Offshore Software Development Center: Definition, Benefits, Setup Process

Offshoring is a great software development practice, especially when it comes to optimizing costs. One model of offshoring is the offshore development center. It basically entails creating an off-site team to work on a software development project.

Most projects won’t require the level of dedicated resources (human and infrastructure) required to situate a development team abroad. Therefore, this practice is common among large corporations or generally for projects requiring the collaboration of over 30 people.

Key Takeaways

• Definition and Purpose: An offshore software development center (ODC) is an off-site team dedicated to a software development project, providing the necessary infrastructure and manpower to complete the project efficiently.
• Cost Optimization: Setting up an ODC can help save up to 60% on software development expenses, particularly in terms of infrastructure, while providing scalable technology resources.
• Control and Customization: An ODC functions as an offsite extension of your organization, allowing you to maintain control over the project specifics and ensure that the team and infrastructure are tailored to your requirements.

What Is an Offshore Development Center?

An offshore development center provides a development team with the required office infrastructure and manpower including administrative and support staff necessary to carry the development process to completion. A project manager is usually set in charge of the development center.

An offshore software development center can help you save up to 60% of your software development project execution expenses, particularly in terms of infrastructure. It is a secure location that is dedicated and customized for software development project execution.

That is, it is basically an offsite extension of your organization since the team’s composition and the infrastructure’s installation are built to follow the client’s requirements and prescribed methodologies.

An ODC aims to provide scalable technology resources, allowing you to eliminate redundant expenses. Usually, the client company directly supervises offshore development center services by interfacing with the team members responsible for the execution through a project manager.

ODC vs. Outsourcing: What’s the Difference?

Aspect	Outsourcing	Offshore Development Center (ODC)
Definition	Assigning a third party to a project is normally done internally.	A dedicated off-site team working on a software development project.
Location	Location is not important; can be local or international.	Specifically involves international arrangements.
Control	Limited control over project specifics.	Retains control over project details and follows company guidelines.
Cost-Effectiveness	May not exploit cost differences between countries.	More cost-effective due to international labor cost differences.
Functionality	Functions as a third-party service provider.	Functions as an offsite extension or branch of the organization.
Setup and Management	Managed independently by the third party.	Managed as part of the company’s operations with direct supervision.
Customizability	Less customizable to the client’s specific needs.	Customizable to follow the client’s requirements and methodologies.

Offshore Development Center Benefits

Why have large corporations been turning towards the use of offshore development centers? What does your company stand to gain by establishing one? This section deals with some great benefits of offshore development center for your business. They are detailed below.

• The offshore development model allows you to focus on your core business responsibilities while outsourcing software development needs. The team is dedicated to that specific project, providing stability throughout the project lifecycle as well as scalability as the client’s needs evolve.
• As mentioned above, an ODC is like a new office branch of a company, except that it is located abroad. The main advantage here is that it helps to accelerate development for large projects, especially when there are more than 30 developers involved. That’s a situation when an ODS is a viable working model. Otherwise, you should consider the outstaffing model, in which ProCoders are high professionals.
• You have full operational control of the project. For most companies, outsourcing their software development project means letting go of some control regarding the direction and execution of the project. However, with offshore development center services, you have a direct interface with the team members responsible for executing the project. Having greater control of a project ensures that resources are efficiently allocated to ensure the project’s success.
  Ultimately, this means that project milestones are delivered in a timely manner. With outstaffing, ProCoders can provide you the same with even fewer expenses and fewer worries.
• An offshore software development center is a dedicated office environment equipped with every need of a physical office, including in-built network security. Therefore, taking your work off-site would not affect the security or the efficiency of a project. Most projects don’t require high-level security anyway. Nevertheless, if yours does, ProCoders can provide a functional agreement and supporting resources to ensure that.
• It helps you to access the best and the most affordable talents from overseas. The countries in Central Europe are some of the hottest destinations for software development project outsourcing. The low cost of living in these areas makes it easier to hire web developers.

What Risks and Challenges of Offshore Development Center You May Arise?

In setting up an offshore software development center, you can anticipate some risks in terms of management, communication, culture, legal compliance, and cybersecurity, all explained below.

Management Challenges

You need to hire a full range of employees here: project managers, recruitment staff, office administration staff, as well as developers, engineers, quality assurance testers, UI/UX designers, etc.

You have to think carefully if it’s all worth it, especially in terms of cost. Perhaps, you can achieve your goals better by hiring a development team through an outstaffing company such as ProCoders.

Communication challenges

An offshore development center means essentially working remotely. Therefore, fostering effective communication between the client organization and the offshore team can be difficult if not managed properly. Also, you need a vibrant project manager who is efficient at managing remote teams.

Although, using an ODC enables great communication between the team members since they are working on the same site. ProCoders, by keeping developers who speak English as a common language together, has been able to facilitate effective communication for successful projects.

Cultural differences

Cultural differences and business models when working with foreigners are always evident, no matter how well the system of the client organization is replicated at the offshore development center. This does not mean that they are wrong but that people in different locations (often, even within the same country) approach business in different ways.

Since Ukrainian culture is similar to that of the rest of Europe and not so different from that of America, organizations from these regions have found it easier to work with Ukrainian developers and development agencies.

