What Is ODC — Offshore Software Development Center?
Updated – January 21, 2024
What Is ODC – Offshore Development Center?
Let’s start with ODC meaning. The offshore development center (ODC model) is a dedicated software development office with all required infrastructure and employees located in another country. Opening a center allows you to save budgets and speed up development, and recruiting, and optimize accounting, HR, and office budgets.
A vendor usually provides various services and is part of the outsourcing industry:
- building your development team from scratch and locating it in the office;
- develop your project;
- provide QA services;
- set up a separate development center for you, that will work exclusively under your brand with full-time HRs, recruiters, product managers, marketing and development team;
It is not a secret that companies gradually move from having their own in-house development team or traditional outsourcing to offshore software development center.
As usual, you can get all kinds of specialists you might need:
- QA engineers
- Project managers
- Product managers
- DevOps engineers
- UX/UI specialists
- Marketing specialist
Vendors also cover additional problems going on with your team like taxing, bookkeeping, HR management, and so on, so your main office has less hassle of that kind.
ODC Model VS Outsourcing: How Do They Differ?
First, let’s clarify what ODC stands for. This abbreviation means an Offshore Development Center, which is a dedicated software development office with all the required infrastructure and equipment. As a rule, it’s located in another country.
What is the offshore development center’s role for the company? Usually, it helps businesses save money, access top-notch talents, and decrease the time required for the development processes. It allows controlling the remote team and adjusting the team size whenever needed.
What does ODC mean in terms of business development? It enables companies to get a legal entity abroad, leverage additional security measures, enjoy cheaper facilities, and have experienced specialists by their side who will manage all the administrative issues.
And how does outsourcing differ from the Offshore Development Center?
Software development outsourcing is considered more fitting in cases when you need help with short-term projects. It’s easy to find outsourcing vendors to delegate specific tasks to them. There’s no constant supervision or hurry. You get the results delivered on time while the offshore developers you hire can work on several projects at a time.
Keep wondering about what is the meaning of ODC vs outsourcing? Make sure to read our article that provides an in-depth explanation.
ODC Model vs Nearshore Software Development Center: The Main Distinctions
Now that we have addressed “what is the full form of ODC” (offshore development center) and explained its benefits, let’s look at nearshore software development.
Nearshore software outsourcing means transferring specific tasks to companies located in nearby countries (for example if your company is located in the USA – Mexico will be the perfect nearshore outsourcing destination). This implies that there are no time differences between the locations, which ensures smooth and synched cooperation. Nearshoring enables easy travel to the selected country and significantly eliminates communication issues.
So, the main difference is that an ODC offshore development center can be located in any country, usually taking over 5 hours to get to. Meanwhile, a nearshore software development center is in the destination that can be reached within 1–3 hours.
You can learn more about what ODC means, its benefits, and tips on opening such a center by checking out our article covering the topic.
When to Consider Opening an Offshore Development Center?
Opening an offshore development center means the ability to find and choose the best of the best. You can launch your project in no time.
You are open for offshore/nearshore.
Remotely you can find a developer with the exact skillset and experience you need for your project. Let a provider do a recruitment for you, as they understand their country’s culture, business practices, and work ethics.
When you do not have a large budget,
having a local company that knows business culture and practices will save you money and it will usually help make sure your every penny is spent effectively. If you can’t make office space for more employees, finding them remote means you don’t need to think about accommodating people, expanding offices, or worrying about equipment.
Global exposure gives you access to the global marketplace and comes with the benefits of working with and learning from professionals who have experience and knowledge of your target market.
You want to save time and energy on managing a development team,
focus all of your attention on the business side of your project, and dedicate yourself to building your brand. A team manager will usually be appointed to take care of all the processes and day-to-day progress of the team and maintain transparent communication with you on the status of the project.
You aim for large-scale projects.
Choosing this model means getting continuous technical support during the entire cycle of the project. On top of that, vendor brings every project to completion using their expertise.
Key ODC Models
Cooperation is usually based on two main models.
Allocated Dedicated Team
The company gathers a full team in compliance with the project’s needs in their offshore development center and manages the office and other work-related activities. It’s handy for a wide variety of tasks from updating and expanding the older software, and its support, to writing new code or migrating it to other platforms.
The main office provides a specification, and the team runs all the analytic and system design tasks as well, before actual coding.
