This section explains the advantages and disadvantages to keep in mind when considering an overseas offshore development company or offshore development subsidiary.

Advantages of Offshore Development

Cost Reduction

The biggest advantage of offshore is cost reduction. Many projects are outsourced to Southeast Asian countries that are close to Japan, and countries such as Vietnam, Myanmar, and the Philippines are used as offshore destinations. Since the cost of labor is less than half that of Japan, it is possible to develop at a reduced cost if the disadvantages can be compensated for.

(Differences in unit costs by country https://www.offshore-kaihatsu.com/faq/tanka.php)

Originally, China and India were the most common offshore outsourcing destinations, but as offshore unit prices have risen, outsourcing tends to spread to countries in Southeast Asia, where unit costs are lower. Since AI development is expensive for domestic engineers, there is a growing need for offshore development.

Easier to attract human resources

While the number of system engineers in Japan is on the decline after peaking in 2019, consumer needs are shifting from products to services, and the shortage of IT personnel is becoming a serious problem.
Looking overseas, engineers can still be attracted in large numbers. In fact, the average monthly wage in Southeast Asian countries is less than 20,000 yen, and IT engineers can earn five to ten times as much as their counterparts in other countries.

(IT technician talent shortage problem https://www.jbsvc.co.jp/useful/management/itjinzai.html)

(Global wage comparison https://www.digima-japan.com/knowhow/world/8314.php)

Versatile Development Languages and Technologies

Offshore development companies usually support a wide variety of development languages and frameworks. There are also many offshore development companies, each with their own specialties in different languages and technologies. If you have a specific technology in mind that you would like to develop, you should first contact a few offshore development companies.

(Development languages used in offshore development: https://www.offshore-ride.com/knowledge/programming_language.html)

Lab development reduces disadvantages.

Lab development is to hire a team of engineers on a quasi-contract basis. One of the disadvantages of offshore development is communication and quality problems, but lab development allows you to focus on solving these problems because you can fix the team members for the mid- to long-term.

Disadvantages of Offshore Development

Communication

Communication is likely to be the most difficult part of offshore development. When communicating specifications, it is not uncommon for the output to differ from what is expected. Usually, you will communicate with the offshore contact person, called a bridge, and you may be faced with a person in charge who does not speak Japanese well enough.

(What is a bridge SE? https://career.levtech.jp/guide/knowhow/article/275/)

Cost cannot be reduced for small projects

In offshore development, costs include not only the cost of engineers, but also the cost of operations such as bridge SE for communication, interpretation/translation, and documentation. In small projects, the relative costs of translation and management may not allow the engineer to benefit from the cost advantages. If the project is larger, communication costs fall relative to the size of the project, making it more cost-effective. Estimating the cost of the project will help confirm which work will be performed and how much the cost will be incurred.

(For development estimates, visit https://products.sint.co.jp/obdz/blog/development-estimation)

Differences in culture, work attitude, and business practices

The way of working in Japan may not be understood in the same way overseas. A special throwaway request will almost never work. Instead of taking it as a bad thing, you can make a request by deciding the job exactly as you want it done, and they will do the work. You need to have an awareness of the need to ensure the quality of the deliverables, even if it is tedious.

(Differences in the way we think about work https://global-saponet.mgl.mynavi.jp/culture/1913#chapter-3)

Quality is unstable

Offshore, the physical distance makes it difficult to check the site. There is also the problem that the process is difficult to see because the focus is on deliverables with regard to development. Maintaining quality requires a high level of management, and there are many offshore development companies with immature quality control, and it is often said that offshore quality is poor.

Conclusion

Offshore development has both advantages and disadvantages. By being aware of the disadvantages and taking countermeasures, you will be able to ensure stable offshore development.