How to Set Up Your Offshore Development Center

Offshore Development Center (ODC)

In the dynamic landscape of today’s tech industry, the rapid emergence of tech startups is undeniable. These startups are the vanguards of innovation, propelling us into the future with groundbreaking technologies and disruptive solutions. To thrive in this highly competitive environment, startups recognize the paramount importance of acquiring the right talent. They need individuals who can not only keep pace with the fast-evolving tech landscape but also contribute fresh ideas and expertise. However, the skyrocketing demand is complemented by a higher market volatility and an increasing shortage of skilled tech workers; thereby, compelling businesses all across the world to adopt revised approaches like Offshore Development Centers (ODCs).

Simply put, an Offshore Development Center (ODC) can be referred to as an extended IT/Development team built overseas to work on software development projects that will eradicate a lot of hurdles, such as finding experts, scalable technology resources, security, and more. In other words, an ODC is an integrated entrepreneurial model suitable for both startups and large companies. The entire mechanism involves setting up a dedicated remote team of IT professionals to augment the on-site team.

Now that we have touched upon the basic definition of an ODC, let us check out its types and functions.

Types of Offshore Development Center Models:

You might be surprised to know that there are different types of ODC models, which cater to various business needs. Thus, companies must choose the ideal options to achieve the desired goals. The different types of ODCs include –

1. Time and Material Contracts:

In this arrangement, the project’s time and materials are paid for as they are used. It offers flexibility in terms of project scope and permits changes as necessary.

2. Fixed Price:

In this model, the cost of the project is established by a set budget and a set of deliverables. It offers transparency regarding expenses and outputs but could be less adaptable to changes during the project.

3. Dedicated Development Team:

In this model, a team of software developers, designers, and IT professionals is assembled and they operate remotely from a separate nation. The team serves as an extension of the client’s team and is solely focused on the client’s project.

4. BOT (Build-Operate-Transfer):

Build-Operate-Transfer (BOT) is a form of business engagement model that refers to hiring an offshore development partner in a foreign location that provides a dedicated offshore team. Here, the offshore partner is responsible for recruitment, legal compliance, payroll, accounting, and other operational functions at the start. However, after some time, this offshore team is going to be transferred back to the client & the client will have total control over the team.

How Does an Offshore Development Center Work?

To begin with, offshore development starts with finding the right offshore development partner. It is noteworthy to remember that an offshore team performs core tasks and brings the same value to an enterprise, just like a typical in-house team.

Usually, an ODC team has an array of specialists, such as QA engineers, software engineers, back-end and front-end developers, writers, team leads, UI/UX designers, and more.

Let us understand the functioning of an Offshore Development Center with an example. Let us assume that you work for a US-based product company and you want to shorten the time it takes to market to get an advantage over competitors for your product.

With minimal financial impact, your best trajectory to accomplishing the objective would be recruiting an Offshore Development Center in a country with a lower cost of living. Through an ODC, it becomes possible to hire a group of highly skilled and qualified engineers and software programmers to work on your project from afar. The ODC is in charge of setting up the infrastructure, managing the resources, and coaching the hired personnel.

Characteristics of a Dedicated ODC

Now that we have touched upon the basics of an ODC, let us check out the basic characteristics of a dedicated ODC.

• Tech-Reliability – Leverage the access to a dedicated team of tech experts who focus on your product development
• Adjustable – The off-shore team can be adjusted and accommodated as per the needs of the product
• Custom Solutions – It is possible to opt for the best practices or assemble only specific experts, thereby customizing the recruitment and onboarding process.
• Secure – Optimal for keeping IP rights, signing NDAs, and ensuring that company data is inaccessible to non-employees.

Signs You Should Hire an Offshore Development Center

Hiring an Offshore Development Center (ODC) can be advantageous for your organization when you notice these signs:

• Cost Optimization: If you’re seeking cost savings without compromising quality, an ODC can offer competitive pricing while providing access to skilled professionals, aiding your budget management.
• Talent Shortage: When your local market lacks specialized expertise, an ODC’s broader talent pool allows you to tap into skilled professionals with the required skill sets.
• Scalability and Flexibility: An ODC’s flexible model enables you to scale your team up or down as needed, providing adaptability to changing project demands.

