Offshore Software Development Guide: Advantages and Risks 

Offshore Software Development Guide: Advantages and Risks 

The prioritization of digital transformation has been hastened by CEOs since the onset of covid 19. Are you looking for offshore development in india? The digital transformation to the future has been approved by their organizations. In order to improve the operational agility, the paradigm change is driving the IT outsourcing spend. New technologies are being integrated and cost savings are being achieved. Even the time to market is faster.

Using Offshore software developers – risks and advantages

How organizations leverage their outsourcing providers have also been changed by the organizations due to the pandemic. Here, the organizations are the customers while the outsourcing providers are the vendors. The key drivers still remain the cost reduction and the talent augmentations. In their outsourcing strategies, organizations are still taking steps to include enterprise resilience. 

Companies are being forced to reevaluate cybersecurity due to the huge shift in the operating models. There are important considerations for business continuity and intellectual properties (IP) as well. Here we talk about a few important legal and risk issues that a customer can consider.

To secure ownership, intellectual property and confidentiality protection is important –

Organizations are required to exercise vigilant control over IP ownership as well as licensing. This usually happens when a vendor is engaged. Netflix and Amazon are well known enterprise organizations. These often rely on OSS or open-source software. They also are in huge need of a public source code that is made freely available for modification and redistribution under a certain license. 

There are several developmental teams for which OSS forms the core building blocks in order to develop, deploy or update applications. There are some OSS licenses required by the consumer. These not only discuss the OSS source code that is ultimately modified by the vendor but also other derivative jobs. The derivative jobs combine Oss with the other Ips. This is known as the “Strong Copyleft License”. 

The strong copyleft license infects the proprietary deliverables. The utilization and the incorporation of any type of OSS in the deliverables need to be closely monitored by the consumers. Searching for offshore software development? A consumer should provide the obligations of the respected vendor in the vendor arrangements. The obligations provided should be with respect to the disclosure of any Oss. This Oss includes the other third parry materials. 

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The license terms should also be included with the customer’s approval before taking them in the deliverables. There is a mandatory flow down of the terms in the subcontractor contracts, these contracts include high levels of confidentialities. Moreover, Ip assignments and background screens are also involved. There need to be Ip warranties, indemnification and also remedies. Under these, the vendor agrees to perform with the due diligence. He or she also replaces the infringing components. 

The damages and the defences related to the IP infringement claims and refund service fees are also done in certain cases. Consumers are finally required to visit the vendors and their developers to execute non-disclosure agreements and also set up staffing restrictions in order to protect certain proprietary information. All these are ways of protection against the developers who tend to leave the vendor unattended. Developers, on the other hand, might also utilize the stolen ideas in order to build a similar platform for a competitor.

To Mitigate Cyber Risks, Certain Data Security Requirements are Present

The world today is absolutely data-driven and we can all simply agree upon that. An increasing amount of sensitive information is required to achieve the outsourcing goals. The sensitive information should come from the consumer’s end for the vendor. Trade secrets, customer logins, health information, credit card numbers, etc. all are information that is included in trade secrets. Several offshore software development designations are present which do not mandate security measures at the same levels.

The levels of the security measures are the same as that of the regulatory standards in the U.S. and the E.U. transferring sensitive information offshore therefore might cause the consumers a significant level of financial as well as reputational risks. This usually happens if the vendor ends up reporting a ransomware attack. A security by design approach should be taken by the consumers in vetting as well as engaging vendors throughout the lifecycle of the software development or SDLC.

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Additionally, a customer is also highly expected to set contractual protections in order to require appropriate technical as well as organizational security measures. These include the data access control that is limited to the employees or the pre-approved contractors on a need-to-know basis. The business continuity plans and the written information security policies are also present. Along with these, the business continuity plans and the written information security policies are also present.

There might be data breaches as well as incident response protocols. Even maintenance of security certifications is present. These are the iso 27001 or the soc 2. These might be present among the others. Security can be the strongest selling point and a competitive differentiator for an offshore software development firm. The offshore software development firm makes or breaks the engagement.

Read More: 5 Important Considerations For Extending Offshore Software Development Team

On Cross Border Data Transfers, There are Privacy Risks and Regulatory Restrictions

It is extremely important to have privacy compliance. An outsourcing engagement is involved to build technology platforms that can process all types of personal data. In order to incorporate privacy at the outset of the SDLC, the customers need to work with the vendors. The SDLC should never be treated as an afterthought. This is a privacy by design mindset. It results in the end products that respect the privacy of the individuals that are out of the box.

The end product is bound to be nimbler and also far more adaptable to the evolving privacy standards in the newer countries and the other marketplaces. Certain privacy regulations are present. These are the E.U.’s general data protection regulations or the GDPR. There are the California privacy laws or the HIPAA. These are the ones that require the additional standards of care. All these are with respect to personal data protection. 

Here we can easily take an example. Before the transfer of the personal data of the EU to the US, the parties need to conduct and document a great transfer impact assessment in order to protect the data against the US government. The US government has access for certain national security purposes. The parties are also required by the GDPR in order to implement specific technical and organizational safeguards for absolute data protection.

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For Dispute Resolution, Law and Even Jurisdiction Can be Governed

Software development has been made into a truly global process with the help of outsourcing. Time should be invested by the consumers and the vendors in order to determine where the disputes could be resolved. The customers and the vendors also need to understand about the laws that should be governing their contracts. Suppose your offshore development firm does not have any sort of presence in or around the US, what do you do? In such a scenario, you can definitely include an arbitration clause (by the customer, for the customer).

The arbitration clause provides the parties with a better level of security. Moreover, a greater degree of flexibility is also facilitated. In certain countries, even expedited proceedings can be facilitated. Most countries, further, are party to the UN convention on the recognitions and the enforcements of foreign arbitral awards. 

Easier enforcements are allowed for the arbitration awards in the member countries including Argentina, Costa Rica and India. Another country in question is Ukraine. There are other much popular nearshore or offshore IT development designations as well.

Following the covid 19 lockdown, the digital transformation trends have accelerated the outsourcing of IT. A customer needs to invest a suitable amount of given time before involving a vendor pretty directly. The time is essential for the assessment of the vendors and contract negotiation is allowed in order to align the contractual terms. Aligning the contractual terms comes with the overall risks and the benefits of the relationship. The engagement for success can be further set up properly.

This can happen when customers do not treat the vendors badly and vice versa. Customers must treat vendor management as a risk mitigation step for the entire year. The risk mitigation process is for competitive advantages.

Wrapping up

Offshoring is a sort of outsourcing. In this type of outsourcing, an organization ships projects to a third-party provider in a far-off country. This might eventually mean working with a vendor operating out of India for the US-based organizations. The other countries that the vendors might be operating from can definitely be China, Eastern Europe, or the Philippines. Searching for offshore software development in India? This is done typically to take greater advantages of the lower labour rates. This model also offers the greatest potential for saving the costs. 


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