The global outsourcing market amounts to 92.5 billion U.S. dollars in 2019. And the market has experienced a drastic jump in the last decade, especially in the last year.
It’s because setting up an offshore development center has proven to be one of the most viable investments in terms of digital transformation. To understand how beneficial is this investment, we need to first understand the basics.
So, in this write-up, we are going to address all the queries that you might have regarding the offshore development center. Let’s get started!
What is an Offshore Development Center (ODC)?
The offshore development center is an office dedicated to fulfilling the software requirements of a company. You can set up your offshore office anywhere around the globe. However, businesses prefer to pick a country where the cost of living is lower in comparison to their native country.
The concept of offshore development is quite simple. It basically functions as a global extension of the existing IT team of an organization, which is more economical, commercially sane, and provides top-notch product/service quality.
Though, you can add or remove resources based on your requirements. But usually, this team consists of full-time dedicated offshore developers, designers, software testers, quality analysts, copywriters, a project manager, and a delivery manager.
So, the client organization doesn’t have to worry about any aspect of the development process.
Your IT outsourcing partner will share your responsibility for the product development cycle, buying you enough time to focus on your core business functions. As an entrepreneur, you can;
- Launch products faster,
- Save the cost involved in the hiring process and infrastructure.
That’s why most startups, SME’s as well as enterprises are investing in this business strategy to drive significant growth.
When to Consider Setting Up an ODC for your Business?
Every organization works differently. But in terms of software development, most organizations struggle under certain situations, that can be considered as the trigger to adopt the offshore development model. Some of these situations are:
1. If you are Looking for a Developer with Specific Skills Set
Are you planning to develop a particular software or product? Do you lack the resources to build it in-house? It’s time to hire developers from an outsourcing company.
Moreover, developers having the experience of building similar products in the past will have the right resources and capability to deliver quality services, within the given time frame and budget.
2. If you have a Limited Budget for Software Development
Offshore development center (ODC) is an effective model to bring down your software development cost, significantly. Also, it provides you the flexibility to engage with offshore developers based on your project requirements and suitable hiring models.
All-in-all, you can build your software at affordable prices, and scale up or down your team whenever required.
Just in case you would like to explore, here’s a post on software developer’s hourly rate comparison across the world.
3. Global Exposure
Regardless of the location of your business operations, you can choose to build your team anywhere around the globe. Not only it will give you global exposure but also empower you to work with professionals having experience working with your target market.
On top of all, it enables startups and SMEs to expand their teams and operations in the global marketplace.
Which Engagement Model is Ideal to Set Up an Offshore Software Development Team?
The three most common yet crucial engagement models to set up an offshore development center are;
1. Fixed Cost Model / Retainer
The fixed Cost Model is one of the most simple and beneficial engagement models, ideal for small to medium-sized projects. In this engagement model, the cost is finalized, eliminating all the possibilities of any additional service cost or hidden costs.
The fixed cost model is most relevant for startups and SMBs as they often have a limited budget. Plus it provides the security of getting the project delivered on time (as everything is written initially on the contract).
Advantages of Fixed Cost Model
- The client & the offshore development team knows the budget, prior.
- Preplanning on project delivery and unaltered timeline.
- Easy to monitor the status of software development
- Little supervision is required by the client
Disadvantages of Fixed Cost Model
- Rigid Terms
- In-depth Planning
Note: The fixed-price model is also great for small projects with limited features and clear requirements i.e. MVPs and projects with limited budgets and definite deadlines.
2. Dedicated Team Model
It is a team-based model that consists of all the sources of technologies, architecture, and platforms. A dedicated team model is assigned to one project at a given time, which is great for developing some big volume or complex project.
It is for a long development process that lasts for a long time and requires a dedicated remote development team to complete a project.
Advantages of Dedicated Team Model
- More value is added to the business model as expert professionals are added to the team.
- Large retention rate improvements result in reducing the conventional attrition or challenges
- The Dedicated development team core team model means fast modifications and maintains the flow of productivity.
Disadvantages of Dedicated Team Model
- Inefficient for Short-Term Projects
- Requires Carefully Planning
- Requires a Considerable Amount of Time
3. Time & Material Model
Time & Material model is used when the total work scope is uncertain and cannot be estimated. Well, these kinds of projects cannot be assigned with a fixed price and dedicated team as the total scope is undetermined.
The volume of the work fluctuates as software development is in process. So, hiring developers on an hourly basis makes more sense. By choosing the time & material model, the client is charged for the actual amount of time and effort spent by the software engineers.
Advantages of Time & Material Model
- Work is divided into short sprints, making delivery faster.
- Clients pay an hourly rate, decided by both parties.
- Clients can easily monitor progress on a daily basis.
