What Is ODC — Offshore Development Center?
- What Is Offshore Development Center (ODC)?
- When to consider setting up an ODC for your business?
- How Does Offshore Development Center Model Work?
- Benefits of the ODC Team for Your Company
- Offshore Development Center Risk
- Hiring Remote Team vs in-House Team
- Useful Tips to Set Up and Manage ODC Team
- Best Practices to Maintain an Offshore Development Center
- How to Start Offshore Software Development Center (Checklist)
- How to Choose Country for Offshore Development Center
- Setting Up ODC in Ukraine
What Is Offshore Development Center (ODC)?
ODC stands for offshore development center and it’s a development company that provides you a team of developers who work for your company, they can work from any country.
Offshore development centers provide various services:
- building a software development team from scratch based on your requirements;
- project based development;
- testing services;
- setting up a separate ODCs for clients;
This business model helps companies to have their own development team remotely. There are numerous benefits for ODC in IT companies and they include: located in a country with a large talent pool and lower costs for development services.
Alternatively some vendors provide a service if setting up and separate development centers support in their country.
It is not a secret that companies gradually move from having their own in-house development team or traditional outsourcing to offshore development centers.
This approach, when you set up a team in other country with help of vendor, allows saving funds and speed up recruiting, optimize accounting, HR and office budgets.
An ODC usually includes all kinds of specialists you can hire:
- QA engineers
- Project managers
- Product managers
- DevOps engineers
- UX/UI specialists
- Marketing specialist
Vendors also cover additional problems going with your own team like taxing, bookkeeping, HR management, and so on, so your main office has less hassle of that kind.
When to consider setting up an ODC for your business?
When you are looking for a high-skilled developer
If you’re not tied to hiring from a strictly local pool of candidates, working with offshore IT professionals means an ability to find and choose the best of the best. A certain level of professionals might not be available locally for you, but outsourcing offshore you can find a developer with an exact skillset and experience you need for your project.
When you do not have skills in recruiting
ODC can be your guide to the offshore country in many ways, talent acquisition is one of them. Letting people there do a recruitment for you will yield more time for you and effective results as they understand their country’s culture, business practices, and work ethics.
When you do not have a large budget
Piggy-backing off previous point, having an offshore development company know local business culture and practices will save you money and an ODC will usually help make sure your every penny is spent effectively.
When you do not have comfortable conditions for the in-house team
If you can’t make an office space for a team of developers, be it due to a low budget, complications in logistics or simply when there’s need for that development team’s permanence, having an ODC means you don’t need to think about accommodating people, expanding offices or worrying about equipment.
No matter where your business is, your OCD can be anywhere in the world. This gives you access to the global marketplace and comes with the benefits of working with and learning from professionals who have experience and knowledge on your target market.
When you do not have enough time and skills to manage the development team
If you want to focus all of your time and attention on the business side of your project and dedicate yourself to building your brand while not having to worry about the technical side of it, an ODC is a good solution. A team manager will usually be appointed to take care of all the processes and day-to-day progress of the team and maintain a transparent communication with you on the status of the project.
When you need technical support
Choosing an ODC model means getting continuous technical support during the entire cycle of the project. On top of that, as your offshore team brings every project to completion using their expertise, they grow said expertise and gain knowledge and experience that is invaluable in the tech field and can be applied onto further projects, thus simply snowballing the expertise
How Does Offshore Development Center Model Work?
You can work with software development centers based on two main models
- Hiring a dedicated team allocated in ODC – With this model, an offshore development center gathers a full team in compliance with the project’s needs and manages the office and other work-related activities.
This kind of work is useful for a wide variety of tasks from updating and expanding the older software, its support, writing new code or migration it to other platforms.
This way, the main office provides a specification, and the team runs all the analytic and system design tasks as well, prior to actual coding.
- Setting up your private ODC (ODC Full form) – With this model, the customers get their own development centers in other country. Vendor recruit a team based on client’s requirements that will plan, research, analyse, design and manage tasks to deliver product in close cooperation with client’s head office. ODC can become a branch office that is working on the same level of responsibility and in the close collaboration with main office. In this case, the vendor helps to build offshore development center, help with recruiting of developers, and the other specialists that may be required, but the client .
- Hiring a dedicated team allocated in ODC – With this model, an offshore development center gathers a full team in compliance with the project’s needs and manages the office and other work-related activities.
Benefits of the ODC Team for Your Company
The rationale for setting up an ODC team may be different. Companies usually pursue the following goals:
Getting the Legal Entity in a Foreign Country
Being on the market, being closer to the customers, and understanding their needs is critical for business success. Thus, large companies often try to be physically present in the target market, which reduces logistics costs tremendously. Moreover, opening an ODC in a country with large population is also a great way to increase the sales volume.
