Today, enterprises are actively looking to move their software projects to offshore development centers so that their in-house resources can focus entirely on their core business activities. But before we dwell on why businesses worldwide opt for Offshore Development Centers, let us find out what they are.
What is an Offshore Development Center (ODC)?
An Offshore Development Center (ODC) is a dedicated team of software developers and IT professionals in another country and a different time zone. Companies establish ODCs to outsource some or all of their software development or IT operations to a cost-effective location, to reduce costs or access specialized expertise.
These teams are managed by the offshore development company, which is responsible for complete infrastructure setup and resource management to ensure seamless operations.
Offshore development centers allow startups, SMBs, and enterprises to augment their IT teams and fast-track project development to reduce time-to-market.
What is ODC Full Form?
ODC full form in the IT industry is the offshore development center. It is a dedicated development center established in a foreign country to take advantage of cost efficiencies, specialized skills, or a larger talent pool.
According to Wikipedia, "offshore custom software development consists in offshoring the software development process in a country where production costs are lower, thus decreasing budget spending."
A partner company in the offshore location offers this facility and assists in acquiring, mentoring & managing high-quality resources for the best productivity.
Now that you are aware of what is offshore development center, let's understand how it functions.
Key Takeaways
- Offshore software development centers provide cost-effective solutions for software development needs.
- Considerations when setting up an offshore development center, such as communication, legal and regulatory requirements, and time zone differences.
- Best practices for managing offshore development teams, include establishing clear processes, fostering effective communication, and regularly assessing performance.
- Challenges of offshore development, include language barriers, difficulty in maintaining control and oversight, and ensuring data security.
How Does an Offshore Development Center Function?
Let us explain it with an example. Suppose you are a US-based company seeking to gain first mover advantage by reducing software development time. Hiring dedicated offshore software developers in a country like India that offers a large talent pool at a low cost can help you speed up your software project development without much cost implication.
By hiring an offshore team of highly skilled developers and programmers on a contractual basis, you enjoy the benefits of owning talented resources without the commitment of long-term engagement, as you can easily dismantle the team once the project is over.
Owing to their benefits, offshore development centers (ODCs) will become full-fledged business units operating overseas in 2023.
Recommended Read: Guide on the Functioning of an Offshore Development Center
But hiring an ODC is not the same as outsourcing IT projects. Both solutions are quite different in their business model. Here is how:
How is Offshore Development Center Different from Outsourcing?
On the surface, Offshore development and outsourcing may sound similar, but in reality, these are very different in their operating model. Unlike outsourcing, where your hand over your project to a third-party vendor for development, in offshore software development, you hire a team of remote offshore developers to work on your project under your supervision.
Offshore development centers give you better control over ongoing project development as the team works as your subsidiary in an offshore country.
Learn More: Difference between offshore development centers and outsourcing
As per Dun & Bradstreet's Barometer of Global Outsourcing, 20 to 25% of outsourcing relationships fail within two years, and 50% fail within five, proving that ODC is a better option than outsourcing work.
7 Benefits of Offshore Development Center
1. Cost-effective software development
Hiring offshore development services can reduce development costs by as much as 60%. Setting up an Offshore Development Center in a developing country like India helps businesses.
- It is a major tech destination and ranks among the top 10 countries for offshore IT projects.
- It offers a massive talent pool across technologies.
- It has a lower cost of living, which results in lower labor and infrastructure costs.
- It has favorable government policies toward the IT sector.
2. Specialized Skills
Tech demand plays a critical role in a nation's digital economy. A nation with an affinity for certain technologies is bound to have a higher supply of tech experts in those technologies and vice versa. This creates an imbalance in resource distribution globally.
An offshore development center helps bring balance by providing limited or unavailable tech experts in your local geography.
3. On-demand Team Scaling and Resource Backup
Developing a software solution require tech experts, and losing a resource in an ongoing project can adversely affect the timeli