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How to Set Up an Offshore Development Center (ODC) in 2021

How to Set Up an Offshore Development Center (ODC) in 2021

Offshore software development is no longer an alien concept for the IT industry; it’s an attractive option that enables companies to hire skilled and talented professionals from outside their domicile country, at relatively lower costs.

This is why many SMBs, large enterprises and even startups are exploring the idea of establishing their offshore development centers (ODCs) in leading offshoring destinations like India, Philippines, China, Ukraine, Russia, and so on.

In this article, we will focus on how to set up an offshore development center and the top benefits businesses will gain from it.

But, first things first.

So, what is an Offshore Development Center (ODC)?

An offshore development center or ODC is a company’s branch or development office, with a team of diverse tech specialists, located in a foreign country. It is a highly viable alternative to in-house/onshore development teams, and provides a solid opportunity for businesses, especially big corporations, to expand their services overseas.

Usually, companies prefer to set up their ODCs in those countries that offer a high price-to-quality ratio, and have a large tech talent pool, lower cost of living (so, wages will be lower) and favorable business conditions.

A Dedicated ODC What are the Benefits?

Establishing an ODC is so much advantageous than hiring additional in-house developers for your projects. The major benefits are:

Cost-Effectiveness 

Due to lower developer salaries and lesser  operational costs, ODCs help businesses to  reduce expenses, and save money and resources.

A Dedicated Development Team 

Through offshoring, you can easily find and hire highly skilled and dedicated engineers and other professionals at reduced rates. And, this team at the ODC will work exclusively for your company and you can manage them just like your in-house team.

On-time Product Delivery 

With properly laid out project timelines and direct management from the head office, ODC teams will be committed towards delivering projects on time.

How to Set Up Your ODC?

Before embarking on the process of setting up your offshore development center, be clear about your business requirements, long-term and short-term goals, the skill-sets and technologies needed and accordingly, plan your budget.

The following key steps will guide you to start your ODC. Let’s check out.

  1. Choose an Offshore Location 

Top offshoring countries in Asia (India, Philippines, China), Eastern Europe (Ukraine, Russia, Poland) and Latin America (Argentina, Brazil, Mexico) are the most preferred locations for companies looking for offshore software development.

The main factor that distinguishes these destinations from one another is the average hourly rates of developers. For instance, if a Jr. Developer’s rates are about $105-$111/hr in the US, it is about $35-$44/hr in Latin America, $25-42/hr in Eastern Europe, and $18-$24/hr in Asia.

However, cost-efficiency should not be the sole yardstick for choosing an offshore location; you must also give importance to the quality of technical expertise, level of English proficiency (for smooth communication) and the cultural specifics of these regions.

  1. Decide the Engagement Model 

There are basically two main ODC engagement models — the Contractor model and the Customer model. The difference lies in the level of control your company headquarters gets in running and managing your branch office, i.e; the ODC.

In the Contractor model, a project manager at the ODC oversees all the offshore team’s tasks and communicates with the in-house account manager regarding the project’s progress. This model best suits startups and SMBs.

In the Customer model, the in-house team and the ODC team work together on the project. The ODC team is a part of your company and you have direct control over them. This model works best for big enterprises.

  1. Find Your Offshore Technology Partner

Next, you need to find a reliable and experienced offshore service vendor in the chosen location, who has access to qualified IT professionals, and who can provide the necessary infrastructure and assistance to assemble the ODC team, and can manage all the administrative and legal paperwork.

Review the vendor’s work history — their expertise in handling latest technologies, the communication and project management tools they use, the industry verticals they have worked for, etc. Ascertain that they have the requisite human resource and talent pool that you are looking for, by interviewing prospective candidates and conducting skill-based tests.

Read More: Questions to Ask a Potential Offshore Development Vendor

  1. Ensure Data Security

Data theft and leakage of confidential product and company information are common security threats plaguing businesses. While evaluating a potential offshore partner, ensure that they have implemented security measures such as firewalls, anti-virus software, intrusion detection and prevention systems.

Also, before entering into a partnership, sign a Non-Disclosure Agreement (NDA) and an Agreement on Assignment of IP rights, with the representatives of the offshore vendor.

Wrapping Up

An ODC could prove to be a game-changer for your business; you get the opportunity to build high quality products without the hassle of hiring local developers and draining your pocket.

So, if your company is planning to expand operations on a global scale, join hands with a trustworthy offshore service provider who can help you to set up your ODC.

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