Offshore development centers (ODC) have become a primary key to harnessing specialized professionals worldwide at a minimum cost. In the following times, the number of offshore development centers increased due to the benefits they offered for Software development. The below article consists of the advantages & disadvantages of ODC while letting you know about its benefits and how to set up an offshore development center.  

ODC – An Overview

Do you know what ODC stands for? It stands for offshore development centers that are becoming the “talk of the town” as these are highly embraced by startups, and SMEs looking to reduce expenses and adept programmers. In this, businesses set up their office in a different country or region to operate software development and other IT services under the same brand name. It is most popular due to its cost-effectiveness and is highly suitable for organizations seeking to outsource their lengthy software development projects while making the best use of their resources. 

In the future, there are more chances that these offshore development centers will be increased to streamline and manage software development operations. So, hurry up and delve into this comprehensive guide to explore more about what is ODC, why businesses choose it, and what should you consider while choosing it. Read further-

What is an Offshore Development Center (ODC)?

An offshore development center is an extended and unified setup used to conduct software development operations in a different country. Small to medium businesses prefer ODC to get access to a global pool of skilled coders who can contribute to their long-term goals of being an overseas business. It is a popular business model offering a wide range of services, including software development, website designing & management, software maintenance, digital marketing, and IT support. 

The ODC setup is usually done in countries with lower labor costs; these are Eastern Europe, India, Vietnam, Russia, and others. In layman’s words, ODC works as a continuation of your firm with a dedicated group of remote software developers that work for you while following similar business practices and approaches. Basically, you hire dedicated developers offshore to work for you.

Key Takeaways and Stats about Offshore Development Center

• Offshore development centers facilitate SMBs, and startup ventures to scale up their IT teams while speeding up the project development to decrease time-to-market. 
• Basically, ODC comprises a cross-functional team, proper infrastructure, and streamlined processes to complete the software development project while following the policies of its parent company. 
• The main goal of ODC is to enable businesses with flexible tech resources and proficiency including alleviated costs. 
• The best approaches to dealing with the programmers at offshore development centers are smooth communication, conveying clear project requirements, and continuous monitoring of the processes.
• Some challenges you might face while running an ODC are language barriers, different time zones, security concerns, difficulty in process management, and others. 
• The worldwide market of business process outsourcing was projected at US$280.64 billion in the year 2023 and is forecasted to evolve from 2023 to 2030 at a 9.4% CAGR. 

How Offshore Development Center Works?

After knowing what does ODC mean; it’s time to know how ODC functions? In the ODC model, organizations expand their business operations by establishing their office in a new country with lower development costs. Experts at ODC handle different tasks such as development, designing, testing, marketing, maintenance, and others. Hiring professionals from offshore development centers benefits you in terms of having talented resources at reduced prices. 

For example, if a company based in the USA hires experts from a dedicated offshore development center in India, it would cost them much less in comparison to other countries. They can hire them on a contract basis for the short term to leverage the expertise of knowledgeable professionals. Here are some points to look at while knowing the workings of ODC-

• At the time of ODC Setup, there are various considerable things such as the right selection of experts, legal formalities, infrastructure, and others.
• The selection of members in an outsourcing team will depend on project requirements. Ensure the chosen experts are well-trained to align with the project requirements including technologies and methods. 
• The ODC should be equipped with the required hardware, software, and IT tools for carrying out the smooth development process.
• ODC needs to apply robust security measures and protocols along with encryption and two-factor authentication to prevent security threats and fraud.
• In an offshore model, tasks are allocated to experts as per their specialization and proficiency and they execute them successfully with seamless coordination.
• After completion, rigorous testing procedures are applied to ensure the premium quality of deliverables considering aspects like performance, functioning, etc. before handing it over to the client.

Best Candidates for an Offshore Development Center

With the increasing vogue of offshore development, various organizations are stepping into this field and obtaining services from offshore development centers. But do you know who the ideal contenders are for an ODC? Have a look at the following points to know who can get the highest advantage by choosing ODC-

Firms with a Large Number of Development Projects: Multiple businesses first choose to accept the development project in bulk and then, they lack in having enough resources to complete them. In this case, having ODC services facilitates them with faster development, surpassing their in-house expertise, and meeting pre-determined deadlines. 

Firms Requiring Expert Skills: For businesses finding experts with some specific skill set, they can go for ODC as they can access a vast pool of expert programmers with this model. They can hire any coder with the required skills and experience to fulfill their project needs. 

Companies with Low Budget: Sometimes, firms have low budgets for software development projects; hence, they can for offshore development centers situated in a developing country with the lowest cost.   

