What is Offshore Development?

Offshore development is outsourcing the tasks to a 3rd-party software company or developers. Such services may include web app development, web development, mobile app development, etc. Typically, a partner company providing development is from a foreign country.

Outsourcing can be done in different ways:

1. To an individual developer or a company;
2. Setting up an offshore development center;
3. Delegating the whole project or only certain parts/features;
4. Hire a dedicated team of developers.

What is Offshore Development Center?

An Offshore Development Center is a dedicated team of software developers who are capable of building new or revamping existing products, while client businesses can focus on their core value competencies. This dramatically increases organizations agility while saving unnecessary costs for implementing a local team.

ODC also acts as an extended team assembled for project development. It is not a group of outsourcing developers but an entire staff of developers, designers, and managers leading the end-to-end project implementation. Even though every entity of the team implements different functions, they are aimed at a similar goal.

Since, as onsite development teams lack the capabilities and expertise to carry out a successful product development, the idea of offshore development team has taken boom. ODC has all the required facilities, skills, infrastructure, and resources to initiate and finish the entire process of development and launch to the market.

Outsourcing vs. Offshore Development Centre

Why set up an ODC?

The main purpose behind setting up an Offshore Development Center (ODC) is to take leverage all the benefits of the technological skill sets, cost reductions, and the reduced time to market. ODC has the capability of providing top-notch development resources, operations management, and the complete lifecycle of software development. This frees the client from the development process and enables them to focus on their core business.

Benefits of Setting Up an ODC

• Cost reduction in the development process: Offshore Development Center helps establish development centers in locations where the costs and office maintenance are much lower than in the company’s home country.
• Access to a large pool of IT talents: Hiring highly proficient IT teams with proven IT competency, skills and experience. ODC is a great place to find highly skilled and proficient resources.
• Flexible work process: ODC can negotiate contract terms so that if the results don’t live up to your expectations, you can demand the ODC to fix the project with extra costs.
• Ongoing tech support: Most of the ODC are able to deliver product in a timely manner because they operate under optimal conditions and closely stick to the project timelines.
• Reduced time-to-market: An ODC is like an extended arm that has the capability to perform the tasks of the in-house team, effectively assisting you in scaling your IT department.

Problems With An ODC?

We understand various problems that most companies face with their offshore development center such as,

1. Quality Assurance: Generally speaking, there are so many companies who overlook the risks of hiring an offshore development center by mainly focusing on reduced costs and time. This is somewhat risky in that the offshoring firm may have neither the commitment nor skills to develop software.

If you are planning to offshore a development company, it is very to check their portfolios to gain information from third parties or other companies who have collaborated with them, product development case studies, whitepapers, and online reviews.

2. Time zone & language barriers: Whenever you plan to choose an offshore service provider, language, and time-zone appears to be crucial hurdles. Let’s start with;

• Language: This occurs when your offshoring partner’s first language is not English. The difference in accents, drives to misconceptions if your outsourced partner doesn’t clearly understand your enterprise necessities.
• Time- zone: Normally, the difference in time zones can cause both parties to have trouble setting up meetings or managing projects. This ultimately results in miscommunication.

3. Poor project management: You need to be very careful while choosing the outsourcing partner because there can be considerable differences in the project management and quality.

4. Delayed delivery: Indeed, one of the significant problems with offshore development centers is that the development process is taking more than expected time. The reason behind the delayed delivery could be anything either; the product requirements are missing or unclear, 3rd party integrations or software reviews catching problems too late.

Steps to Set up an Offshore Development Center

1. Identifying the Project Requirements

The first when initiating a development project is identifying its requirement. This starts by analyzing the business needs, its market, audiences, and competitors. So, in case an organization needs technical skill crunch and if they want to augment their existing in-house team, or require an entire project to be developed, managed, and delivered by the team; then ODC is the right choice.

Depending on the business requirements one can choose between the different outsourcing models: Team Augmentation or Project Outsourcing. Opting for the right model is important as it helps to manage the cost, range of responsibility, and project scalability associated with the outsourcing services.

