What is Offshore Development Center? How does an ODC function?
September 21, 2022
Post pandemic, the global demand for software development has heightened drastically. But, higher market volatility and global demand for technical experts have compelled businesses to adopt a better revised approaches like Offshore Development Centers (ODC) to build resilient and flexible business models. The total revenue of IT outsourcing market in 2021 exceeded 9.8% than previous year which is close to $396.3 billion. An offshore development center will be an extended IT/Development team built overseas to work on your software development project that will eliminate some challenges such as finding specialists with required expertise, scalable technology resources, security, etc. as well as allowing you to eliminate redundant expenses
What is a dedicated Offshore Development Center (ODC)
Offshore Development Center (ODC) is basically an integrated business model suitable for both startups as well as large companies. ODC means setting up a dedicated remote team of IT professionals to augment the on-premises team. You can hire a group of highly qualified software engineers and programmers overseas to work diligently on your software development project. You can profit from having talented resources without making a long-term commitment by contracting with an offshore entity because you can easily scale-up or scale-down depending on the project requirement. Moreover, an offshore development business model provides a dedicated delivery center with all the requirements like infrastructure set-up, software specialists, software development, design, quality testing, security audits, business operations and more.
When to consider an ODC model?
An example will help to better illustrate how an offshore development center operates. Let’s say you work for a company that is creating software and wants to shorten the time it takes to go to the market in order to get an advantage over competitors. You might be able to accomplish this objective without worrying about the availability of tech talents and incurring too much expense by working with an offshore development center.
Establishing an ODC will be more appropriate when you are creating a large-scale project that needs ongoing support and updates, for example a Fintech enterprise application. It is advisable to set up a specialized offshore development center after evaluating the project requirements to define the project scope, duration, and cost estimations. Turning to an offshore development model helps to deliver faster when there are long-term large projects or a set of projects bound together. In the ODC model, all you have to do is supervise and maintain the work quality. While the model offers a speedy, economical, and more productive alternative to put your business output expeditiously.
Furthermore, it is thoughtful to consider setting up an ODC when your project needs particular technical expertise. Access to technical experts runs short most of the time, so you need to put in strenuous efforts to get technical experts as per the market requirements. Especially while developing a complicated solution, it is difficult to find Artificial Intelligence, Data Science, Machine Learning and Cyber Security experts easily. An offshore development center is a large pool of cross-functional teams packed with various specialized skillsets.
A data breach can have catastrophic reputational and financial repercussions if your project involves a significant amount of security-sensitive data, such as financial or personal customer information. Therefore, the Offshore Development Center model can be a better fit than the other outsourcing strategies if you have a project that requires a strong cybersecurity team and is sensitive to security issues.
How ODC differs from conventional outsourcing?
When compared to conventional outsourcing, offshore development center can be considered as an upgraded solution for IT businesses.
Seven key criteria which makes ODC different from outsourcing:
Based on team size and time based contractual agreement
Scope bound agreement
Core team with flexible staffing
Utilization based model
Strategy and value-based approach
Task oriented relationship model
Complete customer control over the development process
Customer control over development processes depends on the engagement model
Best suitable for large and long-term projects
Works great for small and mid-sized projects
Immediate access to full-fledged team
Team ramp-up depends on the project needs
Limitless team scaling opportunities
Rare team scaling opportunities
Benefits of ODC
Cost-effectiveness: The main advantage of offshore development center is reduced direct and indirect costs such as infrastructure, recruitment, training, equipment etc.
Extended working hours: Having a specialized team working offshore in a different time zone assures you a continuous development of your product.
Focus on core competencies: ODC model allows you to focus on core business functionalities and helps you create a physical presence in an offshore mark with minimal cost.
Scalability: The number of resources that your business needs may fluctuate depends on the nature of the project and requirements. An ODC model will make the resource allocation process less complicated because the offshore team can work accordingly the tasks from in-house team.