Integrated (Full form ODC)
With this model, the customers get their development centers in another country. The vendor recruits a team based on the client’s requirements that will plan, research, analyze, design, and manage tasks to deliver a product in close cooperation with the client’s head office. It can become a branch office that is working on the same level of responsibility and in close collaboration with the main office. In this case, the vendor helps to set up an office, help with recruiting developers, and the other specialists that may be required, but the client.
Turnkey Offshore Development Center
With this model, a vendor opens an offshore software development center for you including hiring all core staff, and then passes it to you as a fully functional regional office.
Having defined “what is ODC stands for,” it is necessary to point out that this engagement model has a flexible structure, which can be adjusted utilizing different approaches and methodologies. In general, ODC characteristics are the following:
- A devoted core team responsible for the project
- A place where your corporate brand and culture are located
- A tailor-made infrastructure
- A security policy that is formulated in line with your requirements and standards
- A specifically designed education and training program
- A customized HR program
- Team adjustability under changing budget and requirements
Benefits of Setting Offshore Development Center
This business model helps companies to add development resources remotely. 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. Large companies often try to be physically present in the target market, which reduces logistics costs.
Established your office in locations where the development costs and office maintenance are much lower than in the company’s home country. Before choosing a location monitor the developer rates.
Hiring Different Specialists
The 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 project in a highly competitive niche and wish to keep all the details private, then it’s much better to ask a Vendor to provide additional security measures.
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.
Choose an affordable location to reduce office rent, maintenance, and Internet costs manifold.
Localize your product for the market in the local office, it’s much easier than for specialists in the headquarters.
Risks Connected With Opening ODC
Wrong Choice of Location
It’s possible to make the wrong decision about the 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 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 experienced project managers to remote teams.
Having a distant office is prone to risks such as data leakage.
Hiring developers in countries with a culture distinct from the main office’s is always associated with challenges stemming from the difference in personal and business values, attitudes to communication, punctuality, conflict management, etc.
Avoid Risks Connected with Offshore Development Center
Avoiding risks is crucial for offshore development center to work successfully. Let’s see what potential challenges you could face and how to overtake them:
- Quality Control: Set clear quality standards and maintain regular quality checks. Use Agile methodologies to ensure constant communication and iterative development. Employ tools and processes for tracking progress and maintaining code quality.
- Data Security and IP Protection: Ensure the offshore development center adheres to strict data security protocols. Use NDAs (Non-Disclosure Agreements) and have legal frameworks in place for intellectual property protection.
- Management and Oversight: Regularly visit the offshore site, if feasible. Implement strong project management practices and use project management tools for tracking tasks and progress. Establish clear lines of responsibility and accountability.
- Adapting to Different Time Zones: Use the time zone difference to your advantage, potentially enabling round-the-clock work cycles. Schedule overlapping hours for collaborative work and meetings.
- Legal and Compliance Issues: Be aware of and comply with the legal and regulatory requirements in the offshore location. This includes labor laws, tax regulations, and any industry-specific compliance.
- Skillset and Talent Management: Invest in continuous training and development programs. Keep an eye on the evolving skill requirements and ensure the offshore team is up-to-date.
- Cost Management: While cost-saving is a goal, it shouldn’t compromise quality. Balance between cost-effectiveness and the need for skilled professionals and high-quality output.
- Risk Mitigation Planning: Develop a comprehensive risk management plan. This should include strategies for dealing with potential political instability, currency fluctuations, and changes in local laws.
- Building Long-Term Relationships: Foster a long-term partnership with the offshore development center rather than viewing it as a temporary solution. This encourages loyalty and a deeper understanding of your business objectives.
Opening Offshore Software Development Center vs In-House Development Team
The very main difference is where your employees are located. Do they sit in your office, or are they in another city/country? Some teams prefer the situation when everyone is in the same office and you can come and talk to the person face-to-face at any time during the day. Some other significant differences are:
It’s important to discuss working schedules when you start working with a team/remote developer. Most companies will help you plan scheduling and warn developers if there is a specific request from a client to make communication easier.
Communications and Management
When all communication is handled 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 clearly and in detail to compensate for the gestures, the facial expressions, it’s also great to have an HR who will take feedback and process it.
Remote teams sometimes feel like 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 the 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 account manager/recruiting team manager and give them requirements for new employees.
Useful Tips to Set Up and Manage Offshore Development Center
- Select the right vendor for running your center.
- Explore their track records and 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 qualifications and education but also to soft skills while interviewing candidates.
- Plan your office 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, and 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, whom 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 offshore software development center is not a trivial task, but with some set of skills and the right choice of vendor, it can turn out into a no-brainer.