Start-ups and SMBs: Start-ups and small-to-medium-sized businesses are the ideal candidates for ODC as they don’t have enough resources and capable in-house experts to manage lengthy software development projects. Going for ODC will work as the best and most affordable option for them.    

When to Consider an Offshore Development Center?

The reason behind availing of offshore development center services should not be that every other business appears to be doing it. There must be a valid reason why you want to consider an offshore development center. Below, we have led you to some situations where attaining offshore development services will be an excellent choice.  

Need of Talented Professionals

Most businesses go for dedicated offshore development centers as it is a direct approach to hiring skilled resources easily and conveniently. No matter what technologies and tools they are working on, they can find suitable and specialized professionals in no time within any preferred country. And, if you have no limited budget, then you can also hire programmers from developed countries with the assurance of high-quality solutions.  

Entry to a new Business Domain

Be it local or international, it is tough to enter a new business market as they have different business practices and you don’t know how the system works there. In this case, if you already have an offshore partner, it will be very helpful for you to set up in a potential market. The offshore development center will assist you in providing valuable insights and knowledge about the local legal passages & other practices.   

Business Growth with a Limited Budget

Various businesses face this situation where they want to expand their business operations but can’t due to limited budgets. In this case, they can only invest in extending the manpower for their business growth. They can set up an ODC that will come with technological expertise and no need for physical infrastructure. It will save a huge cost while expanding your venture. 

Easy Development Process

When organizations hire offshore development centers, they benefit from an easy and faster development process leading them to a digital transformation. If businesses have two projects in their hand, they can outsource one project to specialized experts at a lower cost. Further added, they can also scale up or down their offshore development team anytime as per their requirements.  

What are the Benefits of Offshore Development Center?

Knowing about “what is offshore development center”, is not enough, you must be aware of its wide range of benefits as well. Hiring an offshore development center will provide you with benefits such as:

• Get facilitated with the expertise and knowledge of professional coders without going through any interview process or hiring stress. You don’t need to have the headache of resource backing out, enjoy the top candidates with advanced capabilities to build high-quality solutions.
• Working with an offshore development center (ODC) will help you to cut down the costs on higher levels. Your offshore experts will use their own infrastructure, hardware, and software; you don’t need to provide them with anything. Obtaining ODC services based on suitable hiring models is cost-effective to alleviate the overall expenses.   
• Have you ever heard of Autoscaling? This approach is used in asset distribution occasionally to satisfy operational needs. Scaling up or down the in-house resources can be an intricate and disturbing process, hence, going for an ODC would be a simple and easy procedure for organizations leading to simplified working. 
• The top benefit of hiring ODC services is the access to expertise and a higher level of proficiency. Engage with professionals who have a deep understanding of specific technologies and tools you require for your project at a lower cost. You just need to keep monitoring them from time to time. 
• Whenever you need faster development, ODC helps you with extended work hours operating in varied time zones; they can also work off-hours. This will give you more time to review the completed work and provide feedback, leading to faster process and quality work. 
• Obtaining ODC services helps ventures to boost their global presence at the lowest cost. It helps businesses localize their solutions to make their entry into new business markets possible.      

Difference Between An offshore Development Center and Outsourcing

Offshore development centers and outsourcing might not seem a lot different as they work on similar concepts. But being a business person, you need to know about the slightest differences between these two to evaluate which one is more suitable for your business requirements. Have a look at the comparison table below-   

Aspects	Outsourcing	Offshoring
Cost Saving	The goal is to alleviate the overall expenses of the project by outsourcing services outside the firm.	The goal is to offer lower-priced services in overseas countries leading to higher cost savings.
Overall Control	With less control over the development process and outsourced staff, businesses must wait for the final results.	Complete control over the resources and project progress. Offshore experts work as an extension while following the client’s instructions.
Data Security	The client’s project information and sensitive data are at risk due to running multiple projects simultaneously.	Hiring a dedicated offshore development team will benefit you with higher security and confidentiality.
Work Quality	The standard of work excellence depends on different factors such as experience & expertise of staff, training, and guidance.	In offshoring, the work quality and results can be affected by barriers like language, culture, timing, and business practices.
Location	Outsourcing refers to a that project can be passed even within the same region or country, or might be in a different region. It leads to firms choosing the suitable mixture of quality, expertise, and cost.	In ODC, the project is outsourced to a different location geographically, frequently overseas.

