What is an Offshore Development Center?

As the global need for software development rises, the number of offshore software development centers has steadily increased over time. If you are employed in the IT sector, you are likely familiar with the phrase “offshore software development center”.

As a result of the benefits they provide, these offshore development centers are favored by many brands.  Let us discuss everything in brief!

1. What is an Offshore Development Center?

An Offshore Development Center (ODC) is a development center located in another country with a different time zone.  Dedicated offshore software developers will function as an extension of your IT department, speeding up your development process. The company that provides offshore development centers is responsible for recruiting, training, and maintaining high-quality resources for optimal performance.

The offshore development center is also known as the Offshore delivery center and Offshore IT development center. 

2. What is the Difference Between ODC and Outsourcing?

When a corporation faces a severe scarcity of software engineers or desires to cut in-house development expenses, outsourcing could be beneficial. Global spending on outsourcing reached an estimated $731 billion in 2023 and has been steadily increasing ever since. – Deloitte

There are a variety of options to explore under the traditional outsourcing strategy. When a business has established the project’s needs, scale, and criteria, a fixed-price software outsourcing model is an excellent option.

If the specifications are ambiguous or the project requires long-term, continuing offshore assistance, the offshore development center may develop your software project from scratch.

In addition, a dedicated offshore development center provides solutions to clients from different regions of the globe, whereas outsourcing provides the same product regardless of geographical location. 

Nevertheless, there are further important distinctions that should be considered when picking between different recruiting methods.

We establish six fundamental characteristics that distinguish ODC from outsourcing. These include:

2.1 Project Duration

In contrast to outsourcing, which applies to tasks of any scale, offshore development centers specialize in difficult endeavors and need consistent assistance.

2.2 Commitment

On this front, the offshore development center (ODC) approach relates favorably to outsourcing. Since outsourcing requires a staff committed to one customer, your task will receive the uninterrupted attention of contracted professionals.

2.3 Team Size

Although outsourcing enables you to hire a single developer to solve your technological deficiencies, the ODC strategy provides an entire development team of experts.

2.4 Hiring Method

When hiring software developers for your ODC team, your tech provider conducts a stringent assessment which is common for all. Whereas, for outsourcing, All the developers are hand-picked to meet the specific needs.

2.5 Support

In the conventional outsourcing approach, the administrator works at the provider’s office. In contrast, the ODC method enables you to build a dedicated team with your accountants, project manager, and HR personnel.

2.6 Scaling Perspectives

When building an ODC, you may anticipate infinite scalability, while outsourcing allows you to expand your workforce for a limited time.

3. Advantages of Offshore Software Development Center

Developing a business relationship with a dedicated offshore development center offers several advantages for your firm. These are the benefits of possessing an ODC team:

3.1 Reduce Infrastructure Expenses

The offshore company has already established the essential technology, so you do not need to invest money in office space, technology, connectivity, IT infrastructure, and electricity. In contrast to beginning from zero, the supplier may concentrate on recruiting offshore team members, allowing for a far quicker project launch.

3.2 Auto Scaling Your IT Department

Autoscaling is the technique of adjusting resources periodically to meet operational demands. Depending on the objectives of certain projects, the quantity of personnel that your organization needs may vary. Enterprises may require a high level of assets at times and a lower level at other times.  

During these situations, you may be required to move or reduce assets and duties within your team, which may necessitate a complex procedure for resource management. An ODC simplifies resource allocation because the offshore team can take on the functions and responsibilities of the in-house team.

3.3 Reliable Operations

To lure customers into a marketplace, the processes used by leading ODCs are quick, lean, and trustworthy. Offshore companies ensure responsibility and honesty with their clients through the use of effective assessment and reporting methods. You will be able to evaluate and track the development of their initiatives in real-time. Depending on the terms of your agreement with the offshore development center, you may request a redo of the project at no additional expense if you are unsatisfied with its outcome.

3.4 Timely Delivery of Projects

An ODC works in optimal surroundings and employs streamlined business processes to ensure the timely completion of your tasks. From project strategy, design, programming, training, and delivery, they closely adhere to the deadlines that you establish. The continuous coordination between the in-house and offshore team members enables the project lifecycle to be completed in less time.

3.5 Technical Support and Knowledge Retention

As part of their client satisfaction, ODCs provide continuous technical assistance throughout the project’s lifetime. Their method of managing information involves retaining all data gathered throughout the lifespan of a project. The remembered information can be enhanced and adjusted to suit different tasks.

3.6 Access to the Best Skills and Technology

The finest ODCs hire highly trained IT specialists with expertise in designing unique applications for your prospective clients. Their offshore development teams have decades of combined expertise, great competence, and proficiency in various domains. They regularly spend on training and skill enhancement for their staff. This ensures you receive satisfactory value for your offshore software development center investment.

