Dedicated Offshore Development Center: Worth The Setup Cost?

Offshore Development Center: Value in Setup Cost?

In 2021, the total IT outsourcing market revenue was 9.8% higher than in previous years. It is now close to $396.3 million approx..

An offshore development center is an extended IT/Development group that has been established by overseas app developers to assist with your software development project.

This will remove some of the challenges like finding skilled professionals, scaling technology resources, security, and so on.

You can also eliminate unnecessary expenses.


What Is An Offshore Development Center (ODC), And How Do They Work?

What Is An Offshore Development Center (ODC), And How Do They Work?

Both large and small firms can employ the Offshore Development Center (ODC) business model. ODC is the development of a committed remote IT workforce that will support the current on-premises staff.

You may want to engage some programmers as well as software engineers to help you with your project. You can get skilled personnel by working with an offshore company without having to commit to a lengthy agreement.

Depending on the demands of your project, you can scale up or down.

A dedicated delivery center with all the necessary resources, including infrastructure setup, quality testing, software development, software professionals, security audits, and business operations, is offered by an offshore development model.

The size of the offshore software development market was estimated at USD 122 billion in 2024 and is expected to expand at a compound annual growth rate (CAGR) of 10.13% from 2024 to 2031, reaching USD 283 billion.


What Is The Best Time To Look At An ODC Model?

What Is The Best Time To Look At An ODC Model?

You can understand how an offshore development center operates through this example. Consider that your software business wants to beat out the competition by reducing the time to market.

You might be able to accomplish this goal by working with just an offshore development center without worrying about the availability of technical talent or spending excessive amounts of money.

An ODC is better appropriate if youre developing large-scale projects that call for continuing support and updates (such as a Fintech business app).

The establishment of an offshore development center is advised following an analysis of the project needs. You will then be able to calculate the projects length, cost estimates, and scope.

An offshore development model is a viable option when there are numerous projects that must be completed rapidly or when there are massive, long-term initiatives.

You are just required to supervise and uphold the standard of work under the ODC model. The ODC model is a quick, effective, and fruitful technique to boost your company output.

Setting up an ODC is also a good option if your project needs specialized technical knowledge. You will need to put in the utmost effort to locate the ideal technical specialists for your tech industry.

Finding expertise in artificial intelligence, machine learning, data science, and cyber security can be challenging, particularly when creating sophisticated solutions.

An offshore development center is composed of a sizable number of multifunctional teams with particular skill sets.

A data breach could have catastrophic reputational or financial repercussions if your project involves a sizable amount of sensitive data, such as personal and financial client information.

The Offshore Development Center approach may be preferable to alternative outsourcing choices if you have delicate security issues as well as a project which requires strong cybersecurity staff.


Offshore Product Development: Does It Work

Offshore Product Development: Does It Work

To facilitate offshore development, a business can establish a representative unit and then engage its own IT personnel.

The offshore code teams work under the same name and adhere to the same business rules. For instance, the offshore IT specialists perform essential functions and provide value on par with any in-house staff.

This team often consists of technical writers, web and UI/UX designers, back-end and front-end developers, QA engineers, and software engineers.

Leaders of teams are also typical. The offshore teams roles and organizational structure are decided by the central office.

Not stating that operational staff is no longer needed for dedicated offshore teams. A local service provider can handle all other tasks, including accounting, payroll, and legal support.

You can also get legal compliance assistance and advice from nearby suppliers on how to conduct business abroad.


What Do You Need To Set Up Your Offshore Development Office?

What Do You Need To Set Up Your Offshore Development Office?

It is obvious that moving a piece of your business overseas is responsible. Lets look at a few scenarios when the outsourcing approach might be your best bet.


How To Scale Your Team

The offshore product development center might be a tremendous opportunity for established technology enterprises.

With limited resources, it can be challenging for well-established technology companies to grow and scale in new areas.

A lot of large, international technology firms, including Reddit, Oracle, BigCommerce, and Oracle, chose to employ dedicated offshore developers.

They were able to boost IT delivery and develop their internal capabilities as a result. dedicated development team


Specialists With A Narrow Expertise

If youre a startup creating a cutting-edge product, you could need engineers with specialized skills. Finding qualified specialists locally can be challenging; thus, looking for offshore software developers can be more advantageous.

