Quick Summary: Setting up an offshore development center can be a smart move for companies seeking to grow their business. However, it's crucial to assess various factors before taking the plunge. In this article, we'll provide you with a comprehensive checklist to help you determine when it's the right time to establish an offshore development center.
The newest Mckinsey Global survey shows that it’s arduous to find specialists with the required skill set.
Whether it's hiring new resources, establishing infrastructure for a new office, or any other business scaling-related task, everything needs significant investment, right?
So, setting up an offshore development center with a reliable and entrusted service provider seems to offer a sigh of relief in the given circumstances.
If you are reading this blog, you are probably either looking for a solution to create a software product in a budget-friendly way or planning to set up an offshore development center to expand your business in remote locations.
Yes? Look no further!
Offshore Development Centre is the answer to your dilemma.
This comprehensive guide will shed light on everything you need to set up an offshore development center without leaving a burning hole in your pocket. But, before we dig a little deeper, let’s have a quick rundown of what offshore development means.
- Offshore development centers can offer a cost-effective way to expand your operations, but it's essential to consider the potential risks and benefits before making a decision.
- Factors to consider when setting up an offshore development center include talent availability, cultural differences, infrastructure, and regulatory requirements.
- Conducting thorough due diligence and creating a well-defined plan can help ensure the success of your offshore development center.
When To Set Up An Offshore Development Center?
You might be sitting on the fence as to when to hire offshore developers or set up an ODC.
There are many options when offshoring becomes the best viable choice. But, let’s shed light on the crucial ones!
1. Lack of Tech Talent
The world is experiencing a 15-year low point in an ongoing talent shortage. Unsurprisingly, India will witness a Level A TMT (Technology, Media and Telecommunication) surplus of 1.3 million workers by 2030, offering yet more opportunities for the nation.
Although, in a recent study by Korn Ferry, India pulled in at No.7 (America was No.1). But, with the USA facing Level A talent crunch in 2020 - a shortfall predicted to exceed 625,000 TMT employees by 2030 - it can be filled by India with its skilled worker surplus, storming up the ranking surpassing US tech hubs. To put it simply, India could challenge America’s position well before 2030.
Not to forget, the competition for adequate skills can impact the world as it can increase the cost of labor, lower quality, and also slows down production. So, to address these demurs, offshore development centers are one of the best options.
2. Oversee More Cost-Effective Operations
In the U.S and Western Europe, hiring the best talent comes at a premium. However, to start with, payroll is the only aspect of setting up a software development team. There is:
- the end-to-end recruitment process,
- office space,
- state-of-the-art equipment
- employee-centric benefits like insurance, health benefits, gratuity
These all factors make the concept of building an in-house development team an expensive affair, especially when you are located in cities with a high cost of living like New York, Singapore, and London.
Therefore, going offshore and building a team in India or Ukraine can significantly reduce the cost. Moreover, the cost of living in these countries is a lot lower; you can hire equivalent labor at an affordable cost.
3. Kickstart For First-Mover Advantage
In a marketing strategy, “First-Mover Advantage” is the competitive benefit gained by the initial significant occupant of the respective market segment.
That’s a typical situation where setting an ODC proves to be a viable working option. In simple words, an ODC helps to accelerate the development of a potential project idea without any delay, especially when in-house teams are already involved in other critical projects.
Furthermore, it helps companies and brands to establish strong brand recognition, customer loyalty, and early purchase of resources before other competitors enter the market and gain the lion’s share.
4. Investment-Friendly Nature
A little aside from being a budget-friendly option, setting up an Offshore Development Center proves to be investment-friendly too.
Hiring offshore developers gives small to medium enterprises an opportunity to work with global talent. Furthermore, ODC helps build a global presence that eventually helps businesses acquire investments across the globe.
Notably, it offers your company a chance to have an international network of professionals and build relationships which inadvertently helps your brand’s presence.
5. Scale Your Business Quickly and On Your Own!
Imagine your business is booming at an unprecedented pace, and you are growing like never before. Your company proves to be a hot pick from numerous potential clients, but just because you don’t have the potential that you need to scale and address the new requirements as they emerge, you have to turn down your valuable opportunities.
And, businesses would never want to find themselves in these situations.
However, investing in a trusted offshore development team that provides you with on-demand horizontal and vertical scaling to address the challenges of capacity planning ensures the right resources are in place to handle expected as well as unexpected traffic demands.
Besides, offshoring offers companies the opportunity to meet deadlines and the surge in demand and quickly scale up and down as needed. Also, it quickly put together prototypes, proof of concepts, and minimum viable products that can be used to collect feedback and refine an idea before beginning the development process.