Disadvantages of Time & Material Model
- Uncertain Deadlines
- Undefined Budget
- Needs a lot of Management
How to Find the Right Partner to Set Up Your Dedicated Development Center?
Setting up an offshore development center is not just collaborating with a company. It is way more than it.
In fact, offshore development is all about sharing responsibilities with a company really wants to help you grow your company.
Furthermore, the significance to partner with an offshore company is to reduce operational costs while improving efficiency. Therefore, you must consider the following factors before hiring a dedicated team!
1. Choose the Right Location
Location determines everything. Before making the decision think about which country, state, and the city is able to provide you, efficient developers, up to date with technology trends, and deliver you quality results at lower costs.
2. Setting Up a Defined Budget
Before starting to look out for a company, consider all your requirements;
- project scope
- required skills set
- number of resources
- and budget
Not sure how much will it cost you to hire developers? Try out our outsourcing cost calculator and get an idea.
3. Hiring the Right Offshore Development Team
To hire the right resources, it is important that you tally all the skills and experience of your dedicated development team according to your product requirements.
4. Defining the Rules and Regulations
Prior to signing the contract with the ODC, it is important to create a list of your guidelines, regulations, policies, and rules so that you are stress-free about the working conditions of your offshore development team.
5. Clearly Mentioning your Goals
Define your goals, KPIs, and metrics to meet your expectations and budget. Explain to your team what you want to accomplish and why? This will provide them a clear direction.
6. On-Going Communication
Enable your in-house team to establish an ongoing communication channel with your offshore software development center. Above all, choose a team that is flexible to communicate regularly, helping you in monitoring your project development.
If you are looking for some help, these communication tools can help you manage your remote team effectively.
Keep in mind to find a reliable offshore development company that keeps your company information safe and confidential.
Top Benefits of Working with a Team of Dedicated Offshore Developers
Indeed, working with offshore developers has a lot of benefits. So, let’s list down all of them;
1. Low Development Cost
Most companies hire top offshore developers from India and other countries like Vietnam and Ukraine work at lower costs in comparison to the developers in the United States.
But is it the only benefit of offshore outsourcing, or are there others? Yes, there are other benefits as well, which are listed below.
2. Accessibility to Large Tech Pool
You will find an abundance of tech experts in Asian and European countries. As a matter of fact, a few companies outsource their operations to multiple countries to expand their global reach.
In return, they get the advantage of working with a diverse team of offshore developers.
3. Improved Productivity
Offshore development center (ODC) offers you the advantage of serving in two different time zones. This reduces the time-to-market of your software product, fast-tracking the development cycle, and achieving a competitive edge.
4. No Infrastructure Cost
Another important advantage is that clients do not have to pay for any infrastructural costs. Thus, it is suitable for any kind of type and size of an organization.
Challenges While Working with an Offshore Development Team
1. Expectations Mismatch
In most cases, outsourcing fails because of the expectation mismatch. Therefore, it is important to correctly recognize and share your expectations with your offshore team. This way your team can deliver you exactly what you want.
2. Cultural Gap
Lack of cultural diversity can be disastrous in an offshore development center. A team that can share holidays, cultures, festivals with the client can help lead to a successful and healthy relationship.
This is a common pitfall where the local consultant fails to foresee the upcoming challenges and threats while developing their client’s product.
The most sensitive period in any engagement is the initial transition period. The dedicated offshore development center should have a strong, well-structured, and detailed commitment with its clients for a trustworthy relationship and successful product build-up.
How to Make your Outsourcing Journey successful?
Our Offshore Delivery Center in India applies various strategies to manage the uncertainty of our clients or potential challenges that we might face.
1. Develop Trust
We increase confidence by taking a more consultative approach to the marketplace; along with exploration of client scope and objectives to develop a proof of concept
2. Offer Additional Benefits
Highlight additional benefits that we offer as their extension in a global market, not just reduced cost, but efficiency increased resource availability, and top-notch delivery.
3. Bridge the Cultural Gap
Conduct workshops to bridge cultural gaps and to improve mutual understanding. And work with partners with specific industry knowledge to mitigate gaps in knowledge regarding local requirements.
The Complete Process to Hire Offshore Developers
1. Send your Pitch
Present your project details, vision, goal, and provisional planning to the offshore developers you are hiring.
Send them the important documentation, specifications, demo links that can help them understand your requirements. Next, a meeting will be organized with our sales team that will help you understand the entire development phase.
In the next phase, our experienced team of technical consultants will work with you to set up the right team and the tech stack for your project. We will also define the roles of everyone in the team involved in your product development.
After presenting the team of offshore developers, we will let you interview each and every developer individually. Also, you will give that you have the clarity to your dedicated team of offshore developers who are working on your project.
