What is an Offshore Development Centre?
Have you heard of offshore development centres? ODCs are likely not a foreign concept to you if you work in the IT sector. They are software development service centres that can provide you with development teams and the necessary office infrastructure and workforce, including administrative and support personnel, to complete the development process.
Such institutions are now popular among the many startups and companies that want to reduce expenses and access a global talent pool. It is more like a foreign subsidiary or branch of a home company. Startups and enterprise businesses can access skilled professionals at lower costs by setting up an ODC abroad. In this article, we will learn more about Offshore Development Centres and the purpose of such centres. Let’s get started.
Difference Between ODCs and IT Outsourcing
Software outsourcing and ODCs differ slightly regarding geographical location and services offered. It is because outsourcing companies are third-party companies providing certain products and services. In contrast, outsourcing development centres are subunits of a particular company that hire development teams to offer those products or services. Therefore, geographical location matters to Offshore Development Centres.
- The ultimate goal of outsourcing software development is to increase productivity while keeping costs to a minimum. However, it cannot be considered the primary reason for outsourcing.
- But it is true in the case of ODCs. Its primary purpose is to help reduce a company’s expenses by utilising the cost difference between two countries.
- It can offer various services, including creating a team of software developers according to your specifications, project-based development, testing services, and setting up unique Offshore Development Centres for clients.
You should have noticed that offshore outsourcing and offshore development have similar goals. It is to gain access to a sizable pool of talented developers at a lower cost, enabling businesses to save money. Additionally, it will boost hiring productivity and reduce office costs associated with accounting and human resources.
Benefits of ODCs
Offshore Development Centres can offer various benefits, including cost efficiency, access to a global talent pool, and many others. Here we will go through some of the main benefits for you to read and learn more about the topic.
- Savings on Cost
- Availability of Tech Experts With Specialised Skills
- Resource Backups On Demand
- Longer Working Hours
- Expanded Overseas Market
1. Savings on Cost
What most software development companies want is to be able to deliver high-quality products without exceeding the budget they expect. As I said, it is also the main purpose of Offshore Development Centres. Often, it is located in countries with lower living costs than the headquarters.
Since they are located in other countries, you can take advantage of the cost differences in the services offered in various countries. For example, a developing nation like India is a good place to establish an offshore development centre because it can help businesses by slashing development costs by as much as 60%.
2. Availability of Tech Experts With Specialised Skills
The development team’s technical proficiency is an important consideration. There will undoubtedly be a greater supply of tech experts in certain nations because they may prefer particular technologies.
It causes an imbalance in the distribution of resources around the world. However, an ODC can assist you by balancing markets that may be unavailable or limited in your local geography.
3. Resource Backups On Demand
Enterprises employ experts and specially trained personnel when developing software products to produce high-quality solutions. Losing such a resource might have a negative impact on the timeline and effectiveness of the solution.
- An offshore development centre can help you create backup resources for your in-house teams.
- These backups can take over the responsibility of the project and guarantee zero downtime because they are maintained at a much lower cost of ownership.
- As a result, your company becomes more resilient, which lowers risk.
4. Longer Working Hours
Your project development can continue in your off-hours when an offshore team works across borders and operates in a different time zone. It is one of the many other benefits of making use of ODCs.
Having a feedback mechanism in place allows your quality team to review the work completed this way easily. Companies can then guarantee that there will be no project lag or delay, accelerating the entire project development lifecycle.
5. Expanded Overseas Market
It is one of the best ways to expand your business’s presence globally, increase your company’s reputation and sales, get closer to your customers, and reduce logistics costs. ODC is a good option if you want to enter the international market because it brings your business closer to that particular market and aids in localising your products. So it allows you to localise your products and services to create a potential customer base in new markets.
Drawbacks of ODCs
Even though we listed some of the above, we cannot overlook the risks and disadvantages of choosing offshore software development centres for your projects. So check them out in the following section.
- Choosing the wrong location to set up an ODC will be a risk and could impact your sales and the budget you want it to stay within.
- The wise thing to do is to avoid small cities with too few specialists available in your area and a low potential for growth.
- Some nations are unwelcoming to foreign business and present obstacles, such as bureaucratic and legal red tape, that make it difficult to start a new company there.
- It’s a good idea to have contacts in the country where your ODC will be located, as they may be able to provide you with information on how to become legally recognized.
So, in this article, we discussed a lot about Offshore Development Centres, the differences between them and IT outsourcing, and the benefits and drawbacks of ODCs. By learning all these, you can help your business achieve high-quality work at a much lower cost. So, using this information, choose a reliable ODC for your company.
Hi, my name is Rahil. I work at YUHIRO Global and I help web agencies and software companies from Europe to build developer teams in India.