2. Opting a Right Tech Partner

A right tech partner is an outsourcing service provider who understands the business requirements, offers the right resources corresponding to the needs, manages the software development lifecycle, and transparently communicates about the project status, updates, reports, and resource performances.

But, finding the right technology partner is a tough nut to crack. Before you sign and choose your technology partner, it is important to enlist your expectations from them.

3. Ask a lot of Questions

It is very important to set up an offshore development center that can help understand what you are trying to achieve as a business and what type of product you want to get developed. So, before you setup an offshore development center ask them about the latest tools, technologies, architectures, or methodologies that they follow for the development lifecycle.

Keep a lookout at the latest trends in the software industry, such as iterative development, continuous integration, and deployment, test automation, microservices architecture, etc. and whether the chosen ODC provides the following or not. Also, ask about the relevant technique followed for development, testing, monitoring, delivery, maintenance, and examine what they are adding over others to the product.

4. Ongoing Engagement

When everything is finalized and you are going to sign the contract, it’s the time to start your engagement.These can include daily standups among project teams, two-way communication, team management with Agile principles, sprint planning, project progress tracking with project monitoring and tracking tools.

5. Maximize ROI

While the team at the offshore development center continues to work according to project requirement, there can be times when the team is ideal. This time can be utilized for Research & Development for the final product. Your ODC team can help to look beyond your country’s border and can speed up the development of a product.

Team Structure for Offshore Development Center

As you establish team structure in ODC, it’s important to carefully discuss and identify the key members.

An offshore team should include these major roles:

1. Account Manager — Responsible for the management of relationships with particular clients, ensuring that all your needs are fulfilled.
2. Project Manager — Responsible for the entire project from planning to executing, making sure that all the required resources in the project are covered.
3. Designers and Developers — Responsible for the design, installation, testing, and maintenance of your software.
4. Test Engineers — Check the integrity, quality, and even non-functional requirements of your product.
5. Usability Engineers — Perform tests to evaluate the usability or user-friendliness of your product.
6. Graphic Designers — Creates visual and graphical concepts or language to promote a product’s unique persona or brand.
7. Content and Technical Writers — Create instructions and content integrated into the software or website.

Work Models for ODC

Discover the most popular ODC models and how they work.

✓ Contractor ODC Model

In this model, the main office sends a set of specific requirements to the contractor, or the offshore development centre. Then a team will be selected based on those requirements.

This team will then be responsible for a wide range of tasks, both managerial and technical, including analytic and system design, updating software, writing new code and so on.

This model is suitable for small companies.

✓ Customer ODC Model

In this model, a custom team is also selected based on the specifications of the customer, or the main office, but the main office will cover a lot more tasks than it does in Contractor OCD Model, ranging from product research and analysis to team management. The OCD team will focus mainly on coding.

This model is recommended for big companies which have the capacity to handle a large number of tasks.

Billing models for ODC

• Time & Material model

Time and Material model defines the scope and the specifications of the projects that are subjective to change. Clients have the option to upgrade or downgrade resources according to the project requirements. The clients are charged on the basis of the actual amount of time and effort the software developers spend working on the project.

• Fixed Model

The fixed Cost Model is a beneficial engagement model as it is ideal for small to medium-sized organizations.

This engagement model has fixed cost, eliminating all the possibilities of any additional costs. It offers fixed budgetary, and contracting this model making the organization feel safe from any kind of additional capital investment in their software development journey.

• Dedicated resources hiring model

Dedicated resources hiring model is a long-term engagement model for projects with undefined scope and requirements. In this model, clients will have an entire team and the project will follow a simple pricing system: clients will pay a monthly sum of money that covers the salary of each team member plus overheads, including outsourcing provider’s administrative and infrastructure expenses.

How to Count the ODC Costs?

It is quite difficult to tell, how much does the Offshore Development Center cost. The cost depends on the developers & specialists you need, their qualification and the number. To get an image of the expenses, decide on which specialists do you need and how many of them you are ready to hire. ODC costs also include the expenses for the office maintenance — add them to the list.

