An offshore development center (ODC) is a facility located in a foreign country, typically in a low-cost labor market, where software development and other services are provided. ODCs are used by companies to outsource certain tasks or services and to gain access to qualified and experienced professionals at a lower cost.

An offshore development center (ODC) is a valuable asset for companies looking to expand their product development capabilities. An ODC can provide an experienced workforce, access to a global network of developers, and cost savings associated with operating in a different country. But before launching an ODC, companies need to understand the costs and benefits associated with establishing a foreign development center. This guide provides a comprehensive overview of the steps necessary to open and operate an ODC.

Overview of Offshore Development Centers 

An offshore development center (ODC) is an external development unit or a development center that is located outside the parent company’s geographic area. An offshore development center is usually located in a country where the cost of labor and/or other resources are cheaper than in the parent company’s home country. The offshore development center is usually managed by the parent company and is responsible for developing applications, websites, and other software solutions. The work done by the offshore development center is typically sent back to the parent company for implementation.

ODCs offer several advantages such as access to large talent pools, access to lower-cost labor, and access to expertise in a particular technology or field. The main advantage of an offshore development center is the cost savings associated with it, as it can reduce the cost of hiring and training in-house staff. Additionally, the remote development center can offer access to a wider range of resources that may not be available in the parent company’s home country.

Offshore development centers can be an effective way for companies to reduce their costs while still accessing the needed resources and expertise to complete their projects. However, it is important for companies to ensure that they have the proper security measures in place to protect their data and intellectual property. Additionally, companies should also ensure that they have a clear communication plan with the offshore development center to ensure that all tasks are completed accurately and on time.

Benefits of Setting up an Offshore Development Center 

1. Cost Savings: One of the main benefits of how to set up an offshore development center is the cost savings that it can offer. Companies can take advantage of lower wage rates and other cost benefits in countries where labor costs are lower. This can help businesses to save on the cost of development, while still maintaining the same quality of service.

2. Access to Talent: Setting up an offshore development center can give companies access to a larger pool of talent. Companies can find qualified staff from countries with a large pool of skilled professionals. This can help companies to find the right talent for their development projects.

3. Improved Productivity: By setting up an offshore development center, companies can benefit from improved productivity. Companies can benefit from the increased efficiency of the offshore staff and the ability to manage development projects remotely. This can help to reduce development time and improve the quality of the project.

4. Quality Assurance: Companies can also benefit from improved quality assurance when setting up an offshore development center. Companies can access a global team of experienced professionals who can help to ensure that the project is completed to the highest standards. This can help to reduce the risks associated with development projects and ensure that the end product meets the company’s expectations.

5. Improved Communication and Collaboration: Setting up an offshore development center can help to improve communication and collaboration between the teams. Companies can benefit from increased collaboration between their onshore and offshore teams. This can help to ensure that the development process is efficient and that the end product meets the required standards.

Assessing Your Needs for an Offshore Development Center 

1. Determine your objectives: Before setting up an offshore development center, it is important to determine your objectives for the center. What are the goals you want to achieve? What type of development and services do you need to outsource? What are the benefits you want to reap from the offshore development center?

2. Identify and evaluate potential suppliers: Once you have determined your objectives, it is time to identify and evaluate potential suppliers. Look for suppliers who have the necessary skillsets and experience to meet your objectives. Consider their costs, scalability, and technical capabilities.

3. Establish a roadmap: Once you have identified potential suppliers, it is important to establish a roadmap for the project. This roadmap should include timelines for each stage of the project, as well as deliverables and expectations.

4. Develop a service-level agreement: Establishing a service-level agreement (SLA) with your suppliers is essential. The SLA should outline the services the supplier will provide, the quality of the services, and performance metrics.

5. Monitor and manage performance: Once the SLA is in place, it is important to monitor and manage the supplier’s performance. This includes tracking the supplier’s progress, ensuring they are meeting the SLA requirements, and resolving any issues that arise.

Considerations for Choosing a Location 

1. Accessibility: Consider how easy it is to reach the location. Is it close to public transportation and other amenities?

2. Cost: Consider the cost of the location. Is it affordable?

3. Neighborhood: Research the area and its amenities. Is it safe and desirable for customers and employees?

4. Competition: Consider the competition in the area. Does the area already have similar businesses?

5. Zoning: Make sure the area is zoned for the type of business you plan to run.

6. Visibility: Consider the visibility of the location. Is it easy to find and does it have good signage?

7. Space: Make sure the space is large enough for your needs. Is there room for expansion?

Managing Your Offshore Development Team 

1. Establish clear expectations. It is important to have a clear understanding of the roles and responsibilities of each team member. This should include expectations for communication, deadlines, and deliverables.

2. Foster open communication. Open communication is essential to ensure that all team members are on the same page. This can be done through regular meetings, emails, phone calls, or video conferences.

3. Monitor progress. It is important to track progress on a regular basis to ensure that the project is on track and any issues are identified and addressed quickly.

4. Provide feedback. Constructive feedback is essential for a successful project. Make sure to provide both positive and negative feedback to help the team stay focused and learn from their mistakes.

5. Set realistic goals. Unrealistic expectations can lead to frustration and a lack of motivation. Make sure to set achievable goals that are within the scope of the project.

6. Establish trust. It is important to foster a trusting environment between team members. This can be done by ensuring that all team members have the same access to resources and information.

7. Respect cultural differences. Respect for cultural differences is essential when managing an offshore development team. Make sure to be aware of any potential cultural differences and take steps to ensure that everyone is comfortable.

8. Celebrate successes. Don’t forget to celebrate the team’s successes! Acknowledging achievements and milestones can help to foster a positive working environment.

Best Practices for Setting up an Offshore Development Center

1. Establish Clear Goals: Before setting up an offshore development center, it is important to establish clear goals for the center. This will help define the scope of the project and ensure that the team is working towards the same goal.

2. Develop a Detailed Strategy: Developing a detailed strategy for setting up the offshore development center is key to its success. This should include an assessment of the internal resources, a detailed cost analysis, and a timeline for the project.

3. Choose the Right Location: Choosing the right location for the offshore development center is an important step in the process. Consider factors such as cost of labor, language barriers, cultural differences, and local infrastructure before making a decision.

4. Establish a Secure Environment: Establishing a secure environment for the offshore development center is essential for protecting sensitive data. This should include measures such as secure data transfer protocols, physical security measures, and strong access control policies.

5. Provide Training and Support: Providing training and support to the offshore development team is essential for its success. This should include both technical and cultural training to ensure that the team is familiar with the project and the local environment.

6. Monitor Progress: Regularly monitoring the progress of the offshore development center is important to ensure that it is meeting its goals. This should include tracking milestones and taking corrective action if needed.