What is an Offshore Development Center (ODC)? Future of Development

Developing high-quality applications that meet the market's demands takes time, effort, and knowledge. Today, companies are actively looking to move their software projects to offshore development centers (ODCs) to overcome this and deal with local talent shortages.

ODCs have become famous for startups and small and midsize businesses looking to reduce costs and tap into global talent pools.

In this blog, we will delve into everything related to ODC, from the benefits and challenges for businesses to some practical tips on choosing the right ODC.

But before we discuss why businesses worldwide opt for offshore software development centers, let us find out what ODC is.

What is an Offshore Development Center?

An Offshore Development Center is essentially a subsidiary of a company that resides in another country to take advantage of the benefits that come with geographical diversification, such as cost reduction, access to a vast talent pool, and round-the-clock productivity.

ODCs generally handle various tasks, including software development, IT support, and other essential business operations. These centers enable startups, SMBs, and enterprises to augment their IT teams and fast-track project development to reduce time to market.

ODC's full form in the IT industry is the offshore development center. It is also known as an offshore software development center, offshore development team, or offshore software team.

Now that you know what an ODC is, let's move forward and find out how it works:

How Does an Offshore Development Center Work?

Let’s understand how an ODC works with an example. Support you’re a US-based company looking to gain first mover advantage by reducing software development time.

In that case, hiring an offshore development team in a country like India with a large talent pool at a low cost can help you speed up your development process without much cost implication.

By hiring an offshore software team of highly skilled app and web developers and programmers on a contractual basis, you can enjoy the benefits of owning talented resources without the commitment of long-term engagement, as you can easily dismantle the team once the project is over.

However, you need to know that hiring an offshore development center is not the same as outsourcing IT projects. Both are quite different in terms of their business model. Let’s understand how in the next section:

Difference Between Offshore Development Center and  Outsourcing

For many of us, offshore development and outsourcing may sound similar, but in reality, these are very different in their operating model.

In outsourcing, you hand over your development project to a third-party vendor; however, in offshore software development, you hire a team of remote offshore developers to work on your project under your supervision.

ODCs give you better control over ongoing project development as the team works as your subsidiary in an offshore project.

According to Dun & Bradstreet’s Barometer of Global Outsourcing, 20 to 25% of outsourcing relationships fail within two years, and 50% fail within five, proving that offshore software development centers are a better option than outsourcing work.

Also Read: Mobile App Development Using Python: A Step-by-Step Guide

Benefits of Offshore Development Center

ODC allows businesses to save money, gain access to global talent, scale operations more efficiently, and focus on core business priorities while increasing productivity and creativity.

On that note, here are some key benefits of choosing an offshore software development company:

1. Access To Diverse Expertise

Offshore development centers are facilities located in multiple countries that employ professionals with diverse backgrounds and skills.

These centers bring together a wide range of talent, including engineers, developers, designers, and specialists from different fields and industries.

When working on complex projects, the importance of variety becomes clear. These efforts often require a combination of specific talents, extensive technological expertise, and an awareness of specific industry requirements.

2. Scalability And Flexibility

ODC in software development enhances your organization by allowing you to scale your team and resources. You may quickly expand your staff when you have a large project or shrink it during slack times. ODCs are adaptable and can promptly respond to your requirements.

For example, if your company is suddenly assigned a vast project that requires more staff, an ODC can swiftly deploy more trained workers to assist in completing the task.

Conversely, when there is less work, you can reduce the team size to save money without keeping a substantial permanent workforce.

3. Reduced Time-To-Market

One significant advantage of offshore development centers is that they allow you to get your products to market faster.

They deploy workers from several time zones to ensure work is done around the clock. This speeds development, allowing you to launch sooner than the others.

By exploiting this continuous workflow, ODC in IT companies allows reduce the time it takes to launch new products or services.

This speed is critical in competitive industries where being first to market can mean winning market share and a competitive advantage.

