One of the most advanced approaches to software development outsourcing, an offshore development center (ODC) is a huge step up from the traditional methods. Opening a separate business unit far from your home office might seem scary and very costly, but with the whole industry moving towards hiring foreign developers, it can bring a lot of value.
THE RISE OF ODCS
Some of the richest, most advanced countries in the world such as the US and the UK are experiencing a shortage of tech talent. According to ManpowerGroup’s talent shortage study, 69 percent of US companies struggled to fill positions in 2020 – with IT & Data being the hardest roles to fill. In contrast, India will have a surplus of over 1 million tech workers by 2030, which should give you an idea of why offshoring is becoming increasingly popular.
At its core, an ODC is a remote office usually located in a country with a cheap workforce. They often offer the best salary-to-talent ratio, such as India, Poland, Argentina, and others. These centers are fully focused on software development tasks, but they also have all the necessary administrative and support workers needed to maintain it. When approached correctly, these centers can be a source of flexibility, multi-talented staff, and cost savings.
BENEFITS OF ODC IN 2022
Once you’ve decided to set up an offshore development center, you know exactly what you’re aiming towards. They’re going to be operating under optimal conditions, with full coordination and a clear, common goal in mind. It’s important that you pass on these goals to them as best as you can so that the results match your expectations.
Don’t be worried – these centers allow in-house managers to retain close control over all different operations. The workers follow strict guidelines from the main office, and with frequent feedback, you can quickly fix problems before they become serious.
2. CONSTANT PROGRESS
One of the characteristics of offshoring is that your target country is likely to be located thousands of miles away – more often than not in a different timezone. While this is not ideal for communication purposes, it means that tasks will be done around the clock. Since work hours aren’t overlapping, the in-house team will make progress while the offshore team is sleeping and vice-versa.
Think of having to do all of this without an ODC. You’d need a new team, or you’d have to pay existing workers overtime. It’s both time-consuming and costly, which makes time zone differences a positive occurrence.
3. REDUCED COSTS
Looking at the offshore development rates around the world, they’re ranging from $20-65+ depending on the position and the particular country. This is far below the US and UK’s $70-90 average salaries – multiplied by dozens of team members, it’s easy to see how much money can actually be saved by offshoring. Additionally, you won’t have to sacrifice quality – the large talent pool to choose from can actually yield even better results for less money.
Operational costs are also much lower, and you’ll be able to acquire the latest technology for a smaller price. Over time, you can invest in your in-house office from the savings that you acquired by establishing an ODC.
FACTORS TO KEEP IN MIND
– DIFFERENT CULTURES
Keep in mind that the behaviors that you find normal might be disrespectful in another country. Do enough research before settling for a location. Try to predict how these barriers will affect the outcome, and work out some solutions prior to setting up an offshore development center.
– REMOTE MANAGEMENT
Even though time zone differences are generally beneficial, they can also present an issue if you want to receive feedback more often. It’s still important to ensure that the offshore team remains on track and works towards the main goal. Make an agreement on how and when you want to hear about their progress.
– LEGAL ISSUES
Some countries make it extremely difficult to register a business entity, especially for foreign companies. As with all the previously mentioned factors, it’s important to do enough research and figure out how you want to deal with this issue.
Offshore development centers are here to stay for the foreseeable future, and that’s a good thing. It’s a massive project that requires a lot of work and patience, but it can serve you well for years to come – if you approach it correctly and take your time.