Therefore, strive to build an integrative system that preserves the essence of a project while adapting to the peculiarities of doing business in that location. This is where hiring an agency comes in. For instance, ProCoders has years of experience building software and doing business in Ukraine and understands the business landscape well enough to reduce possible friction to the barest minimum.

Legal challenges

Suppose you are setting up an arm of your organization in another country, of course. In that case, you must research the legal landscape and find out if the business policies in the country are favorable to your business. If you don’t want to deal with this, you can simply hire an agency to carry out the project on your behalf. Ukraine, for one, has quite open policies regarding foreign organizations establishing their business there.

Security risks

This is one of the most important factors for many companies regarding offshore development center services: how to keep information secure despite the distance. There are risks of sensitive information being leaked. To mitigate this risk, you must build network security into the very infrastructure of the offshore software development center.

More so, keeping all your resources in a single location does not exactly keep you safe from all security risks. What is important is that you conduct a security risk assessment ahead of time and take steps to address the specific risks that your offshore development center is faced with.

Existing ODC Working Models

There are two principal models for offshore software development. They are contractor and customer models. Each offshore development center model has its own peculiar features, challenges, and approach. Understanding both would help you to choose the one most appropriate for bringing your vision to fruition.

Contractor model

This is an offshore development center model where a company hires a team of IT specialists to take on specific projects. Every aspect of the project is executed by a remote team from planning, to development, testing, and right to the implementation. Startups find this model really helpful for realizing timely software while their on-site IT teams focus on core business processes.

In many cases, businesses use this model to attract and harness talents (particularly for specialist roles) that need to be added to their core IT composition. This model is more affordable because there is less overhead cost from salaries and the like since the offshore team members are not full company employees. Usually, they are supplied by an outstaffing agency, as ProCoders does for its various clients across the globe.

Customer model

This offshore development center model is more common among big corporations. It’s like when General Electric opened one of the first offshore development services in India in 1996.

Basically, the team members in this model of offshore development are still full employees of the corporation. However, the project is still executed from a remote location. The reason for this is usually to preserve the confidentiality and security of a project, particularly if it is related to proprietary software.

So, essentially, in this offshore development center model, an on-site group of senior employees provide the management and direction of the project and take all critical decisions; yet, the actual development, testing, and execution are in the hands of an offshore team. In this format, the offshore software development center operates very much as a subsidiary of the main organization.

How to Setup Your Own Software Development Center?

Knowledge transition

This is the stage where you (as the client) set forth a list of expectations and requirements for the project’s fulfillment. It does not stop there, though. An offshore software development center should properly simulate the client’s IT environment. Therefore, the knowledge transition process should also include a replication of the client company’s standards, approaches, and overall culture.

There should also be a security onboarding aspect in order to avoid unintentional exposure of confidential information and the project details in general. Likewise, it creates a hierarchy for resolving issues and challenges that arise at work. Each member should know how and to whom to report problems that come up for quick resolution.

Appoint key workers

As mentioned already, offshore development center services have functionalities that make them resemble an arm of the organization rather than an independent body. Therefore, its structure often resembles the anatomy of the client organization.

Yet, some key workers are indispensable. For one, there must be a project manager who is responsible for the entire life cycle of the project right from planning to execution. The project manager also functions as a liaison between the organization and the members of the offshore development center, meaning they are critical for the smooth sail of the project.

After assigning a project manager and an accounts manager who together are responsible for the administrative aspect of the project, then you fill other roles as necessary: developers, designers, software engineers, technical writers. One advantage of using an ODC is that it allows you to scale your team up or down quickly according to the present demands of the project.

Set execution target

This is the stage where the expectations defined above are broken down into quantitative milestones according to established metrics. The deliverables should be communicated to the team members, and individual responsibilities should be assigned to avoid any confusion throughout the duration of the project.

However, you should allow the team members some time to blend into their new space. The project timeline should be established, as well as how progress would be monitored and reported. This may be by submitting written reports, having stand-up meetings, etc. All these details must be finalized before the project begins.

Our Advice

Engagement is critical to keeping your offshore development company/team continually on track. By engagement, we do not simply mean communication, although communication is a critical part of the engagement factor. Engagement is ensuring the active participation of all the contributors to the project. This can be ensured by embracing agile practices of continuous development.

For effective integration, you need to treat the offshore team like you would your on-site team. After all, whether the developers are provided by an agency or not, they are essentially part of what you do at your company once they are working on your project. Therefore, include the team in all the important considerations to ensure that they are delivering well on your expectations for the project.

Because of our timely service at ProCoders, Quartz Network became the first mover in releasing a multi-faceted web application that serves B2B clients as a one-stop virtual destination for professional networking.

In fact, at the outset of the project, we had assembled a super-team from our pool of experienced developers within a week. The onboarding process was even more seamless. In record time, a full-stack software solution was created, with a library of coursework, a people-matching system, and a payment system all implemented. That’s the power of what is offshore development center.

Conclusion

Over the years, ProCoders has been part of big-time projects, building dedicated teams and providing appropriate infrastructure to support the development of critical software. ProCoders stands out as an example of how companies can power their teams via a dedicated offshore development center, which means they can do so via a dedicated team and infrastructure. If you have an idea for a software product already, you can talk to us about your options and get a budget-friendly package that fulfills your needs.