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Cost Estimation of an Offshore Software Development Project

ByDavid Adamson

Cost Estimation of an Offshore Software Development Project


One of the most challenging tasks that businesses encounter is calculating the cost of software development and how long it will take to develop an entire project when it comes to offshoring. As we all know, every project has its own specialty and it is unique in its own way which is dedicated to providing all the advantages and features in a given timeframe. Whether you are a developer, software analyst, or customer all have their own set of knowledge, ability to adapt, industry experiences, values, and expectations.

Analyzing the project requirements and calculating the overall cost of offshore software development is a major factor that should be taken into consideration to launch your project successfully. If you think that the cost of software development is only dependent on the project size, complexity, and it is all about numbers, then you’re wrong. It includes various other factors that should be taken into account such as strong relationships among the team members, choosing a reliable development team, well-defined tasks, addressing possible risks in advance, and much more. So, if you desire to have a cost-effective and feature-rich project that empowers your business, then it is important to hire an offshore software development team that not only allows you to access skilled developers but also helps you to manage operational costs and cut down major complications.

Business leaders, customers, users, and economists are consistently straining to optimize expenditure and they want to know beforehand when the project will be accomplished. For business executives and startups, the first factor that strikes their minds is the rational estimation of software development costing.

In this post, we’re going to calculate the overall expenses required to build a product and what are the various aspects that affect the cost of software development. So, without any further ado, let’s get started!

What is Offshoring?

Offshoring is the process of hiring a remote development team in totally different time zones. Basically, it uses the development services of a team that is located in a remote location for software development and facilitates all those services in your home country. For developing a feature-rich app by optimizing the cost, the only best option available for you is, hiring a dedicated development team from another country. It concerns human resources, team maintenance in another country, and surcharge.

Generally, the cost per hour for offshore development is approximately 25-30 USD. That’s why this type is usually the most affordable compared to in-house development and offshoring. In short, we can say that the process of offshore software development is a type of business approach where the service provider is based on the other side of the country.

6. Ways to estimate the cost of offshore software development

1. Software Complexity

While estimating the software development costs, make sure to understand the complexity of your project as it might affect the cost. For instance, the type of software testing and coding, designing, identifying software requirements, look if you’re required to integrate your software with third-party systems or not.

If your app is complex and has a large amount of data and information, then it requires more time to develop an app. Depending on your requirements, if you plan to have a unique interface with custom images, fonts, and icons, then you need to hire a web designer from a top-notch company to deal with all of these.

Lastly, if third-party apps are integrated into your software, then it is not an easy task to develop an app from scratch as it requires more effort and professionals to work on it. This may increase the software development cost as the complexity increases and you’re required to write lengthy code to move data from one system to another.

2. Detailed description and project requirements

Are you one of those clients who can say in the middle of the software development process: I have seen a function on a site, and it looks really amazing! Shall we count on it? If so, then make sure to identify all your project requirements and the technical results, so that you’re not required to add any functionality after the completion of the project. Otherwise, the overall expense increases and the management and scheduling of your project are also affected.

One of the most preferred ways to include all your requirements is making a detailed description so that the development team receives what you exactly want and comprehensive technical tasks. If you’re required to perform some modifications to your project and add some more features to it, then you can directly get in touch with the contractor. So, if you’re required to make some necessary changes to the project, make sure to determine a time frame first so that it becomes relevant to add features in the middle of the project.

3. Software size

Software size is one of the most deciding factors for estimating the cost of offshore software development. It is now commensurate with software development expenses. The procedure is straightforward – If you plan to have more pages, it requires more cost and if you want limited screens and pages, then the cost gradually decreases. 

For example, a small and small app generally has 20-25 feature pages, a medium app has between 30 and 40 pages, and a complex and large app generally has more than 40 feature pages. A large-sized project needs to be optimized and tested more carefully, that’s why the cost of a complex and large project is a bit high compared to small ones.

Let’s say if you’re planning to develop a complex and large-sized project for your business having more than 40 screens and top-class features and functionalities, your cost will definitely increase. So before starting your project, make sure to analyze the software project size and then proceed further.

4. Build a reliable software development team

Choosing a software development company and hiring their development team does not only include developers who work on the technical part of the project but it is a lengthy and complex process. If you want to estimate the cost of software development precisely and in total, provide confirming functions and prerequisites which will enable work on the product.

Whether your business is small or large, everyone desires to have a  successful project that allows the users to access the app effectively. User interface and user experience are the two most important things that affect your project and are preferred in the market. But for this, you need a reliable software development team with experienced project managers, designers, and business analysts that works on your project to transform your ideas into reality. Choosing a top-notch company will help you to streamline the development process for employees and help make the project a useful and sought-after one.

5. Scope and flexibility

Largely, the cost of development is dependent on the scope of the software. Project requirements are directly proportionate to the cost of the software. Every deliverable, assumption, and constraint related to the project will be included in the software costs.

A feature-rich project having all the latest functionalities and integrations with databases have various phases of software development that will directly affect the scope of cost. So, make sure to operate with your teams to develop the most precise and effective estimate, including deliverables and timescales required from both sides.

Choosing a reliable team of developers that chooses a flexible approach that is beneficial to both clients and software development companies is also necessary. It is not possible to fix the software development cost down unless a scope and project timescale is properly identified.

6. In-house or Outsourcing

The software development cost is highly influenced by both in-house and outsourcing. But software outsourcing might reduce your development cost by up to 40% without compromising on the quality of your project.

VariableCost of In-house development in the US(32 hours)Cost of outsourcing development to India(32 hours)
Cost per hire$4,200$1,000
Overall team salary$160,000$40,000
IT expenses$20$0
IT systemMac: $1,800$0
Technology training$1,000$0
Paid benefits$6,500$0
Software license$250 per person$0

As you can see from the above table, the cost of outsourcing in India helps you to reduce the overall development cost that makes businesses and entrepreneurs choose this approach for their product development.

Final Thoughts

Before you start your software development journey and invest your time and money in it, make sure to identify your project requirements as we discussed in this post. Make a detailed list of all your requirements so that it becomes easier for you to experience the development process smoothly.

The process of software development is not an easy task, it requires dedicated developers and other professionals to fulfill your project needs that will bring great success to your business.

The points that we discussed in this post are part of the successful estimation of software development that will ensure a limited budget and quality life cycle of the product, so make sure to consider such points when you plan to develop software.

About the author

David Adamson administrator

David Adamson is the founder and digital strategy manager at Coin Ideology Digital. He develops techniques to boost traffic, sales, and brand awareness for startup agencies. He has specialization in Blockchain and digital marketing industry including SEO, PPC, SMO, influence marketing and consumer behavior analysis.

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