How to Set Up an Offshore Development Center- Key Steps

Now, you have a complete understanding of what is offshore development center. But do you know how can you set up a dedicated offshore development center? Setting up an ODC is strategically crucial as you have to go through multiple steps one by one. Check out these below steps to know about it-

1. To set up an ODC, you need to have clear project goals, milestones to achieve, scope of work, and required budget first. It will help both the client and ODC to create a roadmap and follow that for a smooth development procedure.
2. Location plays a vital role when it comes to hiring a dedicated offshore development center. You are required to do in-depth research about the location best suitable to your requirements. Considerable aspects will be lower labor costs, culture, language, time zone, geopolitical stability, local business practices, government policies, and data security.
3. Partnering with the right offshore development company is significant to get the best results. Find a vendor with relevant experience and proficiency and then, evaluate their portfolio, reputation, global clientele, etc. If everything goes well, you can hire them for your project.
4. After hiring ODC, it’s time to split the roles and responsibilities between the ODC staff and your in-house professionals. Ensure both the teams have a mutual understanding and bonding along with accountability & transparency for better work quality. 
5. To ensure seamless and faster project development, you must apply Agile methodologies such as Scrum. Also, go for overlapping work windows for smooth collaboration and consistent improvement between development teams.    

How do you mitigate the challenges of working with an offshore development center?

Offshoring is a wide concept; hence, businesses may face a lot of challenges while working with an offshore development center. Below, we have penned a list of possible challenges that may occur with ODC. Keep reading-     

Control over Project– Many businesses feel they have less control over projects. This is due to the different locations of ODC and they don’t get in direct contact with their client. To mitigate this issue, offshore development centers must establish clear and transparent communication and provide regular updates to their clients.  

Communication Barrier– When it comes to a different country, communication is the most common issue that arises. To solve this, businesses need to check offshore experts’ proficiency in the languages they prefer before hiring a vendor from any location. Offshore professionals need to have good communication so that clear project requirements can be discussed to get better outcomes.  

Data Security & Privacy– Businesses often doubt the security and confidentiality of their data while collaborating with an offshore development center. Sharing their delicate business information and intellectual property can be very uncertain for businesses in this case. To address this, businesses must go for ODCs with strict security policies, legal & regulatory compliance, NDA signing, and clear data protection agreements.    

Resource Management– While working with an offshore development team, it is not easy to manage all the professionals and continuously evaluate their productivity and work processes. To overcome this challenge, ventures need to apply transparent workflows and continuous reports to have clarity about the defined roles of programmers and milestones to achieve in the decided duration.    

Different Hiring Models: Offshore Software Development Center 

When you have decided to hire an offshore development center, you must have a proper understanding of its different hiring models to choose the right one. Considering different business requirements and goals, here are the three most suitable hiring models for ODC-

Product Engineering ODC Model

With this offshore development center model, businesses can start their project development even by hiring one member only. Yes, you read it right! This model allows ventures to hire staff including 1 to 10 members to scale up their operations. The setup will take 1-2 weeks, and the project will be 30 days and 1 year. In this way, businesses can add team members as per requirements.  

Build-to-scale ODC Model

This ODC model allows enterprises to hire a dedicated team of 10+ professionals to support their in-house team. This model will take time around 7 to 13 weeks to set up, and the project duration will be over one year.  

Build-operate-transfer (BOT) ODC Model

The BOT model enables you to offer a comprehensive range of business maneuvers with your brand name in an international market. Businesses will get help from their chosen ODC in setting up the office and hiring staff. The team size will be according to the business needs, and setup time will be around 6 to 14 weeks. For the initial years, your ODC will help you streamline the operations; after some time, you will be the sole owner of the setup.  

How Developerperhour Can Help You Set Up An ODC? 

From ODC setup to running the operations efficiently, Developerperhour will assist you throughout the process. We boast a pool of talented and skilled resources with exceptional technical expertise that will help you set up your offshore development center. At our firm, we also provide flexible hiring models and establish clear & transparent communication mediums leading to smooth collaboration. With our years of experience and expertise in offshore team management, we will guide you properly through the complexities of setting up and optimizing a dedicated offshore development center. 

It will help you to embrace a cost-effective, productive, and simplified development environment for your business. Partnering with Developerperhour to set up your ODC will benefit you by getting high-quality results at a lower development cost. We will also assist you in overcoming possible challenges such as communication and cultural differences, data security, legal compliances, etc. You can contact us anytime for further queries.          

Conclusion

In the above article, we have provided you with a complete understanding of ODC meaning, its working, benefits, challenges, how to set up an ODC, hiring models, and the difference between outsourcing and offshore development centers. In the present time, establishing an ODC is the most lucrative business model that helps other businesses strengthen their in-house manpower and boost their presence in the international market. 

Going for offshore software development also benefits ventures in several ways including global access to specialized talent, minimum development costs, faster time-to-market, and many more. With this complete guide, we have tried to provide you with all the relevant information, we hope, you will like it!      

Frequently Asked Questions