You may do this to access the top talent throughout the world. Globally known businesses like Grammarly, ThredUP, and Dotmatics turned to Romania, Ukraine, and Poland for offshore coding because they couldnt locate the qualified software engineers there.


How To Lower Your Operational Costs

One of the highest-paying professions in the world nowadays is software development. This explains why its simple to find engineers in the West.

The offshore sector is renowned for being cost-effective. This implies that hiring workers who are paid less can help you save money.

Your operational costs, such as those for office rent, maintenance, and technical equipment, can also be greatly reduced.

After that, you can use your savings to purchase what your company now needs.


Focus On Your Product

Software development outsourcing has several advantages for outsourcing teams. The ability to concentrate on important business activities is the major one.

You can utilize this model to lessen your daily stress. Imagine a professional service provider from abroad handling routine chores like payroll and hiring.

You can autonomously manage your offshore development staff and oversee the business expansion.

Right, it sounds appealing.

Read More: Hiring dedicated offshore developers 3 models


How Do You Set Up An Offshore Development Center

How Do You Set Up An Offshore Development Center
  1. First, think about the vision and also needs of your company and the scope of the project.
  2. You should choose the best location. Not only the country but also the area in which you would like your nearshore/offshore team to operate in the upcoming future.
  3. You can do extensive research on the portfolio and past projects to find the right offshore development company.
  4. Choose the ODC model that you would like to implement
  5. Based on the projects requirements, you should start hiring. The requirements should be fully understood by your vendor. This includes technical knowledge, soft skills, and skill sets. Users will be able to research the greatest pros on the market for employment now.
  6. You will need to find an office space that has all the necessary amenities to set up your business quickly.
  7. Create a structure to enable efficient operation and effective communication among the offshore workforce.
  8. Seek legal advice and ensure that you are getting the best terms possible.
  9. Consistent communication is essential to overcome bottlenecks at all stages of development.

Offshore Developer: Benefits For Companies

Offshore Developer: Benefits For Companies

You may be interested in learning more about the benefits of opening a new foreign software office. There are many other benefits to opening a foreign software office beyond cost savings and accessing a pool of experienced software engineers.

  1. Your Branding.
  2. Secured IP Rights.
  3. Engineers who Are Committed.

Tech companies must be able to market themselves in a new market. This enables you to adapt your corporate policies and hire IT specialists directly into your business.

Employer brands that are strong help software companies find people more quickly and easily. Without the need for middlemen, an offshore team of developers can work at your office.

With both the offshore product development center, you have a lot of freedom. Working under your brand will provide you with complete control over your team and the technical business process outsourcing service.

Your product development is private, and nobody else has access to it. Your rights to your intellectual property are less in danger as a result of a special technology stack by an offshore development team.

Direct management of the team can improve engagement. If you look after your offshore workforce as well as your inside employees, youll gain a strong dedication from them.

Eastern European software developers are enterprising and enthusiastic about fostering startup culture and business growth because of cultural differences in European programmers.


The Main Challenges In Offshore Software Development

The Main Challenges In Offshore Software Development

Quality Of Hiring

Offshoring gives you access to the global talent pool, but it also introduces additional difficulties for efficient hiring.

Because the labor market and laws in a foreign country are different from those in your own, you can find it challenging to get around there.

It is crucial to work with a qualified recruiter.

If youre thinking of outsourcing to Eastern Europe, dedicated developers of Developers.dev can help with full-cycle IT recruiting.

While our market researchers conduct market research, our team of recruiters conducts - tests assignments, job interviews, requests references, and more.

Out of a wide pool of applications, we only pick the best ones. With a Resume pass rate of 80%, our clients hire 4/5 of the prospects we submit.


How To Attract Talent

Keep in mind that not only is the employer responsible for deciding whether or not to offer the job, but so are you.

An offshore developer might be turned down by your company if they have a contract. Offer rejections can result from ambiguous policies regarding sick days and working hours, as well as a restricted social package.

What will land you the job is a competitive wage. The compensation range you should be provided for each position should be based on the median wage in the local IT sector.


