Actionable Tips on How to Manage Offshore Development Team Effectively

Thinking of outsourcing your part or whole software development process to an offshore team? Or looking for ways to improve the productivity of your existing offshore team?

While building an offshore team can be a great option to help you achieve your goals while using fewer resources (including less money), you won’t get this benefit if they are not managed properly.

Yet, managing an offshore team can be easier said than done, mainly due to a lack of physical interaction and direct supervision. This is why you’ll need the right management strategy and use the right tools to ensure your offshore team is performing efficiently.

This post will show you actionable tips on how to effectively manage an offshore team to streamline collaborations, avoid common mistakes, and ultimately improve the team’s efficiency and productivity, and by the end of this guide, you’d have learned about:

  • What is an offshore team? 
  • Onshore vs. nearshore vs. offshore
  • Benefits and drawbacks of an offshore team
  • Challenges of managing an offshore team
  • Actionable tips for successful offshore team management

And more.

Without further ado, let’s get started.

What is an Offshore Team?

An offshore team is, simply put, a team of employees that work remotely from a geographical location (i.e., a country) that is located relatively far from the company’s physical location.

Depending on arrangements, the offshore team can be treated as full-time employees, receiving the same benefits as in-house teams, or they may also be outsourced workers.

When, for example, a US-based video game developer company hires workers in Singapore and builds a Singapore-based team, then this Singapore-based team is an offshore team.

It’s crucial to understand that, although the terms are often used interchangeably with each other, an offshore team and an outsourced team are not one and the same, as we’ll learn below. 

Offshore team vs. Outsourced Team vs. Distributed Team

An outsourced team, as opposed to an offshore team, is a team that is built entirely via outsourcing. Outsourcing is a business practice where a company hires a third-party company or individual to perform a business process. 

So, in an outsourced team, the whole members of the group are not technically employees of the company in question. 

An offshore team can be an outsourced team when the whole team consists of outsourced offshore workers, but as we’ve discussed above, there are cases where the offshore workers are hired full-time as the company’s employees.

Instead, a distributed team is a team that consists of employees that are working from a wide variety of locations both locally and internationally, while an offshore team works strictly from another (distant) country.

Offshore vs. Onshore vs. Nearshore

Outsourced teams can actually be categorized into three main types:, with offshore teams being one of them:

  1. Onshore team: the team consists of workers from the same country
  2. Nearshore team: the team consists of workers from another country (or countries) that is relatively close to the company’s physical location. A US-based company outsourcing to workers from Mexico is an example of “nearshoring.”
  3. Offshore team: the team consists of workers from a distant country or countries, and in most cases, from overseas. When a European company is outsourcing its marketing in the Philippines, it is an example of an offshore team.

Benefits of Having an Offshore Team?

What is the purpose of building and managing an offshore team in the first place? Understanding the benefits of the offshoring model is crucial so we can understand how to manage this offshoring team to leverage these benefits:

1. Cost

Without a doubt, the biggest benefit and the most common reason for outsourcing your process offshore is to save more money.

Especially if you are a company located in developed countries like the US with high labor costs, offshoring means you can gain access to workers with lower labor costs that aren’t necessarily worse than employees from your own country.

Countries like Philipines or Vietnam have significantly lower labor costs and living costs, so you can save more money by building your offshore team in these countries.

2. Flexibility

Having an outsourced offshore team will allow you to easily increase your workforce when there are more projects and reduce the workforce during slow days. 

If you are relying on an in-house team, however, increasing your workforce means you’ll need to undergo a lengthy and expensive recruitment process, not to mention the higher labor costs of onshore workers.

3. Faster turnaround time

Building an offshore team in countries with significantly different time zones than yours can have its perks.

For example, you can ask your offshore team to finish an urgent task during their work hours before the next business day in your country starts. So, you can have the task finished first thing in the morning the next day.

4. Access to a wider pool of talents

Recruiting and training new talents can be challenging and expensive while finding the right talent for your team can often be easier said than done.

So, if your company has a high turnover rate, you can potentially lose a lot of money, time, and other resources.

Outsourcing to an experienced offshore outsourcing company like Oworkers can let you gain access to experienced and qualified AI development talents, including those outside your geographic location. A bigger pool of talent will ultimately translate into a better likelihood of building your perfect AI development team.

5. Focus on your core business

Depending on your business process, you can let your offshore team tackle non-core tasks and let your in-house team use their time and resources on more critical tasks.

Forcing your existing in-house team to handle tasks outside their expertise can be counterproductive since they may be using their time and efforts, not on their core competencies.

By building an offshore team, you can instead allow your in-house team to focus all their efforts on critical tasks that can contribute more to achieving your business objectives.