ODCs are usually established in locations where the development costs and office maintenance are much lower than in the company’s home country. Before choosing a location, you can easily monitor the developer rates and set it up in the location where proper talent may be acquired to the team with considerably lower expenditure
Hiring a Large Team of Different Specialists
Vendor can establish a separate office for you with employee branding if you want to set up a team of 50+ members. All your developers, PMs, QAs, and marketing specialists will work there.
The vendor’s office always hosts several teams working on several projects side by side.
If you have a secret project in a highly competitive niche and wish to keep all the details private, then it’s much better to ask a Vendor to establish a separate office for your team.
Access to Talent Pool
Having a company in the country where you plan to hire developers is always better than hiring a freelancer.When job seekers see that they will work in the company’s office, they are more likely to take the vacancy.
Establishing an offshore software development center in an affordable location is likely to reduce office rent, maintenance, Internet costs manifold.
Your developers in the ODC are locals, so they may localize your product for their market much easier than specialists in the headquarters would do.
Offshore Development Center Risk
Wrong Choice of Location
It’s possible to make the wrong decision about the ODC’s location if you select a small city with few specialists available in your specific niche.
Hardship With Registration of a Legal Entity at a Distance
Numerous countries are unfriendly to foreign business and pose certain legal and bureaucratic hurdles for setting up a new business.
Challenges With Hiring the Core Team Without Assistance
The process of recruiting the new team in the location of your ODC may be costly (if you send recruiters from the main office to complete the task) and ineffective (foreign recruiters may fail to understand the market and proper channels for candidate search).
Challenges With Remote Team Management
Managing remote teams is a science in itself.Thus, it’s necessary to assign properly trained managers for remote teams, which is sometimes costly and still may have little effect on the team’s productivity or communication quality.
Having a distant office is prone to risks such as data leakage, raids of law enforcement officers or criminal groups (in non-democratic states).
Hiring developers in countries with a culture distinct from the main office’s one is always associated with challenges stemming from the difference in personal and business values, attitudes to communication, punctuality, conflict management, etc.
Hiring Remote Team vs in-House Team
The very main difference is where your employees are located. Do they sit in your office, or are they in other city/country. Some teams prefer the situation when everyone is in the same office and you can come and talk to person face-to-face at any time during the the day. Some other significant differences are:
It’s important to discuss working schedules when you start working with a team/remote developer. Most of companies will help you plan scheduling and warn developers if there is a specific request from client to make communication easier.
Communications and Management
When all communication is handled in online a lot of non-verbal information is lost. For example, during the call you can not see when someone takes a deep inhale before saying something as you see in a meeting room. So it’s necessary to talk very clear and detailed to compensate the gestures, the facial expressions, it’s also great to have an HR who will take feedbacks and process them.
Remote team sometimes feel themselves as a second team. It’s necessary to show that your remote team is as necessary and valuable as anyone else in your company. It’s better to visit your team in their country and invite remote team to your main office for a year/quarterly planning and parties to know each other in person.
You can easily scale a remote team. Usually you will need to contact your offshore development center account manager/recruiting team manager and give them requirements for new employees.
Useful Tips to Set Up and Manage ODC Team
- Select the right vendor for running your ODC.
- Explore their track records, references.
- Ask other customers for their experience and advice.
- After you know your vendor, sort out your organizational structure with your new team. They should understand their responsibilities and roles and distribute the tasks equally.
- Create job descriptions for all vacancies. Pay attention not only to the qualification and education, but also to soft skills while interviewing candidates.
- Plan your ODC security measures as well: who has access to different parts of the project and what things are they authorized to do.
- Next, start your actual development process management. Select your methodology, outline what and how often your team should deliver to you, be it software updates or just reports.
- Set up a project-tracking and management suite, like Asana or Jira.
- Give your new team a place on your project infrastructure: the teammates should understand their place in the company, who they communicate with, and to whom they escalate any issues.The same applies to every individual in the team: everyone should know how to report any problems or issues to manage them as quickly as possible.
- Finally, if you have several teams, set up the responsibility areas between them, or blend different workforces on one part of the project if needed.Different offshore teams and your in-house team should cooperate, not disturb each other.
Starting an ODC is not a trivial task, but with some set of skills and a right choice of vendor it can turn out into a no-brainer.
Qubit Labs is able to cover all administrative tasks in creating an offshore development center, be it searching a place for an office, managing it, hiring and HR managing your actual team and closing all financial and taxation question on site.