4. Share your Authorization Terms (if you have any)
Determine and share your security measures, such as who gets access to different parts of your project and who all are authorized to make what kind of decisions.
5. Establishing a Communication Channel
We will establish a communication channel and project management tools that will help direct contact with your developers.
Now your team is all set to start your development process. Our technical experts will closely work with your delivery team to monitor the status of your project. Additionally, on a weekly basis send you a progress report of your IT project.
Best Countries to Set up an Offshore Development Center
It is not a surprising fact that Indian Developers/Programmers work at a fraction of a salary amount and yet deliver some of the most powerful and leading It products in the industry.
India is a huge nation with a massive young population that has the best software developers in the world. And there are a lot of factors that make India an ideal location to set up an offshore development center in India.
Therefore, the capability to develop top-notch products by writing in good code has proven them exceptional in the marketplace.
An average annual salary of Developers in India;
China has a lot of workforces that are both cheap and reliable developers. They are known to be extending their work shifts from 12 to 16 hours.
In addition to this, their software industry is also way cheaper than the United States. An entry-level programmer in China is 30 to 40% less expensive than in the United States of America.
But the biggest challenge that China has is sealing the security turnouts. There is a lot of news about data breaches in China, making it a little, not a preferred country to outsource IT projects.
Despite a lot of governmental issues going out in the country, Ukraine has been a choice of a lot of developed countries to outsource their IT outsourcing work.
In addition to this, Ukraine has been ranked as the largest of any Central or Eastern Europe Country. This is because there are over 900000 IT professionals in the country.
To know about some more countries and their developers’ packages you can read our blog, “Which are the Top Locations to Set Up an Offshore Development Center?”
Why Outsource in India?
India has one of the largest Information Technology sectors and also equips the biggest pool of IT talent. As a result, the country has produced highly skilled developers, consultants, and engineers, who have been rated as the best resources in the world.
Even though India has such great talent, salaries still remain much lower than in the United States and Europe. And countries consider India to be the best fit than China, Russia, and the Philippines.
More importantly, Indian developers are experts at developing and designing complex systems design. Also, their capability serves well in applied fields of software engineering.
Some more reasons why India is a popular Offshore Development Center destination:
- Availability of huge talent pool
- Accessibility of programming specialists
- Low labor costs
- Technical excellence
- Research & Development
- Experience with complex projects
- Adaptive culture
- Availability of local professional organizations.
However, India remains the largest provider to the critical North American and Western European buyer markets for outsourced services.
Offshore development centers in India are reporting 45 to 60 percent annual growth. Gartner Group predicts that within two years, 40 percent of its clients will spend up to two-fifths of their legacy budgets especially on offshore outsourcing to India.
India is Rising On the Innovation Curve
“India has evolved from being the IT, services and business process outsourcing hub of the world to being a significant R&D center for multinationals and many Silicon Valley startups”.
Presently, we have seen an entire product line that can be easily developed, designed, as well as delivered entirely from India. Also, a lot of multinational organizations, such as Cisco, GE, have shifted their R&D, development, and operations to India.
India is currently been seen as a prominent place to grow your digitally transforming business, be it B2B or B2C.
Why Choose Your Team in India (YTII)?
Your Team in India is an initiative to bring world-class offshore IT services at cost-effective prices for global businesses of all sizes. In addition, you get the best professionals at genuine rates. However, the development team takes good care of all your needs.
Moreover, YTII is known to provide IT Staff augmentation and IT resourcing services, where we staff, manage and support offshore development teams based on our client’s requirements.
Our services include:
- Providing certified and experienced developers
- Client’s Team management
- Offering State-of-art-infrastructure in terms of hardware and software
Why Choose Your Team in India?
Choosing Your Team in India means accelerating your business growth with ‘zero setup investment. Partnering with us also gives you –
- A Global Outreach – We will help you expand your organization by providing dedicated Indian offshore developers.
- Unique Work Methodologies – Working with us gives you the choice to bring about your own corporate methodology and management techniques.
- Quality – Top-notch product quality as the developers that we provide have years of experience and do not work from home.
- Cost Effective – Reduced expenses of entire software development cost.
- Scalable – Moreover, you can quickly ramp up or downscale your team, any time, within hours.
- State of the Art Infrastructure – High-end facilities for designing, developing, testing as well as building a range of the latest software.
Setting up an offshore development center in India offers a lot of major benefits for companies of all sizes and kinds. Well, there is no answer as to where and how companies should establish an ODC. So, it is important to make an informed decision and you can get help to establish one of the greatest values.
To know more in detail about our services, engagement models, technology stack, and the kind of developers we provide, you can get in touch with us now or drop your requirements at [email protected]