Offshore Development Team
offshore development

How to Setup an Offshore Development Center [For Your Company]

Your company needs access to talent worldwide, lower labor costs, and higher productivity. The answer may lie in establishing an ODC or an offshore development center.

However, before diving in, it is crucial to learn that there are several outsourcing models to choose from, each with its advantages and disadvantages.

It’s confusing, and above all, it’s a huge decision!

All this should not, however, dampen your spirits. An offshore development center has the potential to help your business a lot if it is planned and run well.

This article will look at the different outsourcing models, why you should set up an ODC, and what you should do. Let’s fasten your seatbelts and set sail for new commercial vistas with an offshore development center.

How Does an ODC (offshore development company) works?/ Types of ODCs

An ODC is a facility set up by companies in different nations to offer their software development services more conveniently. Here are the models that exist when it comes to ODCs

Captive ODC, or Captive Offshore Development Center, is a foreign subsidiary of a parent firm that handles certain services like software development or IT support. Captive ODCs provide committed and specialized resources to the parent firm for software development, and IT needs.

Third-Party ODCs are independent software development and IT organizations that serve several clients. These full-service vendors offer application development, maintenance, testing, and support.

Third-party ODCs typically work on projects for customers and don’t manage their daily operations. Clients have less control over Third-Party ODC operations and employees than Captive ODCs. Third-party ODCs are more adaptable and can serve a wide range of clients. 

Captive ODCs can help the parent firm save money, grow into new markets, and hire more competent workers. The parent firm must also manage and secure the captive ODC.

A Virtual ODC, or Virtual Offshore Development Center, is a virtual software development and IT firm with no physical presence. Developers, designers, and IT professionals work remotely in virtual ODCs.

Virtual ODCs are cost-effective and flexible ways to acquire skilled employees for organizations of all sizes. Virtual ODCs can provide project-based or dedicated remote teams for clients.

Nearshore ODCs, or Nearshore Offshore Development Centers, are offshore service providers near the parent company. 

These countries share similar cultural norms and time zones, and their native languages and business practices are often more familiar. Business owners looking to enter new markets or gain access to specific expertise frequently employ the help of firms like these, who provide a wide variety of IT and software development services.

An Onshore ODC, or Onshore Offshore Development Center, is a company located in the same country as the client but is considered an ODC because they outsource some of the work to an offshore location. These companies typically have a domestic presence and may have a minor off-shore team to handle specific functions, such as software development or IT support.

When more workers are brought in to do a particular task, it’s called the “staff augmentation model.” The ODC group will function as an extension of the customer’s in-house team, taking on any duties and responsibilities the client needs to be done.

The term “managed ODC” refers to the service offered by a third-party vendor. In this, the client firm contracts for the management of an offshore development center on the vendor’s behalf. 

This includes managing the building and ensuring the ODC follows all laws and rules. It also includes hiring new employees and ensuring everyone gets along well within the company. 

Benefits of setting up an offshore development center

  1. Savings on labor costs can be realized by establishing an offshore development center, as salaries and operational expenditures are often lower.
  2. When making specialized or niche technologies, it’s always good to have a larger pool of skilled people to choose from. Offshore development centers may give just that.
  3. Another perk is enhanced productivity. Thanks to the ability of offshore teams to operate even when the main office is not open, resulting in 24-hour development cycles.
  4. One benefit of employing a workforce in another time zone is working done during non-traditional business hours.
  5. The capacity to increase or decrease the size of an offshore development center as required means that both resources and expenses may be adjusted more quickly to meet changing demands.
  6. Offshoring software development also has the added benefit of exposing businesses to new cultural viewpoints and practices.
  7. Legal and regulatory compliance is another key benefit of having an offshore development center.
  8. Contemporary communication solutions make it simple to maintain contact with remote teams and facilitate productive cooperation.
  9. In the event of a natural disaster or other disruption to operations at the main office, having an offshore development center in place can help keep operations running smoothly.
  10. New business prospects arise from strategic alliances formed when an offshore development center is established with local businesses in the host nation.