An ODC can cater to these needs by offering cost-effectiveness, access to a diverse talent pool, and scalability, making it a viable choice for organizations aiming to optimize operations and enhance their competitive edge

How to Set Up Your Offshore Development Center?

Now, let us dive into the crux of the topic – how to step up an ODC. The 15-point process elaborated below can help you navigate the ideal trajectory of establishing an Offshore Development Center.

1. Define the Vision and Requirements of Your Business

The first step in setting up a dedicated ODC is understanding your business’s IT infrastructure and software development needs.

2. Outline the Scope of the Work –

You can do so by following some pointers, such as –

• Define the project’s purpose: Is it building a new product, infusing new features in an existing product, upgrading to better technologies, etc.?
• What features do you want?
• What tech stack do you want to use?
• Which technologies do you wish to integrate?
• Is the development complex or simple?

3. Select the Right Location

The offshore destination should have lower operation and labor costs. Besides, it must have the right technical resources and ideal cultural underpinnings. The most offshoring destinations include India, China, The Philippines, Poland, Ukraine, etc.

4. Service-provider Evaluation

It is crucial to find a dependable and experienced offshore development service provider that can help you navigate the local environment and reduce the challenges of working with a remote team. Some of the things you should consider during service-provider evaluation are –

• Size of the organization
• Quality of resources
• International Presence
• Expertise in various domains
• Technical prowess
• Transparency offered by the company
• Methodologies offered by the company
• Industry experience in offering offshore services
• Overall experience

5. Define the Engagement Terms

Is the ODC engagement short-term or long-term? Such preemptive detailing will help you choose the right mode of engagement with the newly hired team – Fixed Cost, dedicated team model, etc.

6. Establish the Expert Requirements

The next step in establishing an Offshore Development Center is describing the different experts or specialists required for your software product at various stages of development.

7. Opt for the Right Development Method

When setting up an Offshore Development Center in any country, such as India, choosing the right development method is pivotal. The key is to leverage a methodology that fosters transparency, continuous improvement, and faster time-to-market.

8. Define the Team Policies

To ensure that the offshore team you have roped in is efficient enough and continues to operate robustly, you need to define two primary things –

• The end-to-end team selection process must be followed while onboarding any team member. In addition, the mechanism of hiring should be transparent so that one has complete visibility of the ODC.
• HR Policies – Define the employment policies, engagement terms, and project payment in a preemptive fashion.

9. Legal Setup

As the regulatory landscape of every nation is different, it is crucial to get legal advisors and frame agreements like –

• NDAs
• Business Agreements
• Employment Agreements
• Work Permits
• Coding Standards
• Data Security
• Privacy Policies and more

10. Infrastructure Considerations

The tenth step in setting up an Offshore Development Setting is paying due diligence while establishing the infrastructure. It is of key significance to check the IT equipment used in the ODC for smooth operations, efficient functioning, and seamless interaction. Some of the infrastructure requirements you need to define are –

• The system to be used
• Server backups
• Internet bandwidth
• Communication channels
• Data security systems
• KT process
• Data exchange and access protocols

11. Security Management

While working with remote teams, data security, and IP safeguarding face the greatest challenge. As the operations are scattered across countries, even the tiniest lapse in information security can have catastrophic repercussions. Thus, it is crucial to sign NDAs among the three main parties

• The client
• The offshore development service provider
• The hired team in the ODC

12. Project Management

The next step in setting up an ODC is defining its organizational structure. The mechanism entails a comprehensive framework that defines –

• Scope of the work
• The expected outcome from the resources
• Workflow hierarchy
• Chain of command
• Escalation matrix
• Feedback mechanism
• Knowledge transfer process

13. Team Training

All the members of the offshore team must be provided with adequate training sessions for the most efficient workflow and the highest level of productivity.

14. Etch Out the Milestones

To make sure that the off-shore team works and delivers the project on time, it is crucial to define clear milestones and targets.

15. Communication Management

Last but not least, the final step in setting up an Offshore Development Center is establishing a strong bedrock for communication in terms of technology. Thus, the optimal usage of tools like Slack, Jira, Zoom, Google Meeting, etc., must continue for the uninterrupted flow of communication between the offshore and the in-house teams.