4. Cost Effective Software Development

Setting up an offshore development center has numerous advantages. To begin, India is a big technology hub and ranks among the top ten countries for outsourcing IT projects. Second, India has a trained workforce that is familiar with a variety of technology.

Furthermore, the Indian government has created favorable laws and incentives to promote growth in the IT industry.

These policies include tax breaks, subsidies, and programs designed to encourage innovation and entrepreneurship in technology-related industries.

Such government support increases the cost-effectiveness of building and managing ODC offshore development centers in India.

Also Read: New Technology Trends in the IT Sector

5. Specialized Skill

Countries that thrive in specific technology typically have more expertise in such fields. This can lead to a situation in which certain countries have a lot of tech talent and others do not.

Offshore development service providers address this issue by providing access to expertise in technologies that may be scarce where you are.

ODC solves this mismatch by providing firms with access to trained experts who specialize in technologies that are either limited or unavailable domestically.

Businesses can overcome geographical barriers and obtain access to specialized expertise, hence improving their technology skills, by employing an ODC. This multinational allocation of resources levels the playing field and encourages cross-border collaboration.

6. On-Demand Team Scaling

Collaborating with an offshore software development company lowers the possibility of losing critical resources throughout a project.

They have a big pool of competent software developers who can step in immediately if necessary, ensuring that your project runs smoothly without interruption.

Also, the experience and different skill sets available at the ODC offshore development center frequently contribute to better problem-solving and innovation within projects.

Overall, hiring ODCs gives businesses a strategic edge by improving team continuity and the ability to manage hurdles, resulting in increased project success and customer satisfaction.

7. Business Expansion

A firm profits the most when it goes global. ODCs are an effective approach to expanding your business worldwide. They assist you in establishing a presence in overseas marketplaces without paying significant upfront costs.

You may tailor your items to local customers and develop strong partnerships with local businesses.

ODCs play an important role in localizing products and solutions for new markets. This entails tailoring software, services, or products to fit the unique demands and tastes of clients across regions.

For example, translating software interfaces into local languages, modifying features to meet local regulations, or tailoring marketing methods to fit cultural norms.

8. Focus On Core Competencies

When an IT company builds an offshore development center in India, it can delegate its IT responsibilities to that team.

This allows them to focus on their strengths while the offshore team handles software development. This approach accelerates the release of their products, giving them an advantage over competitors.

As previously stated, ODC in software development contributes to faster product and service launch times. Businesses that use a professional offshore crew can speed up the development and deployment of software programs, websites, and digital solutions.

9. Addressing Resource Shortages

According to Korn Ferry's assessment, there would be a significant shortage of technical specialists worldwide. By 2030, there could be 85.2 million fewer workers, resulting in a $8.5 trillion loss in revenue.

Places like the United States, Canada, Australia, and Europe will struggle to recruit enough skilled workers.

However, India is predicted to have a skilled labor surplus of approximately 245.3 million by 2030. As a result, India is the finest offshore outsourcing destination for software projects.

Businesses that engage with Indian ODCs can gain access to a broad talent pool, avoid the risks associated with manpower shortages, and benefit from cost-effective software development solutions.

10. Economic Advantages

Creating an Offshore Development Center (ODC) provides significant financial benefits, primarily by lowering expenses and tapping into a diversified talent pool worldwide.

When corporations establish an ODC in nations with lower labor costs, they can save significantly on operations and product development.

These savings are not only achieved by paying lower salaries, but also by spending less on office space, equipment, and, in some cases, taxes, thanks to laws in those nations that favor international corporate investment.

We are now aware of the advantages that a firm may gain by cooperating with ODC. Let us walk you through the steps of selecting the best offshore development partner.

Latest Read: GitHub vs GitLab: Which One Should You Choose?