We have material about managing and communication with your remote team.
Best Practices to Maintain an Offshore Development Center
Explain the company’s culture and values to your ODC team
The ODC is essentially an extension of your own company, an extra limb, so it should be a part of your company culture. It is important that you communicate the values, goals and visions of your business to your offshore development team. This way you’ll establish a much more effective collaboration.
Make the offshore team members equal to other employees
Your ODC team is just another team in your company, so make sure to treat it as such. Introduce the offshore team to all other employees, include them in company correspondence and meetings if possible and appropriate, have responsibilities and jurisdictions clearly charted and ensure that the offshore development team and the in-house team (if applicable) cooperate with each other.
Communication culture and your team’s conversational capacity are key factors in your project’s future success, so it’s essential that you and your ODC take advantage of every tool and tactic to establish a clear, friendly and professional communication structure. Give clear tasks with deadlines, listen to questions and respect everyone’s time. There are loads of tools, apps and programs nowadays that have significantly eased team communication, business planning and team management, do not hesitate to employ them.
Take interest in the process, stay up to date with tasks, progress and issues your team is facing. Yes, the ODC will take care of the team management, but it’s good practice to be involved and stay on top of all the developments in the team. This way the project can easily avoid or mitigate crises and celebrate successes.
Motivate your ODC team
Doesn’t hurt to say it again: your ODC team is an equal and vital part of your company’s body. People work better when they receive motivation and support from “upstairs”. Give them a challenge, encourage proactiveness. Show your interest in their work and appreciation for their opinions and accomplishments. Even small things make a big differences. Teambuilding activities are a known way to hike up the spirit and productivity.
Be clear on expectations
You’ve made a business plan, you have a vision and a mission with your company. Be sure to communicate all that to your ODC team. Clearly define your goals and expectations for the project, the team and their role in the project. Give feedback and be composed and clear with both positive and negative feedback. Ask for feedback, too – make sure you all are on the same page.
Show your trust
Manifest your trust by allowing your team to make decisions and be autonomous. Show them your value for their opinions by listening, asking questions and engaging. Constructive arguments are also a good way to show your team you know the substance of the business and the process while acknowledging their expertise and experience. This will also be the motivation for the team to deliver high-quality results. Make sure, however, that you establish a clear hierarchy and that your offshore team knows to consult you on important project decisions.
How to Start Offshore Software Development Center (Checklist)
If you want to set up a development center and hire developers, here we gathered the most important steps you should remember:
Plan facilities you will need
- Register a legal entity
- Find and rent office
- Interior design
- Renovations in office
- Buy furniture
- Prepare workstations
- Connect workstations to internet
- Set up security signal system
When setting up an ODC, you first need to register a legal entity.
After all paperwork is done, you need to find and rent an office fitting your requirements and budget.
Renovate the office in the style of your company, buy all needed furniture, and set up the security signal system – your ODC is ready to work!
Equipment for your employees
- Office equipment and supplies (printer, scanner)
- Coffee machine
- Medicine box
Hardware and software are the core tools for developers’ work, so the purchase of all required equipment and office supplies is the top priority for an OSDC creator.
Besides that, it’s vital to organize good conditions for the human work; developers will definitely appreciate having some snacks and a coffee machine at their disposal in the office.
Moreover, it’s critical to provide staff with the first aid box for emergencies.
Hire a core team
- HR manager
An ODC is not only about developers, as you might need some additional staff for the center’s proper daily functioning.
In most cases, the basic staffing requirements include having a recruiter, an HR manager, an accountant, and a lawyer.
- Office branding
- Branded T-shirts
- Branded cups
The company’s brand glues a team together and increases developers’ commitment and job satisfaction.
So, it’s highly recommended to incorporate some form of office branding like branded T-shirts, cups, caps, etc.
Plan corporate and cultural activities with HR Manager
- Plan team buildings and pizza parties
- Benefit package for employees
The work people do in ODCs is only a part of their lives and being a part of the company’s corporate culture is what gives meaning and enriches their workplace experiences.
Thus, it’s advisable to plan team buildings and pizza parties to get employees closer together.
A benefit package for employees is also an attractive perk for many, so it’s better to have one in place to keep the best talent loyal to your company.
How to Choose Country for Offshore Development Center
Download Outsourcing Destination Guide Report in PDF format With Salaries Info
Here are some popular locations for establishing an ODCs:
Asia is a region offering benefits of rapid technological growth and advancement combined with highly competitive development rates.
Moreover, most Asian residents have a decent level of English proficiency.
Asian markets have a plentiful supply of developers proficient in numerous technologies.