Challenges of Managing an Offshore Team

Despite all the benefits we’ve discussed above, the offshoring model is not perfect, and thus there will be challenges to face when managing an offshore team. 

1. Proximity

This one is pretty self-explanatory: lack of face-to-face supervision is the main challenge in managing any remote team, including an offshore team. On the other hand, the offshore workers may also struggle with having less access to clear directions and managerial support.

It’s crucial to establish regular communications and structured daily (or at least weekly) meetings to keep everyone in touch, and it’s also important to implement the right tools and solutions to accurately measure their billable hours and productivity.

2. Data privacy and security

Maintaining communications with your offshore teams will mean regular transmission of information abroad, which may include your sensitive or confidential data. So, data privacy and integrity may be at risk.

Companies with offshore teams must implement adequate data security infrastructure and also maintain cybersecurity best practices while communicating and managing offshore workers.

3. Cultural and language gaps

Even if your offshore workers are fluent in your language (i.e., English), varying accents, dialects, and other language issues may hinder effective communication.

Cultural differences can also be a major issue: your offshore workers may have different habits and opinions on work ethics and professional communications.

You should make sure everyone in your company is sensitive to cultural differences and make sure to hire workers (or outsourcing vendors) that have experience working with other clients in your geographical location.

4.Time zone differences

Time zone differences can be a major obstacle to effective communications, although, as mentioned, it also has its benefits. For example, delayed responses during urgent tasks can be a major hurdle, and your offshore workers may not be able to join important meetings due to time differences.

Make sure to hire only offshore workers that can work at least half of your normal business hours.

How To Effectively Manage Offshore Development Team

In order to manage the challenges above and at the same time leverage the benefits of an offshore development team, you can follow these actionable tips:

1. Set clear policies and rules

The key to successfully managing an offshore team (or any remote team in general) is to minimize miscommunications and confusion.

So, it’s very important to set clear policies and rules on everything to describe how the day-to-day operations will run. Prepare a clear agreement to state your offshore workers’ responsibilities, as well as to secure their rights.

You should set clear policies, especially regarding: 

  • Chain of communication, who to contact in different situations
  • Defined means of communication in different situations
  • Rules regarding billable hours and invoicing
  • Rules regarding performance tracking tools
  • Time of meetings, frequency, etc. 
  • Tools and software solutions to use in different situations

And so on.

It’s important to make sure these policies are as clear as possible to avoid confusion. Make sure they are easily understood after weighing potential language and cultural barriers.

2. Choose trustworthy and credible offshore workers

While managing an offshore team can indeed be challenging, the benefits of having a skilled, experienced, and cost-effective offshore team can outweigh these challenges, as long as they are managed properly.

Arguably, the first and yet the most important step of properly managing your offshore team is to work with the right offshore workers in the first place, so you can be sure there’s mutual understanding and trust. It’s best to partner with a credible outsourcing service provider like Oworkers to make sure you are getting the best possible offshore workers in your team.

To ensure productivity, your company needs to trust your offshore team and vice versa.

3. Clearly communicate your vision

Since your offshore workers work remotely, communicating the vision of your product is crucial.

If your offshore team fails to understand your vision, your product will not be developed accurately, and the whole project may end in a disaster.

If necessary, conduct regular product discovery sessions to make sure both sides have the same vision of the product they both understand and agree upon.

Since micromanagement can be very difficult, if not impossible, with an offshore team, it’s very important to have a solid foundation.

4. Keep a comprehensive performance monitoring system

While we’ve emphasized the importance of having a mutual understanding between the company (the management) and the offshore team, it’s still important to establish a comprehensive and reliable performance evaluation system.

Invest in adequate technology solutions so you can gather as much data as possible about the offshore team’s performance. The offshore workers would also appreciate it if the client provided them with time-tracking and other analytics tools solutions that are easy and convenient to work with.

Establish a reliable system so you can always have clear information on what tasks have been accomplished, by whom, and for how long to maintain accountability.

5. Regularly provide timely and clear feedback

If you are not satisfied with the performance and/or quality of work of your offshore team, then you should provide feedback backed by reliable data as soon as possible.

Too many companies are making the mistake of waiting too long before they provide their feedback, which can allow tensions to grow.

Keep it polite and civil, but don’t be afraid to voice your concerns. At the same time, don’t be whiny, and always provide feedback based on real and verifiable data to avoid unnecessary disputes.

Wrapping Up

Having an offshore team of developers for your software development projects can be a viable, cost-effective way for you to grow your business. However, your offshore team will only offer this benefit (and other benefits) when they are managed properly.

It’s crucial to find outsourced workers who are reliable, trustworthy, and willing to learn, while at the same time, you should establish a comprehensive system to monitor and manage their performances. 

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