Quick Summary: If you're looking to setup offshore development center (ODC), India is a popular destination. With a highly skilled workforce and cost-effective solutions, it's no surprise that many companies are turning to India for their development needs. In this article, we'll guide you through the process of setting up your own ODC in India.
The global economic turmoil and the increasing gap in opportunities vs. available IT resources in western countries have forced companies to look for trusted offshore outsourcing solutions that are cost-effective, viable, and sustainable for their IT needs.
The demand to set up offshore development center (ODC) has increased to meet the changing market needs. India has emerged as a favorite destination for companies in the U.S., UK, Canada, Europe, and Australia to set up an offshore development center.
Learn what makes India the top 5 offshoring destination in our Top 5 Nations to Set Up Offshore Development Centers- 2022 blog.
If you are wondering how a business can build a successful and scalable Offshore Development Center in India? This article is for you.
This blog will explore the step-by-step process of setting up a dedicated offshore development center in India.
But before we start, let us discuss why a business should opt for Offshore development teams.
Key Listing
- Choose the right location in India that best fits your company's needs, such as a city with a strong tech ecosystem or a location with cost-effective solutions.
- Follow the legal requirements and obtain the necessary permits to register your legal entity in India. Seek professional guidance to ensure compliance with Indian laws and regulations.
- Hire a skilled workforce and establish a strong communication and collaboration system to ensure successful offshore development center operations.
- Consider implementing agile development methodology for faster time-to-market, increased transparency, and collaboration between teams.
Why set up an ODC for your Software Project?
In today’s dynamic and constantly evolving market, businesses must constantly upgrade their systems, processes, and technologies to stay ahead of the curve. But doing this by expanding the in-house team can become an expensive affair, especially if you are a company in the US, UK, or any other western nation.
Hence, businesses across the globe are opting to outsource their development project, and here are some stats to back it
- USA outsources approx. 300,000 jobs every year
- 45% of companies plan to increase their outsourcing
- 24% of small businesses today outsource their operation to achieve efficiency
- 50% of Fortune 500 rely on trusted offshore outsourcing partners for their requirements
But why?
Well, here are the reasons why companies are opting to set up offshore development centers (ODCs) for software development. Besides being economical, offshore development centers provides you access to a global talent pool, reduce time to market & help build a global presence. By partnering with trusted IT outsourcing companies like Your Team in India, companies can easily steer through the challenges of entering new geographies.
Owing to these benefits, enterprises across the globe today are looking to start their offshore operations.
Offshoring your software development is an excellent way to gain a competitive edge in today's volatile market. But, location is a critical factor in the success of your offshore development center.
When it comes to choosing a suitable country for India, it tops the chart. Read on to know why offshoring to India is beneficial for your business.
Explore the benefits of setting up offshore development center in India. Read our detailed guide on “What is an Offshore Development Center (ODC)?”
Now that we have established the benefits of choosing India for your offshore development center, let us learn the step to building a scalable, agile, and flexible offshore development center.
Without further ado, let us begin.
15 Steps to Set Up an Offshore Development Center in India
Setting up offshore development teams in a foreign land can become a tedious task. Especially when you don’t know how or where to start.
But you need not worry; this section of our article will cover the step-by-step process of setting up an offshore development center(ODC).
1. Define the vision & requirements of your business
The first step to setting up a dedicated offshore software development center is understanding the IT infrastructure & software development needs of your business and defining the purpose of the Offshore Software Development Center. Following the below steps can help you create a better vision for your offshore team.
2. Outline the scope of work –
-
- Define the project's purpose- Building a new product, building new features in an existing product, or upgrading it to better technologies.
- What features do you wish to build?
- What technologies do you wish to integrate?
- What tech stack do you wish to use?
- Whether it is a simple development or complex development with changing requirements?
Asking these questions would help you understand the project's scope and make informed decisions.
3. Define the term engagement
-
- Whether it will be a short or long-term engagement?
- One-time, recurring, or permanent technical support?
