While offshore web development presents many financial advantages, as well as expertise, navigating the financial landscape can be a nightmare. Hidden costs are easily one of the most common pitfalls businesses fall into, and they can inflate the overall budget without you knowing. Being proactive in identifying and mitigating these hidden expenses is a requirement in order to keep your project under budget. Here‘s how you can avoid hidden costs in offshore web development services.
- Clearly Define Project Scope
The first step is to draw up a Detailed Requirements Document.
A poorly defined project scope is one of the main reasons for hidden costs. Invest some time before you start the project in creating comprehensive requirements document. It should describe at a high level the features, what functionalities, timetables, and the specific technologies you’re going to use. The more clear you are about what you want, the less you encounter scope creep and costs later on.
Use a Project Management Tool
While using project management tools such as Trello, Jira and Asana can help to keep you all aligned. Using these tools you can record tasks, deadlines and changes in real time to reduce risks of misunderstandings and additional costs.
- The next step after deciding on your minimal viable product (MVP), the simplest product that you can offer, would be to choose the right pricing model for your app.
It’s important to understand the difference between Hourly vs. Fixed Rates.
Different pricing model (such as hourly or fixed project fee) is often quoted from offshore development teams. Hourly rates work great if projects take longer, but it can end up being costly if the project takes shorter than expected. Better budget predictability can be had with fixed project rates and make sure that all details are included in the contract to prevent changes being charged to you.
Factor in Ongoing Costs
If your project has to continually be maintained or supported, be sure to include these costs in your contract up front. Prevent surprises down the line by asking your offshore partner what their post launch services are, and if there are any associated fees.
- First, you have to have clear communication channels.
Set Up Regular Check-Ins
Communication is a critical part of any effective project, especially when working with an offshore team in case they are using a different language and culture. Have regular check in meetings to discuss progress, cover any concerns and make decisions fast. The idea here is to minimize miscommunication and the costs which arise from fixing mistakes.
Use Collaborative Tools
Use Slack, Zoom or Microsoft Teams for real time communication. I feel that these platforms aid in better collaboration and can avert the issues from becoming expensive problems only later.
- Do your Due Diligence Thoroughly
Seeking market acceptance is a two way street, between you and your offshore partner; so, the first step is to research your offshore partner.
Not all offshore development firms are the same. Do your homework and research potential partners, read reviews and check references. When searching for a reputable firm, transparency is the key: you want that firm to provide a reasonable roadmap detailing their processes, costs and possible challenges, to limit any hidden costs.
Ask for a Detailed Proposal
When going through the selection process, ask a detailed proposal outlining costs, timelines and deliverables. By being so transparent you can see potential issues before they bite you and everyone is on the same page.
- Plan for Cultural Differences
Instead of finger pointing, you educate yourself and educate your team.
Misunderstandings, sets in extra costs, can be caused by cultural differences. By understanding your offshore team’s cultural norms & educating your internal staff along the way. It will encourage a better, less frayed relation working in teamwork and this will also help you in reducing the possibility of miscommunication.
Set Expectations Early
Clearly provide an appropriate framework of what work style, when (and who) to communicate with, and how feedback occurs. Setting these standards early can rid of collaboration issues and costly misunderstandings in the future.
- Include a Contingency Budget
Prepare for the Unexpected
Although we took very careful planning, we had problems. Budget for the unexpected, adding a contingency budget to your financial planning, usually 10–20% of the total project cost. This is its safety net — so if you encounter a problem, you don’t need to tear your entire budget apart. - Review Contracts Thoroughly
Know What You’re Signing
Reviewing a contract before you sign it is important so that you know what the terms are; payment schedules, deliverables, etc., and don’t sign yourself into anything you weren’t planning on doing (and don’t sign yourself into penalties for delays or changes on your part). If you are not sure what certain clauses in a well drafted contract mean, don’t be afraid to ask for clarification.
Include Termination Clauses
Have an exit clause in your contract that protects your interests in the case you find your partnership wasn’t the best idea. Having an exit strategy gives peace of mind and will keep you from getting into too much depth without exit.
Conclusion
You should be very diligent, transparent and proactive in managing hidden costs in offshore web development. Through clear identification of project scope, selection of the appropriate pricing model, good communications practices, and careful due diligence you can greatly minimize the risk of unbudgeted expenses.
Spending time and money on these areas will not only save you money, but will make your offshore development more successful and efficient. You can take advantage of the benefits of offshore development in a moderate way, keeping your expenses balanced if you had the right strategies in place.