Hiro Yamada is an AI and software development expert, CEO at First Mate Technologies, and a former engineer at Asana, Palantir, and Google.
With remote work becoming the norm and AI-powered tools democratizing software development, outsourcing product development to offshore agencies has become increasingly common. Reflecting this shift is a 2020 report by The Economist showing that GitHub users in poorer countries surpassed those in wealthier nations (subscription required)—illustrating how global developer talent is becoming more accessible to businesses.
I’ve seen this shift firsthand through my own career. First I worked as a software engineer at several Silicon Valley companies, where I saw the level of craftsmanship required to build world-class software. Later, I returned to my home country of Japan and founded an offshore development agency, partnering with U.S. tech companies. That journey has shown me both sides of offshore development. When done right, it can dramatically reduce costs and accelerate growth. When done wrong, however, it can lead to delays, budget overruns and inconsistent quality.
In this guide, I’ll share hard-earned lessons—both wins and wounds—to help you navigate potential pitfalls and leverage offshore development successfully.
1. Assessing Technical Expertise In The AI Era
While AI-assisted tools can make it easy to build functional software, achieving scalability, security and maintainability still require deep expertise. This makes it important to evaluate the true capabilities of your development team—a task that can be especially tricky for non-technical clients. Further complicating matters, the people on sales calls are often not the ones doing the work.
Here are a few ways you can determine if a potential partner has the expertise needed for your project:
• Seek long-term client testimonials. Ask previous clients how long they continued using the software built by the agency and whether there were any major security vulnerabilities or unexpected failures.
• Request short trial periods. This gives you opportunities to witness firsthand the team’s responsiveness, technical proficiency and communication effectiveness.
• Prioritize maintainability. Ask how the agency ensures code quality over time, including their documentation standards, testing procedures and methods for minimizing technical debt.
2. Overcoming Workload Underestimation
Even experienced engineers struggle with accurate workload estimation, and offshore engagements often face additional challenges in this area. Some dev shops may deliberately underbid to win contracts, only to later overestimate remaining work to increase revenue.
Other reasons for underestimation can be unintentional, however. For instance, offshore teams may have cultural differences that lead them to treat timelines as flexible goals rather than strict commitments. AI-driven overconfidence can also cause delays; AI-generated code creates an illusion of speed, but real-world debugging and integration remain time-consuming, which can lead to underestimations about the total time required for project completion.
There are several methods I have found effective for ensuring you and your offshore dev team agree and commit to a solid workload estimation. First, insist on detailed task lists with specific hour or day estimates; hidden complexities often reveal themselves when you break projects down. You can also reach out to previous clients to confirm past estimation accuracy. Finally, in order to account for unknowns, ensure the dev team’s estimates include at least a 50% buffer that is transparently separated from baseline task estimates.
3. Bridging Gaps In Product Sense And Business Context
Not every product detail can be fully predefined, and product managers often need to rely on engineers’ judgment. However, offshore teams can miss subtle product cues due to cultural differences or lack of exposure to informal product team conversations.
For example, one of our U.S. clients once said the UI could be “minimal but usable.” We interpreted their mockups as flexible guidelines, assuming we had creative leeway. In reality, their standard for “usable” was far more polished than we expected. The misalignment wasn’t about skill—it was about differing assumptions and missing context. Here are a few best practices that can help you avoid such scenarios:
• Overcommunicate product expectations. Instead of assuming developers will “figure it out,” provide clear examples, user flows and edge cases upfront.
• Clearly define good UX. For example, sharing benchmark designs from competitors in your target market with the dev team can help ensure they understand what you expect.
• Set up regular product syncs. Frequent check-ins can be used to provide context, feedback and deeper business understanding to developers.
4. Improving Communication And Reducing Language Barriers
English isn’t the first language for many offshore developers, which can make it harder for them to comfortably engage in nuanced product discussions. As a result, developers may hesitate to ask clarifying questions or to push back when something seems unclear. This hesitation can lead to quiet assumptions or unspoken workarounds that may cause misalignment and last-minute surprises.
As CEO of an offshore developer team, I’ve found that being free to raise ideas through open, collaborative dialogue with our clients often saves everyone time and money. Here are a few ways you can foster clear communication with your dev team:
• Ensure key stakeholders have strong communication skills. Choose a dev team with a tech lead, project manager or client-facing engineer who is fluent in English so that they can handle complex discussions without misinterpretation.
• Favor written communication. Request written confirmations after critical discussions.
• Create safe escalation environments. Make it explicit to your dev team that raising blockers early is valued, not penalized.
5. Making Smart Tradeoffs Amid Scope Creep
Product scopes evolve, priorities shift and new requirements regularly emerge. In these moments, offshore teams may feel pressure to say “yes” to everything—often not because it’s feasible, but because the stakes are high. Many developers come from lower-income regions and depend on these contracts to support their livelihoods. At the same time, the offshore development market is highly competitive, and agencies know that pushing back on scope could risk losing the client. This dynamic can lead to overcommitment, resulting in burnout, high turnover and declining code quality.
To mitigate scope creep, start by monitoring your developers’ well-being; for example, high turnover or frequent burnout can signal unrealistic workloads. If these issues arise, consider adjusting timelines, reducing scope and/or expand the team proactively. I also recommend developing long-term, trust-based strategic relationships rather than focusing on transactional engagements, as these can empower you and your dev team to have honest discussions about feasibility.
Final Thoughts
Offshoring isn’t just about cutting costs—it’s about building a scalable, high-quality engineering operation. Companies that recognize offshore engagement challenges and invest in the right processes can gain a competitive advantage. By treating offshore teams as strategic partners rather than just vendors, you can establish long-term, high-quality collaborations that benefit both sides.
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