In simple words, the speed and flexibility of offshoring need clearly defined requirements and quality.
6. Low Cost Of Ownership Of Tech Backup
Without the specific tools and experience, it’s easy to run into speed bumps and accumulate downtime. This holds true for enterprises hiring specialized and uniquely skilled labor to create quality products. Losing a resource like this could adversely affect the timeline and quality of the solution.
So, hiring an offshore development center would prove beneficial in avoiding such scenarios. An entrusted ODC would assist you in creating backups for resources in a pocket-friendly manner that can easily take over the responsibility of the project, assuring zero downtime and a smooth work transition.
Thus, an offshore development partner offers a low cost of ownership on the project from ideation to completion.
7. Expansion To A Foreign Country
Partnering with a reliable offshore development company can help you navigate the language arrears, cultural differences, regulations, and many other challenges that can make it incredibly difficult to step into new market horizons.
While you’ll certainly need a point person who understands your company's ethics, objectives, and how to turn ideas into reality, this is a niche where cultural differences between teams prove to be an asset.
The offshore teams can help you understand your target audience in a better way and develop relevant solutions that speak to a different set of priorities.
Probably, you must be wondering, is offshore development the right move for your business?
Here’s the answer!
Is Offshore Development The Right Move For Your Business?
Offshore software development is a recommended choice in most scenarios, but it’s always crucial to have a complete overview of the project at hand before inching ahead on this option.
To start, consider the following:
- Make sure your partnered outsourcing company meets the delivery dates.
- Pay attention to any skill gaps and capacity limitations that may take place in your in-house team.
All in all, a lot of companies across the world are resorting to offshoring business operations. But, the most pressing question still remains unanswered - “Who Can Benefit From Offshore Development Center?”
Who Can Benefit From Offshoring - Startup, SMB, or Large Enterprises?
Businesses offshore their project primarily to leverage global resources and gain business momentum. But, there are other unskippable reasons why companies choose this strategic approach.
Let’s get to know why and how offshoring proves to be an ideal choice for businesses.
Undeniably, offshoring is the best choice for early-stage startups or businesses that launch new products and want to save on costs, deliver really quickly, and power up their tech expertise. Furthermore, offshoring is better for founders who cut their teeth on building products or establishing startups.
Recommended Read: How To Hire Developers For Startups
Product Engineering is an ideal choice for startups as it caters to the need for an extension and support to the in-house team on ongoing projects. Besides, there are other reasons too!
- You can easily start with as small as two members team and a minimum engagement commitment of 1 month to gauge the work.
- Though the team works directly under your supervision, setting up infrastructure, management, and policies lie within the umbrella of hired ODC services. Also, you can easily keep track of the work.
SMBs (Small and Medium-Sized Businesses)
Offshoring can be a powerful tool for small and medium-sized businesses, and it shouldn’t be underestimated just as a cost-saving measure. Indeed, offshore staffing can transform a business and is among the most potent business tools available.
Offshore staffing helps SMBs triple their workforce for a similar price as your local workforce. So, when you decide to offshore your business, the right question to ask is how to hire employees to scale your business. Which offshore model is right for you?
The Build-To-Scale model is the right choice for small and medium-sized businesses, as it offers the following benefits:
- You can start with a minimum of 10 members and scale accordingly to the project requirement with an engagement commitment of 1+ years.
- Scale-To-build is an ideal choice even for businesses planning to expand their business in another country and mark up their presence in the established market.
The ODC model is not new. Companies around the world have used it for many years.
In simple words, the ODC Build-Operate-Transfer model proves to be an ideal choice for businesses who wish to develop a complete business solution in a foreign land under their brand name.
Herein, the ODC service provider and the hiring company agree that the ownership of the set-up office and the team would be transferred to the hiring company after a specific time period. That’s not all!
- There is a vetting period of 2 years to access confidence and develop a sense of ownership with the team.
- The team size is more than 20 members, including technology experts and the management team.
Setting up an ODC might sound daunting at first, but with a reliable partner accompanying you on your journey, everything turns out to be easy. You can easily avoid all pitfalls with an ODC team by adhering to the practices mentioned above.
So, if you are looking for an entrusted partner capable of reducing your hiring costs by offering flexible and fast project scaling, the experts are here to help!
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Frequently Asked Questions (FAQs)
How can a company determine if setting up an offshore development center is right for them?
What should companies look for in an offshore development center partner?
What are some best practices for managing an offshore development center?