4. Define the talent requirements
Detail the different experts required for the software development project at various stages of development.
It will help you choose the right mode of engagement with the hired team- Fixed Cost, Hourly Cost, Retainer Model, or Hybrid model.
5. Choose a development methodology
When setting up your offshore development center (ODC) in India, choosing the right development methodology is crucial. Agile methodology is a popular choice due to its iterative approach, which allows for flexibility and collaboration between teams. This methodology promotes transparency, continuous improvement, and faster time-to-market.
6. Choose a location
Today, India is a major IT offshoring destination. Though multiple cities in India have emerged as IT hubs in the past two decades, there is a vast disparity in the distribution of tech talent.
A tier 2 city becomes a more viable option when your software development project requires simple development, basic coding language experts, and a small team. Whereas, for a complex software development project with large team requirements, tier 1 city is the right choice.
Working with a reliable offshore development partner ensures that you find the right resources and IT infrastructure for your project at the best price.
Read our blog on ‘The Best Indian Cities to Hire Remote Developers’ to make an informed decision.
Factors that you must consider before choosing a location
- Ease of resource availability across tech-stack
- Per-hour rates of developers
- Government FDI policies
- Rules and regulations regarding data breaches and IP theft
- Political and geographical stability
- Available infrastructure in the location
This short checklist can help you save time and energy evaluating the offshore development company and making the right decisions.
Want to know more about how to evaluate your offshore partner? Read our blog- 2022’s Checklist To Hire Offshore Development Team, to get your answer.
7. Service provider evaluation
The third and one of the most critical steps is finding a reliable offshore development company that can help you build a reliable and talented team of offshore software developers. A trusted partner would navigate the local environment and mitigate the challenges while working with a remote team.
Here is a quick checklist for you to choose the right offshore Development company for your ODC
- Check for their industry experience, especially in your business domain
- Evaluate their development methodology
- Check if they are providing you dedicated offshore development center/team to work with
- Evaluate the size of the firm and their technology expertise
- Check for their international presence
- Do they offer resources with different amounts of experience?
This short checklist can help you save time and energy evaluating the offshore development company and making the right decisions.
Want to know more about how to evaluate your offshore partner? Read our blog- 2022’s Checklist To Hire Offshore Development Team, to get your answer.
Following a three-step process of vetting the offshore development companies that involve:
- Open and direct communication with the leadership team
- Collecting information on work experience, client reference, and the company’s social proof
- Assessing the partners on their ability to have transparent and honest communication
This can help you make an informed decision about a partner.
8. Team Selection
Once you have zeroed down on your offshore development partner, your next step is to select your offshore software team. The right offshore service provider can help you select resources that meet your software development needs, like technical expertise, years of experience, and soft skills.
To build the offshore team for which, you need to define
- The team selection process-the end-to-end process to be followed before onboarding a resource in the offshore team. Setting up a transparent process that allows you to have complete visibility into the hiring operation of the offshore development center.
- HR Policies- Defining employment policies, engagement terms, and project payment.
9. Create legal documentation
The regulatory landscape of every country is different; thus, you must get legal advisors to frame the engagement agreements like
- Business Agreements
- Employment Agreements
- Work Permits
- NDAs
- Data security and privacy policies
- Coding standards
10. Infrastructure setup
Due diligence should be paid while setting up the infrastructure for an offshore development center. Closely evaluate the IT equipment placed in the offshore development center (ODC) to ensure smooth operations and seamless communication with the offshore team.
You need to define the infrastructure requirements in terms of
- Systems to be used
- Internet bandwidth
- Communication channels and technologies
- Server Backups
- Management policies
- Data security system
- Data access and exchange protocols
- KT process
11. Security management-
Data security and IP protection face the biggest threat while working with remote teams. As the operations are spread across geographies, a minor lapse in information security can cause a major loss to a business.
Thus, is it important to create a detailed Term of Engagement contract along with NDAs to be signed among the three parties:
- The Client
- The offshore development partner
- The hired software developers and other resources
To ensure the complete safety of data and IPs.
