The increased market volatility and the economic downturn have forced businesses to adopt stringent budget cuts and rethink their modus operandi to build resilient and flexible business models. Today enterprises are actively looking to move their software projects to Offshore Development Centers, so their in-house resources can focus entirely on their core business activities.
But before we dwell further on why businesses worldwide are opting for Offshore Development Centers, let us find out what they are.
What is an Offshore Development Center (ODC)?
An Offshore Development Center is the extended IT/Development team built overseas to work on your software development project. This team acts as an extension of your IT team and helps you fast-track your project. A partner company in the top offshore location offers this facility and assists in acquiring, mentoring & managing high-quality resources for best productivity.
For example- Suppose you are a company based out of the USA, developing a software solution, and wish to reduce your time-to-market to gain first mover’s advantage. Hiring web development offshore companies in countries with a lower cost of living, like India, Ukraine, and the Philippines, could be your answer in achieving this goal without much cost implication.
Offshore Development Center is also known as – Offshore Software Development Center, Offshore Delivery Center, Offshore IT Development Center, offshore development services, Offshore Team, and Offshoring.
In 2022, offshore development centers (ODCs) are becoming full-fledged business units operating overseas, owing to their benefits.
Benefits of Offshore Development Center
Delivering high-quality projects without exceeding budget is one of the most prominent challenges software developing companies face. Hiring offshore development services can reduce the development cost by as much as 60%.
Setting up an ODC 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.
- ODC offers a massive talent pool across technologies.
- It has a lower cost of living, which results in lower labor and infrastructure costs.
- ODC has favorable government policies toward the IT sector.
2. Specialized Skills
Tech demand plays a critical role in the digital economy of a nation.
A nation with an affinity towards certain technologies is bound to have a higher supply of tech experts in these technologies and vice-a-versa. This creates an imbalance in the distribution of resources across the globe.
An offshore development center helps balance the market by providing technology specialists that may not be available or are limited in your local geography.
3. Tech Backup
While building a software product, enterprises hire specialists and uniquely skilled resources to create quality solutions. Losing a resource like this could adversely affect the timeline and quality of the solution.
An Offshore Development Centre aids in creating resource backups for your in-house teams. These backups are maintained at a much lower cost of ownership and can take over the responsibility of the project, ensuring zero downtime. This enhances your organization’s resilience and thereby helps mitigate risks.
4. Extended hours of work coverage
An offshore team working across borders operating in a different time zone ensures that your project development continues even in your off-hours.
Your quality team can easily review the work completed this way with a feedback mechanism in place. This way, companies ensure zero lag or delay in the project. Thereby fast-tracking the overall project development lifecycle.
5. Business extension
Offshore development centers are a great way to expand your business presence and offerings overseas.
An ODC helps you create:
- a physical business presence in an offshore market with minimal cost commitment
- allows localizing of your products and solutions to tap the potential customer base in new markets
- helps create brand affinity amongst the local businesses
6. Focus on core competencies
With an offshore development center in place; businesses can delegate their IT operations to the offshore team and focus resources and time on building their core competencies.
What is the purpose of an ODC?
An offshore team working on your software development project accelerates your business growth.
- It delivers high-quality project development at a lower cost of operation
- It speed-up the project’s time-to-market
- Helps expand business in new markets
- Enables on-demand scaling of teams
With all these advantages, offshore development centers have surely emerged as winners in IT outsourcing.
But hiring an ODC is not the same as outsourcing IT projects. In fact, both solutions are quite different in their business model. Here is how:
Offshore Development Center vs 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.
This brings us to our next part; how can you choose the right ODC team? But before we jump into selecting the team, let’s discuss the various ODC models available in the market.
The different Offshore Development Center models or ODC models
1. Product Engineering
The Product Engineering model is an ODC model suited for businesses looking for an extension and support for their in-house team on ongoing projects. These could be the sole product development team with in-house Sales/Marketing and Management.
- This is usually a shorter engagement, and the team requirement is immediate.
- Though the team works directly under your supervision, setting up infrastructure, management, and HR procedures lies with the hired ODC service.
- In this model, the hired team generally comprises technical resources like developers, coders, etc., and the team size is below ten members.
- This model is suited for small start-ups and businesses who are offshoring their project for the first time.
The build-to-scale model is an ODC model suited for businesses that wish to set up their business and an offshore team of experts in another country. These businesses have a growth mindset and have experienced success with small offshore groups.
- This is a long-term engagement between the offshore team and the company hiring ODC.
- It takes longer to set up as clients here focus on putting together a handpicked winning team and wish to invest their time to collaborate.
- The process goes through multiple rounds of discussion with clients who travel to an offshore location to understand the culture and partner.
- With a long-term commitment from the client, the offshore development firm scouts for high-quality resources than only limiting to inhouse bench or team
- Like product engineering, the team works directly under your supervision, but setting up infrastructure, management, and HR procedure lies on the ODC service providing company.
- The hired resources are a mix of technical and non-technical staff, and the team size is above ten members.
- It’s suited for businesses wanting to set up a business extension in another country. Offshore software development company helps create the brand identity and localize their products and services.
3. Build-Operate-Transfer (BOT)
Build-Operate-Transfer is an ODC model suited for businesses who wish to create a full-fledged business operation in a foreign market under their brand name. Here, the ODC service providing company and the hiring company agree that the ownership of the set-up office and its employees would be transferred to the hiring company after a specific time frame. The ODC service provider would transfer the team management, work allotment, HR responsibilities to the client.