Advantages of Offshore Development Center

After a comprehensive overview of the 15 steps to set up an ODC, let us check out the advantages of the phenomenon. The main benefits of an Offshore Development Center are –

• Cost reduction
• Access to a massive talent pool
• On-demand setup
• Phenomenal scalability
• Excellent flexibility
• Effective resource allocation

Mistakes to Avoid While Setting Up an ODC

Setting up an Offshore Development Center is a decision that has hardly any room for mistakes. Some of the key mistakes you must avoid while indulging in the process are –

• Not having long-term goals
• Focusing only on cost, or cost reduction to be precise
• Ignoring workforce diversity
• Choosing the wrong Offshore Development Service Provider
• Failing to establish the right set of communication tools

Offshore Development Center vs. Outsourcing

Many people, including business personnel, are confused between outsourcing and offshore development. In addition, unlike in outsourcing, an Offshore Development Center has a dedicated team, infrastructure, and operations that focus on a single client.

Aspect	Offshore Development Center (ODC)	Outsourcing
Location	Only takes place internationally	Can occur both globally and locally
Dedication	Product mindset	Project mindset
Workspace	As if your own offshore branded office	Full dependence on the outsourcing company: little to no control
Engagement	Core team with flexible staffing	Utilization-based model
Expertise	Experts are hired after a comprehensive step-by-step onboarding process	It involves contracting a third-party provider to handle certain tasks. This option is favorable when specific expertise is not central to the project’s success and the focus is on cost-efficiency.
Communication	Transparent communication and full accountability	There may be a lack of transparency in resource allocation & resource schedule of work may not be clear
Scalability	Limitless scalability as you have the ODC office	Limited scalability
Time Zone Advantages	Can be difficult to navigate in the initial phases	Not a hurdle
Integration	Tight-knit	Scattered
Control Over Resources	High control	Minimal control
Adaptability	Excellent adaptability	Average adaptability

How to Maintain Offshore Development Center

It is not just setting up an ODC that is difficult, as the maintenance process is equally hard. Some of the steps of maintaining an Offshore Development Center are –

• Establishing clear processes and practices
• Fostering effective communication
• Regular assessment of performance

Setting Up an Offshore Development Center in India

Currently, India is one of the most sought-after destinations when it comes to establishing an Offshore Development Center. The availability of highly-skilled professionals, easy and swift access to the workforce, a culturally diverse and accommodative workforce, lower labor costs, and a comparatively lower cost of living are some of the reasons why India has emerged as the most preferred offshoring center.

Besides, a large chunk of the Indian population speaks English, which further adds to the benefits. Currently, India is known to outsource an array of software services, such as mobile app development, digital marketing, software development, and more.

FAQs about Setting Up the Offshore Development Center (ODC)

Q1. How can I ensure effective collaboration between my local and offshore teams?

Ans. The best way to ensure effective communication and collaboration between your local and offshore teams is by establishing the right set of communication tools. Use Slack, Jira,

Google Meet, Zoom, etc, generously.

Q2. What are the considerations when selecting an offshore location for my ODC?

Ans. The considerations while selecting an offshore location include –

• Lower labor costs
• Lower operational costs
• Lower cost of living
• Higher technical faculty
• Skilled labor availability

Q3. How can I determine if my project is suitable for an ODC model?

Ans. If your project is comprehensive, requires scalability, is expensive and beyond your budget, and needs a large pool of talented tech experts, and likewise, then it is likely that you need to consider an ODC model.

Q4. How can I manage the time zone differences between my local and offshore teams?

Ans. By ensuring communication and embracing flexibility, you can easily manage the time differences between your local and offshore teams.

Q5. What are the cost savings associated with establishing an ODC?

Ans. The cost savings associated with an ODC are –

• Lower labor costs
• Lower infrastructural costs

Conclusion

So, there we have it, a crisp overview of how to set up an Offshore Development Country. Currently, the world of tech and software is in a peculiar terrain, where the rise in demand is complemented by a shortage in skilled tech forces. Other factors like an expensive workforce, and higher cost of living, and likewise, also add fuel to the fire. In such a context, an ODC emerges as the knight in shining armor. India is one of the best places to set up an ODC, owing to an array of benefits, such as a massive pool of talented experts, lower cost of living, lower labor costs, and more.

Why Choose BuzzyBrains as Your ODC Partner?

For a reliable, cost-effective, efficient, and experienced ODC partner, look no further than BuzzyBrains. We help unlock your growth potential with our proven expertise in software development. Robust and efficient software solutions are just a step away when you partner with us!