Software has become the need of every individual and business today. Look around you; from the smartphone in your hand to the office desktop, every digital device needs a robust software application. The demand for high-quality software products is growing with time.
However, delivering ton-notch products as per users’ requirements is not easy. Software developers need advanced knowledge and expertise to satisfy their customers. Moreover, they want to control their rising expenses without compromising on software quality. There are various options to achieve these goals.
One solution is an offshore development center (ODC). This relatively new business model has gained immense popularity in recent years. Organisations set up a development center in another country to access global talent and benefit from reduced labour costs.
Let’s explore the concept of an offshore software development center in detail. The article describes the benefits of ODC and guidelines to set up an offshore development
ODC models, common risks, and unique benefits of this rapidly growing idea.
What is an Offshore Development Center (ODC)?
An offshore development center (ODC) is a software development facility in another country. It is equipped with all the facilities and IT infrastructure required to build high-quality digital products. An ODC operates under the umbrella of a parent organisation. Companies set up offshore software development centers to meet growing market demand at low expense.
A dedicated offshore development center (ODC) is no different from the parent brand. It has cross-functional development teams and experienced IT resources. They work together with in-house teams and carry out development projects following core values.
Locating in another country has additional benefits in terms of talent access and cost savings. The development costs are reduced significantly with offshore development center services. Qualified IT experts can be hired at a lower cost. Similarly, global expansion becomes easier. Companies can scale quickly and add new clients to their portfolios.
Eventually, IT firms can establish offshore software development centers to meet their long-term objectives while reducing operational costs.
Benefits of an Offshore Software Development Center
Below are some of the exclusive benefits of establishing an offshore development center (ODC) in another country:
Cost Savings
The most obvious advantage of setting up an offshore software development center is long-term cost savings. Here’s how.
If a US-based IT company hires professionals locally, it will have to bear high recruitment, selection, and training costs. The average cost of hiring a software engineer in the US is $119,443 per year excluding additional benefits like medical insurance, provident fund, bonuses, etc. Similarly, expensive equipment and taxation raise operational expenses by manifolds.
On the other hand, hiring software engineers from countries with low living costs is a cheap option. For instance, companies can recruit skilled software engineers from Pakistan at $3,446.76 per year. The cost of establishing a well-equipped software development center in Pakistan is nine times lower as compared of the US.
As a result, businesses can take advantage of cost efficiency and increase their profitability while delivering quality products at a lower price.
Global Expansion
Every business strives to expand globally. The expansion opens doors to new markets and drives growth opportunities at different scales. More customers mean higher revenues and more profitability.
An offshore software development center is the best way to expand business at the international level. Companies can freely operate in another country’s marketplace and fight with new competitors. Eventually, a better understanding of potential customers’ needs increases sales and brings diversity to the delivery service.
Moreover, physical presence in a low-cost country pushes businesses towards innovation based on market needs. With a high-tech offshore development center, IT companies can work on more profitable ventures for high-value clients and scale their businesses in a short period.
24/7 Business Continuity
When you work with international clients, adjust to their time zones. Round-the-clock operations become essential to deliver projects on time and meeting tight deadlines. An offshore software development center can solve this challenge.
As an IT company, you can set up offshore development centers in countries with different time zones. Your in-house T team in the US would be working during the day while the offshore team in Pakistan, India, or Vietnam can work at night.
Offshore IT teams are no different from in-house teams. Both collaborate as each other’s extension and work together to achieve desired objectives. This collaboration enables businesses to operate 24/7 without any sort of disruptions. By following risk management protocols, employees in the offshore development centers can significantly contribute to the growth of the parent company.
This model has now been followed by the world’s leading tech giants like Amazon, Google, Microsoft, etc.
Multi-talented Diverse Workforce
The world of IT is amazing in various aspects. There is no restriction of geographical boundaries when it comes to upgrading skill sets. Anyone sitting in a rural area or less populated colony with internet access, can learn new skills online.
Today, global talent has become more accessible for renowned organizations that value qualified resources. And offshore teams are the best example of how companies can capitalize on this opportunity.
Offshore development centers enable businesses to access talented resources across the globe. IT companies can build multitalented and diverse workforces with a variety of technical and professional skills. This diversity in talent, expertise, and professional acumen becomes valuable assets.
As a result, finding innovative solutions to complex challenges becomes very easy. Professionals in offshore software development can collaborate with in-house teams and come up with the most demanded products and services for high-value markets.
How to Setup an Offshore Development Center?
Follow these simple guidelines to set up an offshore development center and use this model to improve operational efficiency while reducing your expenses:
1. Identify Your Business Goals
First, you must be clear about your vision and mission, scope of work, and expertise. Define what products or services your business can offer. Perform an initial assessment of expenses and identify your desired business goals.
2. Understand Your Customers and Competitors
Next, get a deeper understanding of your target market. Define your potential clients, their needs, their pain points, and their expectations. Similarly, evaluate your competitors. Check what USPs they are offering. See where they are lacking. Based on your analysis, list the market gaps you should work on.
3. Perform a SWOT Analysis
Once you are clear on your business objectives and products or services, you should analyse factors critical to your success. Perform a SWOT analysis evaluating the strengths, weaknesses, opportunities, and threats. Additionally, conduct feasibility studies of economic, technical, legal, and operational factors. This step will assist you in making data-driven decisions with the establishment of an offshore development center.
4. Choose Target Location
The location of offshore software development is very crucial. Prefer countries where you can hire resources with your required technical expertise and IT skills. Consider the operating costs, regulations, and legal considerations. Similarly, make sure your target location has low living costs, a large network of high-speed internet, good communicators, and a committed workforce.
5. Make the Final Decision
When your homework is complete, it’s time to make the final decision. You have two options; Partner with a local company or set up your offshore development center. The final decision is based on your niche, target market, and desired objectives. The former option is feasible if you have no experience managing offshore teams. However, if you can integrate an in-house workforce with offshore employees, establishing a well-equipped offshore software development center is preferable.
Final Thoughts
Businesses seek opportunities to increase their growth while controlling their expenses. They can achieve these goals by integrating technology with advanced team management expertise.
An offshore development centre is a practical example of how these plans are implemented. The idea is simple. You set up your company’s branch in a low-cost country and hire talented resources locally. The offshore team possesses all the skills and expertise that your organisation needs to maintain consistent growth.
Thus, by integrating your in-house team with a remote team in an offshore development centre, businesses can explore new growth opportunities and increase their profitability. They can acquire multi-talented diverse work forces and work on high-value projects while cutting down their costs.