All businesses, big and small, need software to operate. As a result, it’s become harder and harder to find software developers, and even if you can find a team, their prices have shot up. In this article, we’ll look at an alternative: building an offshore development center. We’ll look at offshore development center benefits and challenges in more detail, offshore development center meaning, and more. 

What is ODC? 

ODC or offshore development centers are centers that provide software development services, including completing bespoke software projects, consultancy, ideation, and development services on behalf of foreign clients. Many of the biggest companies in the world, including Apple, Samsung, Microsoft, and Uber, use ODCs to complete specific projects or provide maintenance and support. 

There are many different ODC models to consider: 

• A software ODC trust for clients in healthcare or fintech that require top-level security and confidentiality from offshore development center services;
• A traditional software ODC model that includes a dedicated team with technical skills required to deliver the project, e.g., updating older software, providing support, migrating to another platform, or writing new code;
• Branded ODC for businesses with internal teams that want to be heavily involved in the entire development process;
• Full form or private ODC where companies choose their own development centers based on their own requirements and operate in close cooperation with the company headquarters. 

What are some offshore development center benefits?

Like most outsourcing rates, offshore development center rates are generally cheaper, but there are many other benefits to consider.

• Cost savings: ODCs are placed in countries with lower living costs, so you can take advantage of this to reduce your material and labor costs considerably. 
• Market expansion: Developing your product in another marketplace creates opportunities for expansion and presents the target market. 
• Scale: you can set up a large team with many different skill sets, including PMs, QAs, and even marketing specialists, to get your product off the ground. 
• Access to a wider talent pool: You’ll be able to hire talented developers with rare skills and seniority levels that you might not be able to find in your home country. 
• Product localization: You can bring your products to the market more easily by basing your ODC in the country where you’d like to launch. 

There are a few risks to consider as well. If you choose the wrong ODC location, you might end up spending more money than you initially planned. You may also struggle to find employees with the right skills or level of English proficiency if you pick a small town to build your ODC. Stick to well-known tech hubs to ensure you reach your full potential.

It’s also a good idea to look at the political and tax landscape of the country you’re entering. There may be more bureaucratic hoops to jump through or difficulties with hiring staff or establishing a legal entity.  

What are some of the challenges of setting up an ODC?

A distant office may come with greater risks of data leakage, cultural differences and language barriers, or time zone concerns that make it hard to connect. Some of your inhouse team members may become irritated or resentful of the ODC team, or consider them a threat to their own job security, especially if there are cultural differences to consider.

How do you set up an ODC team?

You have to start by choosing the right software vendor. You have to examine the vendor’s working culture, look at their case studies and code, and analyze their skill sets and experience. Always look at their track record and references. Call past customers and ask about their experience working with the ODC.

It’s very important that your in-house and ODC teams work together in harmony and understand what their responsibilities are. The teams should distribute tasks equally and help one another. Team members should have the right soft skills as well as technical skills to thrive. Reporting lines should be clear.

You should also make sure that you have the right tools in place to manage your project and remote team, including Jira, Asana, or Slack. Stand-ups and scrum meetings will keep teams coordinated and organized, even across distances. 

Here are a few steps to follow: 

1. Research the market and the country you want to operate in
2. Plan the facilities you need
3. Register as a legal entity 
4. Find and rent an office
5. Prepare and connect workstations
6. Hire your core team and support staff

You should always try to inspire and consolidate your team and instill pride in your brand through regular all-hands meetings. Make sure everyone understands your vision and how they contribute to it.

Best Destinations for building a ODC

There are a few countries that are suitable for building an ODC, including:

• India, one of the early offshoring pioneers with more than 3 million software engineers in the country
• China has invested millions in the offshore development market. There may be some cultural barriers to consider.
• The Philippines has great infrastructure, talented developers, and strong work ethics, along with strong cultural ties to the US. 
• Vietnam is significantly cheaper than other destinations when it comes to offshoring.
• Poland has more than 250,000 engineers that can work for your ODC, great tech education, and low living costs.
• Ukraine has more than 160,000 engineers, and they are adding more every year.
• Zimbabwe is one of the most affordable destinations, in the same time zone as Europe, with great English language proficiency. 

Make sure that you choose a country where the time zone overlaps with yours and where development rates are cheap enough to justify the ODC.  

Conclusion

Now you know a little bit more about ODCs, but you can find out more about them here. Putting together an offshore development center can take time, research, and effort, but we can all agree that offshore development center benefits outweigh those challenges. Saving time and money and accessing great skills will make the journey worth it. 

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