs of living differences, and the third time by the favorable exchange rate. These savings make it attractive to hire an offshore software development team, especially for long-term projects.

Flexibility

An offshore team is both easy to extend and easy to reduce. The whole HR management in the development team is handled by the offshore partner. This includes reassigning developers no longer assigned to the offshore team, and finding replacements quickly when needed.

In fact, building a dedicated offshore team removes the stress of recruitment from the client. Whether you're working with offshore development teams in India or building a remote offshore team in the Philippines, flexibility is a major pro.

Time-zone differences

Although this is a tricky one, it can do wonders. If the meeting takes place in the evening, the team in the offshore country has a complete day to make changes, sometimes delivering features overnight. Thus, the client gets the work done in the morning of his day.

When played well, time differences are a competitive advantage in software development projects, especially when the offshore team understands the priorities. Working with a team that delivers by your morning is powerful when launching fast iterations.

Disadvantages of offshore teams

Despite multiple advantages, there are many voices against offshoring. Managing offshore teams comes with its set of challenges, many of which can be mitigated but not ignored.

Cultural differences

Although the age of the Internet and globalization has brought cultures closer together, there are cultural and communicational mismatches. There are various norms and customs regarding terms like time or friendliness.

From simple and tiny misunderstandings, a major disaster can erupt currently least expected. Building trust among team members is crucial when working with an offshore development team.

Time zones

Time zone difference is a double-edged sword indeed. While the difference can work for the client, it complicates setting up live meetings or calls.

There’s no easy way to contact team leaders in real-time without delays. Ensure your offshore team has clear availability slots and uses tools like Slack or Microsoft Teams for communication.

In-person meetings are rare, especially in pandemic or post-pandemic times. That’s why choosing the best tools for managing offshore teams is vital for efficiency.

Furthermore, it is a significant challenge to meet the team in-person, and in the COVID-era it is nearly impossible, despite being risky.

Geopolitical challenges

Depending on the offshore placement, there may be multiple challenges regarding political stability. Wars, sanctions, or drastic policy shifts can all impact your offshore software development team.

Moreover, doing business with “risky partners” comes with unpredictable implications. One of the greatest challenges is anticipating these risks while deciding on the right offshore development company.

Quality issues

With the distance between the development team and the client, the uncertainty about the code quality rises. Preferences and experiences with offshore vendors vary from project to project.

To maintain high standards, effectively managing an offshore team means implementing code reviews, project tracking, and clear expectations. Tools like Calamari help track your offshore progress.

Displacement of jobs

If there are positions offshored, local specialists may face layoffs or missed job opportunities. This creates tension around loyalty and national job markets.

While a remote development team may offer financial benefits, the social impact should be considered. Balancing onshore and offshore teams can be a strategic move that supports both efficiency and local employment.

Final thoughts

Considering the points above, offshoring can be either a business blessing or a curse. The key lies in how companies navigate the complexities of managing remote and international teams.

Use the right tips and tools to ensure that your offshore collaboration runs smoothly. Whether you’re managing a team in the Philippines, teams in India, or any other region, the right structure ensures your offshore team goes from good to great.

With proper offshore team management, strong communication, and shared vision, you can manage your offshore development like a pro. Now, let's point out the best tips for managing offshore teams!

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How to work effectively with offshore developers

The core of the intercultural differences is the non-consistent set of basic principles like time or respect. These variations can easily become a con in international cooperation, especially when managing a distributed team. To avoid future misunderstandings, the company needs to follow a set of rules shown below. Establishing clear communication, defined workflows, and mutual expectations is essential to make the offshore team's collaboration effective.

Whether you're working with a dedicated development team or a flexible contractor setup, these practices will help ensure your offshore team successfully aligns with your goals and company culture.

Set clear rules

The core principle and a basic foundation of any other rule shown below. There is a need not only to prepare a clear agreement that secures both sides of the cooperation. It is necessary to deliver a better-defined framework describing how the cooperation is run daily. The “cooperation constitution” would include:

Defined means of communication,
Progress tracking tools,
Rules regarding the invoicing and work management,
Contact people.

These rules need to be as clear and defined as possible. As mentioned above, the intercultural differences sometimes make communication challenging. So the clear rules defining the time of meetings, the frequency, or the tools to use, for example for time tracking or expense tracking are crucial and will save a lot of effort and nerves later.

Implement heavy analytics on your side

This is a tricky one. While there is a need for mutual understanding and trust when it comes to cooperation in an offshore model, there is also a high need for evaluation. That’s why as many tools and data as possible should be on the client-side.

For example, in most cases, the offshore partner will invoice the company for hours worked. So if the partner sends only a spreadsheet with no clear information on what and when has been done, the uncertainty rises. Moreover, a spreadsheet is easy to manipulate, raising even more questions regarding the precision and accuracy of provided data.

That’s why keeping the production environment and utility software is the best way to ensure the process is done in the best way. The offshore partner will appreciate that the client has provided them with a convenient tool system to work with, while the client will have access to all the required data.

Furthermore, using time tracking software like Calamari can make the process even easier for both sides. The offshore partner will have a lot of paperwork reduced – all his employees working on a particular project will track their time using Calamari, so any additional summaries or spreadsheets will be required for invoicing. On the other hand, the client will have clear information on what has been done, by whom, and for how long.

