In the era of globalization, offshore software development has become an intriguing idea for many companies looking to leverage cost efficiencies, access a broader talent pool, and speed up their development cycles.

The Impact of Time Zone Differences & How To Mitigate

• Why timezone differences are an issue.
• The potential solutions.
• The a cost comparison of your options.

Why Time Zone Differences Matter & How To Address

1. Open Communication Leads To Success

Synchronous Communication: The first thing to address is when development teams are in significantly different time zones, synchronous communication becomes challenging. Real-time discussions, which are crucial for quick decision-making, clarifying requirements, and resolving issues, are often delayed by several hours. This must be on the top of your list when moving software development offshore.

Asynchronous Communication: If synchronous communication is not addressed early, your project can become reliant on asynchronous communication methods like emails and project management tools, which, while useful, can slow down the overall pace of the project. Questions might only be answered the next day, causing a ripple effect of delays and loss of assets to other projects while they wait.

2. Coordination and Collaboration

Meeting Scheduling: Scheduling meetings that are convenient for all parties can be difficult. Often, team members have to join calls early in the morning or late at night, leading to reduced productivity and potential burnout. This is simply something you will have to deal with and some solutions are provided below.

Collaborative Work: Tasks that require close collaboration, such as pair programming or brainstorming sessions, will suffer due to the lack of overlapping work hours. Once again, this is a known issue, but it will change how your software is developed and your teams collaborate. You will have to make accommodations for this aspect of offshore development.

3. Project Management

Monitoring and Supervising: Effective project and delivery management involves regular check-ins and updates. Time zone differences can hinder the project manager’s and the delivery manager’s ability to provide timely feedback and supervision, leading to potential oversight of issues. This must be addressed.

Milestone Tracking Tracking project milestones and ensuring that all team members are aligned on project goals can become cumbersome when working across different time zones but should be considered necessary.

4. Cultural and Contextual Misunderstandings

Cultural Differences: Different time zones often mean different cultures, even from the West to the East Coast and North and South within the Untied States. Misunderstandings can arise from different working styles, communication norms, and business practices. Making each team aware of the most critical ones will go a long way in addressing issues before they arise.

1. Flexible Work Hours

Shift Adjustments: Implementing flexible work hours and overlapping shifts can help ensure some overlap in working hours between onshore and offshore teams. At least five hours of overlap is preferred. This will reduce hours for your project and delivery manager to 55 to 60 hours a week.

Core Development Hours: Establishing core hours where all team members are available can facilitate better communication and coordination.

2. Effective Communication Tools

Use of Collaboration Tools: Leveraging tools like Slack, Microsoft Teams, and project management platforms like Jira can help maintain continuous communication and keep everyone on the same page.

Regular Updates: Requiring regular status updates and check-ins can help keep track of progress and address issues promptly.

3. Dedicated Project Management

Local Project Managers: Having a project manager and delivery manager who can manage the team in their time zone and coordinate with the onshore team can bridge the gap effectively.

Round-the-Clock Support: Implementing a follow-the-sun model where different teams hand over tasks to each other can ensure that work continues around the clock without delays.

4. Dedicated Senior Onshore Software Consultant

Onshore Consultant Project Lead: A project and delivery manager is one thing but having someone intricately familiar with the code and technology onshore can head off issues. A senior consultant who knows how to lead a team, jump into unique situations, and has multiple projects behind them, from architecture to deployment, can help identify issues early and suggest changes before it’s too late. 

5. Training and Cultural Sensitivity

Cross-Cultural Training: Providing cross-cultural training to all team members can help mitigate misunderstandings, foster better collaboration, and retain internal FTE project participants that may be dissatisfied with the offshore experience.

Clear Documentation: Maintaining clear and detailed documentation of requirements, processes, and expectations can help avoid miscommunication and the loss of the knowledge base as offshore developers move around.

1. Labor Costs

Flexible Work Hours: Paying employees for flexible work hours or shift premiums can increase labor costs on both sides of the ocean. However, if hired with this in mind, you may be able to offset this increase.

Trusted Local Delivery Managers: Hiring additional project & delivery managers or team leads who are willing to be on call at all hours of the day and night, depending upon time zones impacting development, will increase management costs. Request an estimate from a specialist who takes on this role and knows how to handle the project from a distance. In many cases, companies transplant a trusted manager at the offshore location. However, it is important to remember that this person still has to balance two cultures and two time zones while trying not to offend the people in their new home. No matter which solution is selected, assume costs are added to the project/delivery management roles that must be calculated.

2. Effective Communication Tool Costs

Communication and Collaboration Tools: Investing in premium versions of communication and collaboration tools can be an added expense, but communication is the backbone of every project. Without an ongoing and concise understanding of expectations on both sides, your project will move off the rails quickly. Find the right tools and make them the standard, whether already in place or new.