Together with a convenient time zone, Asian countries offer a favorable legal environment for setting ODCs, with many of them already internationally regarded as mature outsourcing markets.
India is a pioneer of IT outsourcing; its market has been on the path of active development since the 1980s, and at present, it boasts a labor supply of over 3 million engineers.
China has a much younger IT outsourcing market, but it exhibits exponential growth within the past couple of years and promises further expansion.
Currently, the IT outsourcing companies invest over $15 billion in Chinese market with their projects and ODCs.
A number of countries select Eastern Europe as a major outsourcing location because of a large number of highly-qualified professionals, affordable development rates, and availability of all required infrastructure (e.g., high-speed Internet access).
Moreover, small travel distances and minor cultural differences contribute to smoother collaboration and better productivity of outsourced professionals from this region.
Most preferred locations here include Poland and Ukraine.
Hiring Polish programmers is cost-efficient and beneficial because of their good level of English proficiency, low living costs, and cheap tech education.
Some companies offer a favorable legal climate for foreign IT companies and has a stringent set of intellectual property protection laws.
Country’s currently offers over 250,000 experienced developers, which makes it the largest outsourcing market in the region.
Ukraine is another regional market exhibiting strong growth and expansion in terms of experienced tech specialists’ supply.
In 2018, there were over 160,000 programmers offering their services in Ukraine, but impressive market growth rates exceed 30% per year, suggesting that a labor supply will soon equal that of Poland.
Ukraine offers a favorable legal environment, continuously improved local infrastructure, and great availability of well-trained professionals.
Setting Up ODC in Ukraine
Why set up offshore software development center or team in Ukraine? We decided to do a short interview with Stas Oskin, from WINGS company to ask him about that.
Stas Oskin, a co-founder, Core Dev and Biz Dev at WINGS Stiftung, a Swiss company with offices in Kyiv, Saint Petersburg, Puerto Rico and a small office in Tel Aviv.
WINGS is a global international project with huge potential – a platform that accelerates DLT companies growth, helps the community to evaluate the potential of a company, invest, manage funds and protect investors from dishonest companies.
QL: Why did you decide to set up an offshore software development center?
Stas: We decided create an ODC in Kyiv because we were looking for a country with a western way of thinking to outsource our development.
We believe that Ukraine is a place for it.
QL: How do you choose people for your offshore software development team?
What do you ask on interviews?
Stas: The most important factor for choosing a developer is a “hunger.”
We want a person to be motivated and to develop together with us to jump into a DLT world. He must believe that it is the next level of development of technology. It is essential that a person wants to learn and invest not only in their work time but extra time to learn, network, explore. When we hire people relying on this values, we are rarely mistaken. We track metrics and follow how processes are going. We monitor quarter results, half-year and a year results. We value personal values and motivation. We believe that an intelligent person can learn everything by him/herself.
Of course, we check an experience of every candidate, but we will not look for people with DLT experience on purpose.
We expect that he/she will improve skills in the shortest terms. That is how it works; no one will teach you something in DLT. If someone expects that any company will guide you, you will be left behind. It is essential that a candidate searches and learns, and looks for new information by him/herself and does not wait for someone to tell what to do.
QL: What is crucial for a remote team to succeed?
Stas: We hire people like us and better than us. Our goal is to have team players who mentally match and provide total support.
QL: Thank you for your time, it was a great pleasure talking to you.
If you decide to opent an ODC in an unknown location, with no supportive representatives, may be quite a challenge.
With Qubit Labs, you may benefit from all the advantages of an offshore software development center as a business model and will avoid all potential hurdles of business process.
Here’s what you get when working on the ODC with us:
- Office – We help clients to build a team or set up their ODC in separate office in line with their requirements (i.e., size, budget, location).
- Recruiting – We hire not only developers. If you need recruiters to work specifically in your ODC, we can hire such specialists for you as well or find specialists you need (e.g., marketing specialists, HR, accountants, sales etc.).
- Accounting – If you don’t need a full-time employee to conduct accounting, we can provide you with a part-time service of this kind.
- Equipment – Our technical specialists consult clients on purchases of all equipment required for the ODC’s functioning.
- Office perks – Experts of Qubit Labs help to choose office furniture, to equip a kitchen, and to establish snack budgets.
- Employees benefits – We can help you to create an appealing package of workplace benefits for your employees within estimated budget. They may include insurance, gym membership, English courses, professional training, etc.
- Office management – We can hire a full-time or part-time office manager to manage the daily running of your ODC.
With Qubit Labs, you will never experience any hardships with getting an development center setup and running.
Turn to our specialists to create your team today!
This post was edited on 12 June 2020.