Qubit Labs can cover all administrative tasks in creating an offshore software center, be it searching for a place for an office, managing it, hiring and HR managing your actual team, and closing all financial and taxation questions on site.
We have material about managing and communicating with your remote team.
How to Open Offshore Development Center?
We gathered the most important steps you should remember in a checklist:
Plan facilities you will need
- Register a legal entity
- Find and rent an office
- Interior design
- Renovations in office
- Buy furniture
- Prepare workstations
- Connect workstations to the Internet
- Set up a security signal system
First, you need to register a legal entity. After all the 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 office 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.
Besides that, it’s vital to organize good conditions for human work; developers will appreciate having some snacks and a coffee machine at their disposal in the office.
It’s critical to provide staff with a first aid box for emergencies.
Hire a core team
- HR manager
You might need some additional staff for the center’s proper daily functioning.
In most cases, you will want to start with 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 people’s 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 the HR Manager
- Plan team buildings and pizza parties
- Benefit package for employees
The work your team does in the development center 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. It’s great to plan team buildings and pizza parties to get employees closer together.
A benefits 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.
Want to Open ODC? Contact Us
Key Employees In An Offshore Development Center
After we have addressed the question “what does ODC stand for,” it would be practical to take a look at the core specialists on the side of the contractor and customer. The contractor is responsible for finding suitable candidates, taking care of the offices, and making sure the working environment is convenient. It takes on the accountability for offshore programming.
Key Specialists on the Contractor’s Behalf
The first key role is the account manager; he/she communicates with clients, clarifies their requests, informs on the project stages, and improves customer loyalty. The next specialist is a project coordinator, who usually has a technical background and is an expert developer. This person prioritizes tasks, monitors the operations, and ensures there is no miscommunication. The third role is an analyst who researches the market, figures out trends, and implements improvements to the company’s business process.
Key Specialists on the Customer’s Behalf
As for the essential employees associated with customers, there are also three of them. An IT manager takes care of all the operations associated with offshore IT services and is responsible for delivering relevant results. A development manager influences the company’s performance to increase income. An exploitation manager keeps an eye on intellectual property affairs and develops plans for distribution and exploitation.
Best Practices to Maintain an Offshore Software Development Center
Explain the company’s culture and values to your team
The team abroad is essentially an extension of your own company, so it should be a part of your company culture. You must communicate the values, goals, and visions of your business to your team to promote a much more effective collaboration.
Make the offshore team members equal to other employees
Introduce the new team to all other employees, include them in company correspondence and meetings if possible and appropriate, have responsibilities and jurisdictions charted, and ensure that the offshore development team and the in-house team (if applicable) cooperate. Plan corporate parties for everyone.
Communication culture and your team’s conversational capacity are key factors in your project’s future success, so it’s essential that you 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.
Take interest in the process, and stay up to date with tasks, progress, and issues your team is facing, 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 team
People work more effectively when they receive motivation and support. Give them a challenge, and encourage proactiveness. Show your interest in their work and appreciation for their opinions and accomplishments. Even small things make a big difference. 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. 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.
Top Countries for Opening ODC in 2024
A) Asia Region
Asia is a region offering the 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, 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 has exhibited exponential growth within the past couple of years and promises further expansion. Currently, IT outsourcing companies invest over $15 billion in the Chinese market with their projects.
B) Eastern Europe Destination
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. The 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 have a stringent set of intellectual property protection laws.
The country 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 exceeded 30% per year – so now in 2024, the number of developers in Ukraine exceeds 250,000, 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.
Why Customers Choose Ukraine for ODC
We decided to do a short interview with Stas Oskin, from WINGS company to ask him what influenced his decision.
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 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 center?
Stas: We decided to choose 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 team?
What do you ask in 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, and explore. When we hire people relying on these values, we are rarely mistaken. We track metrics and follow how processes are going. We monitor quarter results, half-year, and year results. We value personal values and motivation. We believe that an intelligent person can learn everything by him/herself.
Of course, we check the 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.
With Qubit Labs, you may benefit from all the advantages and will avoid all potential hurdles of the business process.
- Office – We help clients to hire a team in a separate office according to their requirements (i.e., size, budget, location).
- Recruiting – We can hire developers and other 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 office functioning.
- Office perks – Experts of Qubit Labs help to choose office furniture, equip a kitchen, and establish snack budgets.
- Employees benefits – We can help you to create an appealing package of workplace benefits for your employees within an 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.
Turn to our specialists to create your team today!