Challenges of Working with an Offshore Development Center

Here are some major offshore development problems that businesses frequently face:

Challenge 1. Cultural Distinction

Undoubtedly, cultural differences can make international outsourcing challenging. Cultural borders can result in misunderstandings and conflict because two diverse cultures' customs and values are typically very different.

For instance, criticizing or publicly disagreeing with someone may be considered unfriendly in some cultures but respectful and respected in others.

As a result, there may be friction and conflict if you work with a group of people from a culture that values civility and respect. You come from a culture where it is acceptable to criticize someone when you believe they are wrong publicly.

The solution to this:

Understanding the cultural norms and beliefs of the country or region where you outsource your employment is critical for overcoming this challenge.

You can learn how to do this by completing internet research or engaging with others who have previously worked in that profession.

Challenge 2: Time Zone Differences

Not everything can be done to reduce costs. Because there are so many potential offshore outsourcing locations, time zone differences may provide a challenge for offshore development centers.

Depending on the overseas staff they choose for a contract, there could be a 10-hour time difference, for example, if the American company operates on the East Coast. Communication and essential company processes may become difficult as a result.

Time zone differences often complicate meeting scheduling. Scheduling a meeting that works for both parties can be difficult if one side works all day while the other team sleeps.

Furthermore, when multiple teams work on distinct project components in different time zones, tracking what work has been completed might be challenging.

Understanding the time zone differences between your organization and the one you're outsourcing to is critical.

This can be accomplished by employing an online time zone converter, scheduling fewer meetings, and using timesheets to enable speedier asynchronous communication.

A solution to this:

Find an offshore app development company that is close to your geographic area. This makes time adjustments much easier, and you don't have to sacrifice your sleep!

Challenge 3: Difficult to Rely Upon or Trust

Yes, a trust issue could be challenging for offshore outsourcing. This is because when firms outsource to other offshore countries, they frequently worry about the quality of the job provided and whether they will be able to meet project deadlines.

Many firms hesitate to outsource labor to foreign nations because they are concerned that the task will not be completed correctly or that vital information will be exposed.

Fortunately, there are various ways to build trust with your offshore outsourcing partner. Create a detailed project strategy and timetable to ensure you and your partner agree on all key milestones and deliverables.

A solution to this:

Periodic reviews ensure that all stakeholders are satisfied with the work being done. To quickly address any issues or concerns with offshore developers, you should always have a solid communication channel.

Challenge 4: Language Barriers

Language barriers are undoubtedly a challenge for offshore development centers. Misunderstandings and misunderstandings can lead to unhappiness among both parties, lowering the quality of the work produced.

Nonetheless, some thought and effort may overcome most language barriers with offshore vendors and international staff.

A solution to this:

Using translation services or software is one way to translate text and documents between languages. Using an interpreter is another option since it can help facilitate communication between personnel from different countries.

These technologies enable organizations and overseas suppliers to overcome language barriers and take advantage of offshore outsourcing.

Furthermore, you may only choose overseas companies that speak great English. This allows you to hire an outsourced mobile app development company with specialized knowledge and great language skills without boosting operating costs.

Challenge 5: Poor Transparency and Control

Yes, offshore outsourcing may encounter challenges due to a lack of transparency and control. When firms outsource work to international contractors, they face communication, quality, and timely delivery challenges.

These challenges could result from the offshore partner working differently and being unable to respond quickly to customer requests.

Furthermore, it is likely that the customer will not have direct access to the individuals performing the activity and will be unable to watch what they are doing. Misunderstandings about what is being done and how it should be done may come from this.

A solution to this:

To overcome this issue, businesses must be clear about what they expect from their offshore development services supplier. They should also ensure that the offshore provider is conversant with their sector and the project's specific needs.

Finally, they must maintain open lines of communication to resolve any issues or concerns quickly.'

Explore More: 10 Must-Have Skills To Become a Backend Developer in 2024

So, Should you opt for the Offshore Development Center?