The data acquired this way will be of more usage when there will be a need to count the total cost of the product and the overall feasibility of the cooperation. The outcome can be surprising, but without good data, it would have remained hidden.

Ensure seamless communication

Seamless communication is not only about using proper tools or establishing frameworks. It is also about setting rules regarding the contact people, their availability, or even an expected response time. There is nothing more frustrating than a void when the client waits for the response. With this in mind, a correct attendance schedule, tracked by time tracking software, is a must.

If there is something bigger to deliver with an offshoring partner, for example, a whole service, a set of mobile apps, or a complete product, the client should consider participating in an intercultural communication workshop. The cost can appear high, but the gains from understanding why the offshore partner behaves in a particular way can be priceless.

Set a clear vision of a product

Another challenge is in communicating the vision of the product in a clear and mutually understood way. If the offshore partner doesn’t share the vision, the project will end with a disengagement at best and a catastrophe at worst.

To reach that, both sides should attend a product discovery or design thinking session, where the managers and product owners will together build an image they share and agree upon. That’s a foundation of working agile with remote teams – having a solid base.

Ensure building good documentation of the product

Software development is a challenging venture, with products composed of thousands of lines of code. With changing people working on a particular part of the product, switching teams, and multiple reviewers, it is no surprise that the code gets swampy. There is a term coined for that – a technical debt.

The technical debt is amassed when the company’s software is being constantly developed without a strong emphasis on the code quality and making the software future-proof. With that, the hidden dependencies or suboptimal solutions amass and get hidden deep inside the code.

According to various estimations, the value of technical debt is on average $3.61 per line of code.

Is that much? It depends on the size of the project. There are 2 million lines of code in the Hubble Telescope software, amassing for over seven million dollars technical debt. Considering the fact that the 30-year-old machine has recently entered into the “safe mode” after a software glitch, the problem is more than real.

And by the way – two million lines of code is not that many – Microsoft Office 2013 had used 45 million lines of code and Facebook runs on 62 million lines of code.

If the company wants to build a modern software product, comparable with Facebook or other popular internet services, it is crucial to prepare solid and informative documentation. It will serve the developers themselves and help future team members to tackle the technical debt and solve problems no one ever thought about when writing the code.

Trust the offshore team – they are your partners

When thinking about the challenges mentioned above, one would think that working with an offshore team is too much effort with little to no gain. But that’s not the case. A skilled and affordable offshore team is a great way to build a competitive advantage and deliver cool products on time and within a budget.

Thus, when the rules are established and communication is ensured, the company needs to trust the partner. If there is no mutual understanding and trust, there is no point in continuing the relationship – be that friendship, dating, or offshore software development.

Provide instant and clear feedback

Finally – if there is any problem, it is not a reason to cut all ties instantly. But on the other hand, the partner will never find out if something is wrong if the company will not share this information.

The key aspect is to provide feedback based on real data gathered in a reliable system. It also regards the employee time tracking and project time tracking. A modern solution like Calamari supports both types of filtering.

When the communication lines are secured and the framework clearly established, the feedback should be as swift as possible. There is no point in waiting for the tensions to grow or even explode in a violent eruption of mutual anger.

Summary

Hiring offshore developers is an interesting way to gain a competitive advantage and deliver powerful digital products for a decent price. Due to various factors like time zones, cultural differences, and work approach, offshoring can come with unpredictable and sometimes unpleasant surprises. That’s why it is important to find outsourced developers who are trustworthy and eager to adapt.

But when the client secures the basics, the gain usually outweighs the risks.

If you wish to discuss the advantages and disadvantages of working with offshore companies, how to hire offshore software developers and not regret it, and how to make the cooperation as smooth as possible. Don’t hesitate to contact us now!

Managing Offshore Teams – Frequently Asked Questions

1. What are the main challenges of managing offshore teams?

The challenges of managing offshore often include time zone gaps, communication issues, and cultural differences. Clear rules and strong offshore team management help reduce risks.

2. How can I manage an offshore team effectively?

To manage an offshore team, you need a well-defined strategy, good tools, and structured communication. Focused management and regular updates make a big difference.

3. What are the best practices to manage offshore teams?

The best practices to manage offshore include setting clear expectations, documenting everything, and ensuring time tracking. These help maintain structure in offshore development.

4. Why should companies hire offshore teams?

The benefits of hiring offshore teams include cost savings, access to global talent, and flexible scaling. It's ideal for boosting your software development speed.

5. What tools help with successful offshore team management?

Tools for successful offshore team collaboration include time tracking, project management, and messaging platforms. These improve visibility and team coordination.

6. How is managing offshore development teams different from managing in-house?

Managing offshore development teams requires more structured communication and time zone planning. It's different from in-house team workflows.

7. What makes a successful offshore team?

A successful offshore team has clear roles, trust, and regular feedback. Good team building and structured workflows are essential.

8. How can I improve communication with my offshore team?

Effective communication is key to managing your offshore team. Use scheduled check-ins, clear documentation, and collaboration tools.

9. What should I consider before I hire an offshore development team?

Before you hire an offshore team, assess your development goals and team readiness. Define a strong strategy and management process.

10. Can offshore and onshore teams work together effectively?

Yes, onshore and offshore teams can succeed with the right software development tools and aligned processes. Seamless working depends on planning and mutual understanding.