BOT engagement is a 3-step process:
In the first step, the ODC service provides company set-up facilities and infrastructure to support offshore offices. They hire teams as per the client’s brief and create training models for inducing the hired talent. They establish proper knowledge transfer protocols to ensure the seamless exchange of information.
In the initial phase of business setup, the operation of the ODC is developed, deployed, and managed by the ODC service providing company. The team would work under your supervision, but the management and HR responsibilities lie with the service-providing company.
The last step of the process is the transfer of ODC ownership to the client. Usually, this step occurs after a pre-decided stipulated time, when the client has seen the successful operation of ODC and is confident in its performance.
- BOT is a long-term engagement between the service provider and the client.
- There is usually a vetting period of 2 years or more to assess confidence and create a sense of ownership/belongingness with the chosen team.
- Since the work commitment to the hired team is permanent, it attracts high-quality talent and has a high retention rate.
- The hired resources are a mix of technical and non-technical staff, and the team size is above 20 members.
- Eventually, the ownership of the entire ODC is transferred to the client.
- This model is generally opted by SMBs and large companies who want to set up their subsidiaries in different markets but don’t know the market dynamics.
These three models help your businesses meet ODC model outsourcing requirements without draining your budget. A successful ODC team has the right composition of expertise and experience. Though there is no hard and fast rule about the key roles in an ODC, usually an offshore team has the following key members
Members in an Offshore Development Team
- Account Manager – Accountable for managing client relationships and ensuring on-time delivery of high-quality projects.
- Project Manager – Responsible for project planning, execution, and quality assessment at every project stage.
- Designers and Developers –
- The tech team looks into the design, installation, testing, and maintenance of software.
- Test Engineers – Tech team that assess the integrity, quality, functional and non-functional requirements of the project.
- Usability Engineers – A team that evaluates the usability and user-friendliness of the solution.
- Graphic Designers – Experts who build visual concepts to showcase solutions’ USPs.
- Content and Technical Writers – Team responsible for creating instructions and integration content for the software or website.
Selecting the right offshore team is the key to successful project execution. But how can you ensure that you choose right? Here is how-
How to choose the right offshore development company/partner?
Setting up an offshore development center has its own challenges and risks in terms of management, communication, culture, legal compliance, government policies, and cybersecurity.
Businesses can avoid these challenges by gaining information on the country chosen for ODC and thorough vetting of the offshore development companies.
Read on to find out how to vet the offshore development companies/partners.
1. Leadership Team
One must interact with the leadership team before selecting an ODC service-providing team. Talking to the leadership will give you an assessment of:
- How well does the organization know its business? What are their strength and weaknesses?
- Do they understand your brand requirement, and can they onboard the right talent for the project?
- How good are their communication skills, and how soon can they debrief your instructions?
Communication is a non-negotiable aspect of setting up an offshore business. Good communication and the right selection of talent, and the right cultural fit ensure project success.
2. Experience, Reference and Social Proof
While shortlisting an ODC team, you must find out:
- How long have they been doing this business?
- What kind of projects have they successfully delivered in the past?
- How many industries have they served?
- Who are their clients?
- What are they saying about their business operation?
- Have they received awards and accolades in the recent past from the industry?
Finding answers to these questions would help you assess their industry and technology niche and work quality. You will be able to make an informed decision.
3. Transparent and Honest Communication
When an offer sounds too good to be true, you may want to drop it.
Developing a successful software product or solution requires-
- Time and a skilled team conducting a granular assessment
- Multiple rounds of quality assessment
- Feedback and code inspection at various stages of development
Though ODC teams are known to deliver premium quality work while meeting the deadline, anyone promising unrealistic delivery time has probably little to no idea about how software development works.
Why choose Your Team in India?
Your Team in India (YTII) is an offshore development company that provides offshore software development services. We empower startups, SMEs, and large-scale enterprises to hire highly-skilled Indian software developers and build reliable software solutions. At Your Team in India, we believe and practice committing right to our clients.
Pillars of our ODC services
- Dedicated Team We are committed to providing a dedicated offshore development team, irrespective of the size or duration of the project.
- Dedicated Relationship Manager We will assign a dedicated relationship manager to your project, who will closely monitor the team and ensure the delivery of quality work.
- Data Security NDA contracts are signed between the hired talent, you and YTII to safeguard your solution Ips and build confidentiality of the ongoing project.
- Focused Leadership Team and Constant Self-owner Review and Audit The leadership team constantly reviews and provides feedback on ongoing projects.
- Process Framework Well-formed, reliable and robust processes framework and SOPs that clearly define the work hierarchy and ownership amongst the team to ensure seamless operations.
- Mentoring of ‘Why’ At YTII, we ensure that every ODC team member is mentored on ‘why they are creating a product or solution?’
Knowing the ‘Why’ is crucial, as it becomes a self-checking mechanism for individual contributors. Knowing the purpose helps them evaluate their work and match it to the client’s expectations.
- Agile Mindset Every developer is autonomous, self-sufficient, and works with an agile mindset, delivering high-quality work.
Ready to start your offshore development journey?
Setting an offshore development center can help businesses achieve high-quality work at a much lower cost. But choosing a reliable ODC partner is critical to an ODC.
With 10+ years of experience in delivering quality output, YTII can help you set up a robust and scalable offshore development center in India.
Get in touch with us @ [email protected]. To know how we YTII can assist you in building a thriving offshore development center in India.