4. Challenges of Offshore Development Center

Let’s look at some challenges faced by offshore development centers.

4.1 Security Risks

When transmitting confidential data across several places, it is critical to guarantee its security. Businesses need to ensure that their ODC partners follow their stringent data protection rules.

4.2 Cultural Differences

Dealing with overseas teams may lead to miscommunication and misconceptions due to cultural differences. It is crucial to understand each other’s work habits and actively build solid connections. are 

4.3 Time Zones

The practical challenge of coordinating across several time zones is indeed significant. To keep productivity levels high, make sure all team members know how to contact each other. Schedule frequent meetings that work for everyone’s availability. 

4.4 Communication Barriers

It can be challenging to develop effective communication methods and to provide or receive feedback if the team’s competency in English or another communication medium is poor. Progress can be slowed down, rework can be necessary, or quality can be affected due to issues including miscommunication, unclear directions, language hurdles, and time zone management.

4.5 Quality Control

Working with remote teams might make it difficult to keep tabs on the development process and quality. In addition to investing in training, conducting frequent audits and inspections, it is critical for organizations to have thorough quality control procedures. To further aid in quality control, businesses should set strict requirements and their suite of quality assurance tests for every project.

5. Different Models of Offshore Development Center

5.1 Product Engineering – 

The Product Engineering model is an offshore development center model appropriate for firms seeking the addition of their in-house team and assistance with work progress. This may be the only product development team with skilled management on the inside.

• This often requires a quick team setup due to urgent needs. 
• Although the team performs effectively under your direction, the contracted ODC is responsible for establishing infrastructure, administration, and HR processes.
• In this approach, the offshore development team often consists of technical professionals such as engineers, programmers, etc., and has less than 10 individuals.
• This strategy is ideal for small enterprises and entrepreneurs who are outsourcing a job for the very first time.

5.2 Build-Operate-Transfer Model

Build-operate-transfer (BOT) is a more comprehensive method that is deeply related to the ODC approach to offshore software development. It advises that you enter into a deal with a local company that will construct, run, and then transfer a software development center to you. In its later phases, the BOT faces several dangers surrounding the transfer of knowledge and personnel.

5.3 ODC Model 

For many companies, this traditional approach is still the best option. In the ODC Classic, a manager oversees a group of dedicated developers who have significant technical ability.  This model highlights the need to work together with customers to understand their goals and address their needs.

5.4 Customer Model 

In this ODC model, an offshore development center functions as an extension of the firm, allowing large companies to expand into other places. Also, in this model, an offshore team handles all development-related tasks, while top executives are located on-site to handle management and decision-making. 

6. Partnering with an Offshore Development Center

Follow the below-mentioned steps to set up your offshore development center:

6.1 Determine the Location

Several outsourcing countries in Eastern Europe and Asia are economically attractive to IT enterprises. In addition to cheaper operating and personnel expenses, firms should also consider the technical skills and cultural nuances of the countries. This is essential for effective remote team management and communication to minimize cultural differences and work ethic concerns. 

6.2 Partner up with ODC Provider

After settling on a location, selecting a reliable provider should be your next priority. Do not expect things to be as simple as it appears. Every nation has its fair share of offshore businesses. You can trust each business based on their perfect portfolios, stellar ratings, numerous positive reviews, and reasonable prices. Before hiring a vendor, ensure that they have a solid reputation and will protect their clients’ data and project information effectively. 

6.3 Establish Your Team

The next step is to establish your dedicated team after you have hired an offshore development partner. 

At this point, you’ll have to choose whether you want to be involved in the whole process, only in the interviewing of applicants, or in the final approval phase. Notably, while collaborating with offshore development organizations, there are various interaction options available. 

6.4 Start the Project

Once you delegate tasks and duties, your newly hired employees will go to work.

7. Conclusion

The establishment of an offshore development center has proven to be one of the most profitable investments for driving digitalization within your organization. The ODC is an efficient business model that extends a company’s market presence in a foreign nation, improves access to tech talent, and reduces upfront and infrastructure expenses.

As the trend of offshore software development continues to grow, an increasing number of outsourcing destinations have begun offering offshore development center services.

However, the Indian IT industry is renowned for being the leading offshore development center located in Europe, exceeding other locations in terms of skill and competence. In addition, you’ll need an ODC supplier like Tatvasoft for all of these benefits to function properly.

FAQ:

What is an offshore development Center?

An Offshore Development Center (ODC) is a development center that is located in another country and in a different time zone. In this model, dedicated offshore software developers function as an extension of your IT department and accelerate your development process. 

What does an offshore developer do?

A team of offshore developers can handle various aspects of your tech project, from creation, implementation, support, and testing. They bring a blend of technical expertise and soft skills.

How do I set up an offshore development center?

Follow these steps to set up an ODC:

• Determine the Location
• Partner up with ODC provider
• Establish your team
• Start the Project