We have compared the average annual ODC salary for different countries, so you can imagine, how much will you pay for this kind of work:

12. ODC Checklist

• Skills and Knowledge

When choosing an offshore service provider, you need to determine which country offers the best quality service without draining your company’s pockets. Among other countries, the Philippines is one of the top outsourcing destinations for business processes along with India and Brazil. The country’s booming BPO industry has led universities to offer training programs that cater to workforce demand.

• Work History

How do you know that you are entering a partnership with a good company? You listen to rumors. Well, not actual rumors. Ask their clients. When deciding on your ODC, you must first hear what other people have to say about the company. Reviews and interviews from clients are invaluable. Through these, you will gain more knowledge of the company, learn how they work, and discover the quality of service it provides. This knowledge enables you to make better-informed decisions.

• Good Communication

Find an offshore company within a country with good communication to avoid the hassle of language barriers. There are a lot of countries in Asia, such as the Philippines and India, who are well versed in English. The workforce in the Philippines is composed of young educated individuals who are good English communicators. With this advantage, miscommunication is less likely to occur between the client and the vendor.

• Security

One of the risks of offshoring is the security of company files and information. In finding the right vendor to be your ODC, you need to make sure that the company is reliable when it comes to keeping confidential company and product information safe.

Best Practices to Maintain an Offshore Development Center

Here are the 7 best practices to maintain a successful offshore development center:

1. Choose your partner carefully

Choosing the right team is one of the stepping-stones to a successful offshore development center. Explore all available options and evaluate the prospective providers.

Choose your partner wisely, who understands your business needs, has prior experience in the industry, and employs robust project management techniques. Always check for references, reviews, and understand their communication methods.

2. Be clear on expectations

When crossing any organizational boundary, a contradiction in expectations is common. What is considered acceptable by you, might not hold true for your offshore development partner — especially in many aspects such as quality, security, and user experience.

Document everything in detail, be clear on the requirements, and improve the speed of delivery, ownership, and subsequently quality.

3. Agree on ownership of application architecture

Having another team dictating application architecture can be disempowering. If your offshore team is not allowed to make important decisions, their engagement and feeling of ownership is most likely to be lowered.

Agree on the ownership of application architecture from the start, and witness a steady increase in process efficiency and software quality and performance.

4. Account for time zones

Make sure there definitely are overlapping working hours, and ensure decisions are taken, and issues are resolved within budget. Be aware that you will need to adapt your workflow to accommodate a small overlap in time.

5. Encourage shared values

When local teams have strong professional etiquettes, there can be challenges in sharing those values with the offshore development team. Make sure your offshore software development partner is culturally alike, with a similar approach to work — if not the same. Encourage teams to collaborate with one another, and work together to reach end goals.

6. Frequent discussions

In order to get the most out of the partnership, it is best if the onshore team lead communicates to all offshore developers — not just the offshore team lead — around once a week.

Often, such direct communication with the offshore developer helps in identifying issues earlier rather than later. Look for ways to build a relationship with the offshore team through social and collaborative activities.

7. Develop small, but highly-skilled teams

When it comes to team size, the smaller the better — a small team of very highly skilled offshore developers will be more effective than a larger team of average developers. If the offshore team starts growing in size, split it into multiple teams and identify a team lead for each of the small teams to get the required accountability, visibility, clarity, and focus on the development process.

Things to Consider Before Setting Up an ODC

Below are some of the important things to consider before setting up an ODC:

• Location

The first thing to think about is where your offshore development center should be located. Most people think of places like India but that’s only one potential location. Your offshore development center should be located in a place where there is more technical specialization than there is demand. These are usually countries that have internationally known science and technology centers but that have largely manufacturing or agrarian economies.

• The Law of the Land

Once you have identified the country that you are interested in establishing an offshore development center in, you should dive into the laws that that country has relating to international commerce.

Most countries that you think of when you think of offshore development are actually very friendly to the idea of offshore development centers.

