Costs of Offshore Software Development

The offshore software development model has been in use long enough for those who have experience with that model to have identified a number of cost categories that must be budgeted and included in ROI calculations, including:
  1. Travel costs for onshore resources to visit the offshore facility, and vice versa. These visits will occur regularly, resulting in almost a continuous presence of someone, or a group, from one site, visiting the other site.
  2. Communications, including phone calls and web conferencing. Daily communication, including visual demonstrations, is critical.
  3. Intermediaries. Language, cultural, and domain issues require added resources, including business analysts, project managers, team leads, and others.

In addition to these explicit costs, each organization, the client and the service provider, need to account for the increased time and energy demands placed on their respective employees. Time zone and language differences will require an extensive commitment after hours for both sides. The absence of immediate presence of team members means communication is slowed and filtered, which results in lower quality and higher rework levels.

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