3. Training and Development

Cultural Sensitivity Training: As mentioned above, cultural sensitivity training in the right hands can help eliminate issues with offending offshore teams that have set expectations of work and schedules. My relatives from overseas were invited for dinner and showed up two hours late, assuming this was normal. Cross-cultural training and team-building exercises can incur additional costs but must be part of the decision to move offshore or nearshore.

4. Operational Adjustments

Entire Team Adjustments: The entire team, from stakeholders to testing, must be on the same page. No matter their location, ensure this is set in stone and that the costs are part of the adjustment. The good thing is that these costs are typically upfront (unless on contract) and only repeat for specific roles.

5. Training and Cultural Sensitivity

Cross-Cultural Training: Providing cross-cultural training to all team members can help mitigate misunderstandings, foster better collaboration, and retain internal project participants.

Clear Documentation: Maintaining clear and detailed documentation of requirements, processes, and expectations can help avoid miscommunication and the loss of the knowledge base as offshore developers move around.

Project Overview

• Project Duration: 12 weeks
• Weekly Hours: 40
• Team Size: 3 developers & 1 Delivery Manager
• Offshore Team Time Zone Difference: 6 Hours

Onshore Project Cost Calculation

Development Costs:
• Hourly Rate per Developer: $150
• Total Hours per Developer: 40 × 12 = 480
• Total Cost per Developer: 480 × $150 = $72,000
• Total Cost for 3 Developers: 3 × $72,000 = $216,000

Delivery Manager Costs:

• Hourly Rate for Delivery Manager: $180
• Total Hours per Week: 10
• Total Hours for 12 Weeks: 10 × 12 = 120
• Total Cost: 120 x $180 = $21,600

Total Onshore Project Cost:

• $216,000 + $21,600 = $237,600

Offshore Project Cost Calculation

Development Costs:
• Hourly Rate per Developer: $65
• Total Hours per Developer: 40 × 12 = 480
• Total Cost per Developer: 480 × $65 = $31,200
• Total Cost for 3 Developers: 3 × $31,200 = $93,600

Delivery Manager Costs:

• Hourly Rate for Extended Hours Delivery Manager: $180
• Total Hours per Week: 70 (~14 hours/day billed for 24hr availability – 5 days/week)
• Total Hours for 12 Weeks: 70 × 12 = 840
• Total Cost: 840 x $180 = $151,200
  (Note: Typically, an FTE U.S Based employee at a higher salary rate of $260,000 < to experience level required in project management and tech knowledge - also typically manages more than one team at the same time.)

Total Offshore Project Cost:

• $93,600 + $151,200 = $244,800

Offshore Project Cost with Trusted Delivery Manager Living Offshore

Development Costs:
• Hourly Rate per Developer: $65
• Total Hours per Developer: 40 × 12 = 480
• Total Cost per Developer: 480 × $65 = $31,200
• Total Cost for 3 Developers: 3 × $31,200 = $93,600

Trusted Delivery Manager FTE Living Overseas Costs:

• Annual Salary: $260,000
• Weekly Salary Calculation: $5,000 ($260,000/52)
• Total Salary for 12 Weeks: $5,000 × 12 = $60,000
• Overseas Living Expenses (Monthly): $5,500
• Overseas Living Expenses (Total 12 Weeks): $16,500
• Travel (Total 12 Weeks): $8,000
• Total Overseas Placed Delivery Manager: $84,500

Total Offshore Project Cost w/ Overseas FTE Delivery Manager:

• $93,600 + $84,500 = $178,100

Offshore Project Cost for Each Week Project is Extended

Offshore Extension Costs:
• Development Cost Per Week: 40 × 3 x $65 = $7,800
• Delivery Manager Cost Per Week (U.S. Based): 70 × $180 = $12,600
• Total Cost Per Week: $20,400
  or

• Development Cost Per Week: 40 × 3 x $65 = $7,800
• Delivery Manager Cost Per Week (Overseas based): $5,000 + $1,269 + $667 = $6,736
• Total Cost Per Week: $14,400

However, it’s crucial to note that this comparison often does not account for hidden fees and additional costs associated with doing business overseas. With the increased complexity of working offshore, projects often run past deadlines or require additional hours to make up for challenges along the way. It is important to weigh weekly overage costs and the idea that in some cases, the project fails outright and must be restarted.

Costs To Offshore Not Included Above:

Adjustment Costs for Onshore FTE Team: Transitioning to an offshore model can require significant adjustments for the onshore full-time employees, including changes in workflows, processes, and management practices.

Cultural Training Courses: Successful offshore collaboration often necessitates cultural sensitivity training to bridge gaps between working styles and communication norms.

Communication Tools: Effective communication tools and platforms are essential for maintaining seamless interaction between onshore and offshore teams. The costs of these tools can add up, especially if premium versions are required.

Legal and Compliance Costs: Operating in different countries involves navigating various legal and compliance requirements, which can incur additional expenses.

Travel and Accommodation: Regular travel to the offshore location for onshore team members and vice versa can further increase costs.

Unexpected Fees: Various hidden or unexpected fees, such as currency exchange rates, international banking fees, and local taxes, can also impact the overall cost of offshore development.