• Recruitment and Hiring

Of course, the manager of your offshore development center is only one of the positions that you will need to fill. You’ll need the actual developers, not to mention people in positions like accounting and human resources. You and your manager will need to identify a way to recruit these other positions as well as how to vet them.

• Paying the Overhead

Depending on how your offshore development center is modeled, you may also be looking at some infrastructure costs similar to those that you face at home, such as equipment and space. These should factor into your figures when you begin to look at cost analysis.

• Cost Analysis

Cost analysis is an important step because it helps you to understand how much money you can afford to put into your offshore development center at the moment. Your offshore development center will definitely save you money in the long-run. However, given the start-up costs associated with it, it may be awhile before you start to see those returns. As a result, there is probably only so much money you can afford to invest in your offshore development center right now. You can always expand later but if you put in more than you can afford to at the start, the project will hurt instead of help you.

• Services

This is a good stage in the process to reconsider your vision for what services the offshore development center will take care of. Development, obviously, but many people also move their customer service department to their offshore development center. If you have enough developers that you can have them wear both hats, that’s fine. However, if moving your customer service department — or starting a dedicated customer service department — means hiring more people at your offshore development center, you may want to rethink that for the time being.

Tips for Solving the Common ODC Issues

Outsourcing has both successful and unsuccessful project examples, which make it a little hard for companies to opt for it, without a second thought.

As we discussed above, there are some overheads in setting up an offshore development center. Moreover, issues like selecting the right offshore service provider and misunderstanding of all the legal implications can hinder your success.

Thus, we have rounded up some tips for you, which will help you in solving some of the most common ODC issues.

1. Transparent Workflow:

In simple words, “ Planning, oversighting and quality reviewing can actually help you remarkably to reach the end goal. By creating a simple yet transparent workflow, you can line up the tasks priority-vise. Furthermore, pre-planning will help you solve issues like quality, poor project management, delayed delivery, ect.

2. Small but Skillful Team:

Keep your team small but make sure that you bring together skilled and developed workers. People usually aim at big teams which bring in a lot of people who are not that skilled. This is where the issue arises.

Your investment goes high and you don’t benefit that much from it either. You need to target small but experienced firms for your offshore development center.

Why Choose India as your ODC Partner?

Offshore outsourcing plays an important role in the global IT scenario. Few analysis forecasts that by 2020, almost 80 percent of world’s Business Process Outsourcing service will be catered by the Indian companies.

There are a plethora of reasons for the leading companies to choose India as their ODC partner.

• Availability of talented and skilled developers: India has a large pool of employees in the IT industry. A recent survey indicates that almost 3.1 million graduates are added to the Indian workforce each year. It is expected that by 2020 India will have almost 2.2 million skilled IT professionals.
• Price Flexibility– A recent report NASSCOM states that outsourcing saves almost 60% of their cost. This is because of the cost difference between the domestic market and the other countries. Companies can save on recruitment, salary and benefits by outsourcing.
• Focus on your business goals: When you outsource your development work to an offshore development centre, you can focus on your business goals. This cuts down significant complexities and frees up time that you can spend on more critical tasks for your core business. This way, outsourcing to the offshore development center can help you in growing your business.
• Cost-saving in Infrastructure: One of the essential advantages of the Offshore Development Center is cost-effectiveness. When you outsource your development, the direct and indirect costs such as recruitment, supervision, compensation, and Infrastructure, would be eliminated. Thus, saving a lot on infrastructure.
• Government policy: In India, there are precise IT-related policies that support seamless operation and yields maximum benefit. There are policies about investment and taxations for the ODC. Service tax exemption for the SEZ units and certain other benefits aim at promoting IT in the country.

Visit: https://www.yourteaminindia.com/contact-us

Conclusion

Offshore Development Center is the latest trend that will not fade anytime soon due to its cost-effectiveness and convenience. If you wish to set up your own ODC, do consider the above-mentioned guide to setting an Offshore Development Centre since it is vital to analyze the requirements before making any big decision for your business.

If you need any consultation and assistance from a trusted offshore provider, feel free to connect with us. Our professionals will help you in setting up the ODC in India.

This content is syndicated from What is offshore development center?