Must-have personnel in an offshore development center

Role Description
Project Manager Responsible for managing the project, including setting timelines, coordinating with the client, and ensuring the project is over on time and within budget.
Technical Lead Responsible for overseeing the technical aspects of the project, including design, development, and testing.
Developers Responsible for designing, developing, and testing the software.
Quality Assurance (QA) Engineer Responsible for testing the software and ensuring that it meets the client’s requirements and is free of defects.
Business Analyst Responsible for understanding the client’s business requirements and translating them into technical specifications for the development team.
UI/UX designer Responsible for designing the user interface and the user experience and ensuring it’s user-friendly.
Operations or IT Support Responsible for maintaining the software and infrastructure needed for the development and testing processes.

Things to remember before setting up an offshore development center

  • Define the company’s reasons for establishing a dedicated offshore center. This is important for estimating the size of the project and the materials needed to complete it.
  • Look at your options and pick a good spot for the offshore hub. Cost, availability of trained personnel, and compliance with applicable laws and regulations are all relevant considerations.
  • Get the firm registered and any licenses it needs to operate legally before opening an offshore center.
  • Establish the foundation for the offshore center, such as a physical location, IT resources, and communication channels.
  • Put together a group of natives to manage the offshore hub, and provide them with the appropriate training. This will entail hiring new employees, developing HR systems, and offering professional growth opportunities.
  • Setting up communication channels and collaboration between the offshore center and the parent firm is essential to ensure everyone is working toward the same goals.
  • Maintaining high quality and regulatory compliance, as well as safeguarding sensitive information and intellectual property, requires the establishment of solid processes and procedures.
  • Ensure the offshore center achieves its goals and adds value for the parent firm by regularly measuring its performance and adjusting it as necessary.
  • The success of every project depends on the developer’s ability to pick the best development approach for their offshore development center. The development approach is the basis for the project’s management from inception to completion. In it, the team sets up the rules and procedures for how they will work together, who will do what, and how their performance will be judged.
  • Setting up an offshore development center (ODC) exclusively on cost might be harmful. Cost is crucial, but not the only one. Cheap ODCs may lack the skills, experience, and infrastructure to perform excellent work. An ODC that cares about cost may not safeguard your company’s private data.
  • Outsourcing success depends on choosing the right offshore development center (ODC) model. Before selecting an ODC model, consider your company’s needs and objectives. Consider your project’s size, complexity, amount of cooperation and communication, skill sets and experience, budget, and timetable.

 By choosing the suitable ODC model, you can make sure that your efforts to outsource are helpful, & your projects are finished on time and within budget. Not only this, but also ensure your company’s intellectual property and private information are safe.

Why is it important to sign a non-disclosure agreement (NDA) with an Offshore Development Center (ODC)?

Securing your company’s secret information and proprietary technology is critical. You can sign a non-disclosure agreement (NDA) or another agreement to keep information secret with an offshore development center (ODC). 

Most of the time, ODCs deal with sensitive information like trade secrets, personal information, and financial data. Having a proper NDA in place and a proper system to manage confidential information handled or shared can save your company money and protect its reputation.

The ODC will be able to keep your information private since they will have signed a non-disclosure agreement (NDA) promising to do so. It gives you legal protection in case of a breach and defines how the ODC should handle and protect your data. If you and your ODC sign a non-disclosure agreement, your company’s intellectual property and confidential information will be safe.

To sum up, an NDA is a necessary measure for establishing a reliable and trustworthy relationship with your ODC and protecting your business’s most prized possessions.

Final Note…

In the end, any business that wants to grow should consider opening an offshore development center (ODC). It opens the door to a more diverse talent pool, reduces expenses, and boosts productivity. 

If your business needs an ODC, look no further than Perfomatix; we have the resources and expertise to do the job. When businesses team up with a seasoned ODC like Perfomatix, they can focus on what they do best while the experts handle the development. An ODC helps businesses reach their goals faster and more efficiently, which leads to more growth and prosperity.

For more information about us, contact us. 

Perfomatix | Product Engineering Services Company