Improved security: Well secured physical & IT infrastructure with all required facilities to accommodate ODC of various capacities. ODC model is more secure when compared to conventional outsourcing practices. Your team will be isolated in a separate office and the software & security will be kept up to date to ensure high-end data protection.
Innovative and quality work: A dedicated offshore development center provides access to pool of talented and skilled professionals as per your business requirements and that leads to enhanced quality of work. You will have assurity on the quality of work for the fact that you will be having the complete control over the professionals assigned to the projects in an ODC team.
Benefits outweigh the risks
An ODC is profitable, but it is not completely risk-free. However, it can be easily overcome.
Performance expectation mismatch vs output reality might be the first risk you encounter with the offshore team. A clear hiring procedure, appropriate resource training, and regular feedback can help to mitigate or lessen this risk. Another difficulty that can arise while working with remote teams is project management. The creation of SOPS, an escalation matrix, a task hierarchy, etc., can manage this. Moreover,
Having an offshore team allows you to reduce hiring, infrastructure, and staff costs because your offshore development business will take care of everything.
You will have the flexibility to ramp up and down your team according to the requirement of your project and budget.
You can quickly onboard resources for various tech stacks when you have access to a talent pool of pre-screened programmers and coders.
ODC ensures enhanced and complete security and confidentiality of data.
When you see the above benefits, setting up an offshore development center is always an excellent option, especially if you want to do high-quality work quickly in a cost efficient and a secure way.
How to set-up an Offshore Development Center?
Primarily, focus on the vision and requirements of your business and the scope of work for the project.
Choose the right location, not just the nation, but the city and area where you want your offshore/nearshore team to work in the future.
Choose the appropriate offshore development service provider by conducting deep research by studying their portfolio and previous projects.
Select the ODC model you want to implement
Start recruiting based on the professional requirements you need for the project. Your vendor should have complete knowledge on the requirements such as skill sets, technical expertise, professional experience, soft skills etc. So they can analyze the present employment market and recruit the professionals.
Find an office space with all the amenities for various capacities to quickly set up operations.
Set up an infrastructure that ensures smooth operations and seamless communication with the offshore team.
Get legal support and make sure that you get the best terms of agreements.
Ensure consistent communication to negotiate the bottlenecks present in the various stages of development.
Why KGiSL as your trusted ODC partner?
KGISL is a leading ODC / OCC (Offshore Competency Centre) partner of global organizations, helping them outsource or setup IT competency centers in India.
Why because we have
Successful track record of 15+ years in setting up ODC
Offers offshore as well as nearshore operating models
Access to in-house CoEs (Java, Microsoft, RPA, Oracle, DevOps, etc.)
Captive IT and non-IT infrastructure with data security measures
On-demand team upscaling or downscaling
Backup talent pool for uninterrupted resources supply
Flexible costing models – T&M or turnkey models
30 – 40% reduction in operational cost
Regardless startups, SMEs, or large-scale enterprises, we equip them to hire highly qualified software professionals and build reliable software solutions. Since, KGiSL is a multiproduct software company, having access to large talent pool, our clients have the luxury to scale up and scale down their team with the right talented skill-set, on-demand. Our customized engagement models, flexible cost structure, in-house infrastructure and a large talent pool makes us a preferred outsourcing partner for global majors. Over the last two decades, we have set up 10+ OCCs in Coimbatore for global clients of capacity ranging from 10 seats to 3000 seats.
Key ODC models by KGiSL
BOT (Build-Operate-Transfer): In BOT model, we create the environment, develop the project, and operate it. After a particular period of contract, eventually transfer the ownership to the client.
Dedicated Offshore Model: This model provides dedicated IT, infra, network support and highly qualified professionals for the client’s project.
Shared Model: This model offers shared infrastructure, network support and resource.
BOM (Build Operate Maintain): This model is an end-to-end approach as per the client requirements.
Setting up an ODC is a perfect solution for your business to save time, and cost and focus on your core business activities without worrying about human resources and other issues. Moreover, it will take over the challenges and boost your business scale. Would you like to explore further? Get in touch with us.