Having a security measurement plan covering physical security layers and confidentiality and regular security audits can protect you from data theft and intelligence leaks.
12. Project management
This is the step where you have to define the Organizational Structure and apply it to your offshore development center. This step requires the creation of an extensive process framework that defines:
- Scope of work and expected outcome from the resources
- Hierarchy of workflow
- Chain of command
- Escalation matrix
- Feedback mechanism
- Knowledge transfer process
To enable seamless operations overseas.
13. Team training and mentoring
Offshore development teams have people from different regions and ethnicities, so you must carry out proper training sessions between your in-house and offshore teams to make communication smooth and seamless.
14. Define Milestones
To ensure the team works and delivers the project on time, you must define milestones with timelines for them to follow.
15. Communication management
One must build a strong foundation for communication in terms of technology and processes that enables a seamless flow of information between the in-house and offshore teams. Tools like Jira, Slack, Zoom, Google meeting, Trello, etc., can work wonders to ensure ongoing development visibility and efficient team collaborations.
Besides, daily scrum can help in keeping the project on track. Scrum meetings regularly update project progress, feedback, changes, and bottlenecks. This will help you monitor ongoing development without micromanaging the work.
By following a suitable development methodology, creating an overlap work window, and bringing work flexibility, you can use this time difference to your advantage and fast-track your software development.
Setting up an offshore development center is just the beginning. You must monitor and manage your offshore team’s work to make it a success.
Here are some tips for managing your remote offshore software development team.
5 Mistakes to Avoid While Setting Up an ODC
1. Lack of long-term goals
Defining your offshore development center's long-term goals is key to making crucial decisions like location, infrastructure, team size, and tech stack. Not having a clear vision for offshore development center services can lead to challenges in the future horizontal or vertical scaling of the team, which invariably increases the overall cost of the operations.
2. Focusing only on the cost
Though, cost-benefit is one of the significant advantages of offshoring IT projects. This should not be the only criterion in choosing an offshore team, as it may lead to choosing an inefficient or unsuitable team, creating delays and downtime in project execution.
Before selecting an offshore partner, factors like industry experience, domain experience, complex project experience, available talent pool, etc., must be considered.
3. Neglecting workforce diversity
Understanding cultural diversity can help navigate the challenges of the local environment and build a more resilient and productive team. Being a highly contextual country, Indian developers follow a more intuitive decision-making style, place more value on oral agreements, and seek personal relationships in a work environment. So, it is essential to understand and acknowledge the emotional psyche of the team.
4. Choosing a wrong partner
This is a common mistake but can significantly affect your software development project. Even an experienced offshore software development company can turn out to be a wrong choice if they lack:
- Experience in your industry
- Experience in the tech stack that you are looking for
- Experience in emerging technologies
- A readily available pool of resources to help you scale
- Proper process and framework for offshore software development center operations
Thus, it is essential to thoroughly evaluate the offshore development company before selecting them as your ODC partner.
5. Failing to set appropriate communication tools
When working with a remote team, communication is the key to success as your development team is working in an offshore location. You must put proper communication infrastructure, hierarchy, and processes in place to ensure seamless collaboration between teams.
An offshore development center in India could become the first step to unleashing the full potential of your business. A reliable and trusted offshore software development partner like Your Team in India can help you channel the right talent, technologies, and opportunities, helping you build a flexible, scalable, and agile offshore development center.
With us, you can start your offshore software development journey with as small as one-member team and scale operations on the way.
Read the success story of a US-based Fintech company, that started its collaboration with YTII on small scale for project management and has now expanded its engagement in digital marketing along with product development.
Get in touch now to learn how to augment your offshore team in India quickly and efficiently.
FAQs on Setting Up ODC
What is an offshore development center?
What are the different models of ODCs?
1. Product Engineering
2. Build to Scale
3. Build Operate Transfer
What is the difference between onsite and offshore?
How can I open an offshore office in India?
4.8 out of 5 by