When comparing the benefits of having offshore software development centers against the challenges, hiring ODC developers for your development project is advantageous and essential to counter the increasing volatility and uncertainty in the market.

How?

» It saves on your hiring, infrastructure, and employee costs.

» You can swiftly scale up or down your team to meet your project requirements and budget.

» With an available talent pool of pre-vetted programmers and coders, you can quickly onboard resources across different tech stacks.

So, choosing a dedicated offshore development center is always a good idea, especially if you seek quality output and quick delivery at an economical price.

But is an offshore software development team better than an in-house development team? Let’s find below:

Offshore Development Center Vs. In-House Team- Which is Best for you?

When searching for a dedicated team for software development, businesses usually hire either offshore software developers or an internal team. But, which one you should choose, depends on the nature of the project.

The significant difference between an offshore development center & in-house team is that an ODC is a remote location where businesses outsource their software development or other IT projects.

In contrast, an in-house team is a team of employees who work within the same physical location as the company.

How to Choose the Right Offshore Development Company?

When setting up an offshore development center, businesses often face challenges and risks regarding management, communication, culture, legal compliance, government policies, and cybersecurity.

Businesses can avoid these issues by gaining information on the country chosen for ODC and thoroughly vetting offshore software development companies. Here are a few tips you can use to ensure that you’re hiring only the right ODC for your project.

Interact with the Leadership Team

You must interact with the leadership team before you choose an offshore development company. This will help you assess the team’s work capabilities, strengths and weaknesses, communication skills, and working style.

Check Experience, Reference, and Social Proof

When you shortlist offshore development service providers, you must check their previous projects, clientele, successful delivery rate, and industry recognition. This will also help you assess their industry, technology niche, and work quality, allowing you to make an informed decision.

Transparent and Honest Communication

When you feel the offer sounds too good to be true, drop it. Creating a successful software or application requires time and a skilled team to conduct a granular analysis.

While offshore software development teams are known to deliver premium quality work while meeting deadlines, anyone promoting unrealistic delivery time probably has little to no idea about how software development or app development works.

Concluding Thoughts

The demand for offshore development centers is increasing as more businesses consider it. There are several good reasons for hiring offshore developers for diverse projects, whether web development, app development, software development, or any other development project.

However, with the advantages, there are also some disadvantages. It’s advisable that you choose this option by understanding your needs and requirements. If they match with the pros, you can go with it. Otherwise, you can find other ways to get development services.

If you’re looking for a reputable app development company in India, contact Arramton. We’re experienced in delivering a successful broad range of projects, from a real estate website and online cake bakery mobile applications to advanced software.

Our team of skilled developers is committed to providing innovative solutions that meet your specific business needs. Let us help you bring your ideas to life.

Frequently Asked Questions

Q. What does the offshore development center mean?

Ans. An offshore development center (ODC) is a dedicated team of software developers and IT professionals located in a different country. Companies set up ODCs to reduce costs, access specialized talent, and focus on core competencies.

Q. What is an ODC in IT companies?

Ans. In IT companies, an ODC is a strategic approach to outsource software development or IT operations to a foreign location. It involves setting up a dedicated team or facility to handle specific projects or ongoing operations. The goal is to optimize costs, improve efficiency, and tap into a global talent pool.

Q. What does an offshore developer do?

Ans. An offshore developer is a software professional working remotely for a company located in another country. They perform various tasks like coding, testing, debugging, and maintaining software applications.

Q. What are the benefits of ODC?

Ans. ODCs offer several advantages, including cost reduction, access to a larger talent pool, round-the-clock development, focus on core competencies, and accelerated time-to-market.

Q. Is offshore outsourcing good?

Ans. Offshore outsourcing can be beneficial when executed correctly. It offers cost savings, access to specialized skills, and the ability to scale teams quickly. However, it's essential to carefully select a reliable partner, manage communication effectively, and address potential challenges like time zone differences and cultural nuances.