Employee Retention

When you have attracted the top talent in your offshore country, you must engage them. It is challenging to manage and monitor the mood of a remote software development team.

Your local team leader can support you in this. In addition to managing everyday responsibilities, this person will support the growth of your software engineers teams personally which have engineering skills.

The keeping of this is essential.


Legal Concerns

Confidential information about each IT companys product is available. Some of this information should be shared with international coworkers, but you must guard against leaks by employing non-disclosure agreements and other qualified consultations.

Its possible that intellectual property is not as safe as you assume. My group suggests that tech firms directly hire coders and draft a number of NDA agreements.


Offshore Programming: Risks For Businesses

Offshore Programming: Risks For Businesses

Although there are many advantages to having research and development centers overseas, tech businesses must take the following crucial factors into account.

These sneaky traps can be challenging to avoid, but if youre watchful, you can easily notice them.

  1. Services Scattered.
  2. Recruitment With A Drawn Out.
  3. Vague Pricing.

Only a small number of service providers fully support offshore development centers (ODCs). This would entail that you would have to seek advice from various accounting firms, law firms, and financial experts, all of which might have varying perspectives.

Hiring a service provider with extensive experience in operating management and a focus on technology will help you prevent this.

Many experts will be on hand to assist you in identifying the optimal option for your business and valuable asset.

It can be challenging for country managers in charge of QA and offshore product development facilities to find IT expertise rapidly.

This could be due to ineffective or incomplete vendor recruitment services. You will be able to reduce risks and hire faster if you have a competent agency that has defined KPIs, commitments, and guarantees.

Flexible pricing models will make offshore coding more cost-effective. You ought to be able to choose the services you require and just pay for what you really utilize.

If your invoice lacks comprehensive cost information, switch your offshore service provider.

Get a Free Estimation or Talk to Our Business Manager!


Things CEOs Should Do To Reduce Risk Before You Start Offshore Development

Things CEOs Should Do To Reduce Risk Before You Start Offshore Development

When beginning offshore software development, you must consider every aspect and follow the best practices. The first nine items on your list should be these:

#1. Choose an offshoring location. Offshoring teams with opposing values can lead to multiple misunderstandings or conflicts.

#2. If you intend to conduct face-to-face meetings frequently, take into account the size of the nation. Due to different time zones (time difference), it could also be challenging to keep track of and coordinate with your coworkers activities.

#3. The prospective offshore IT market can be researched. Additionally, discover if there are any conferences or events planned for it.

#4. You should research the location of your partner before you make a decision. Clutch, for example, is a great place to look for this kind of information online.

#5. Pay attention to hiring skills in technology and hiring speed. Ask how long it takes them to fill your vacancy and what their hiring process is like.

#6. Make sure you comprehend your cooperation model well. Its preferable to be transparent about your participation in the hiring, team management, and wage negotiating processes.


ODC Vs. Outsourcing

ODC Vs. Outsourcing

Offshore development facilities and IT outsourcing are frequently contrasted. Tech corporations use these two polar business activities when they relocate offshore.

Whats the distinction?


Mindset

Product firms are typically where software engineers who are really passionate about their work. As opposed to outsourcing, offshore team models give engineering management the possibility to contribute to the IT product.

With a product mindset and a willingness to put more effort towards their job, this approach draws IT specialists.


Prices

Outsourcing your code can save money if your project wont grow soon. For large-scale projects, having your own offshore development center is a fantastic choice.

Offshore product development process facilities can offer a substantial return on your investments over time but only require a minimum initial investment.

Its uncommon, but outsourcing companies are renowned for their pricing transparency.


Team Management

The service provider will manage the team of developers you hired outside the company in the recruitment process.

The team is not directly under your control as a client. Employees may be moved around and assigned to other high-quality projects at the discretion of outsourcing companies.

This is not how an offshore partner operates. The squad just has you as an employer.


Talents

Software experts with expertise in the field are eager to concentrate on one product. They dont want to work on numerous projects with overlapping scopes of work.

For talented developers, a product company offers a variety of opportunities. They see the potential to improve their tech skills and share their knowledge with other tech-savvy professionals.


ODC Vs. Other Engagement Models

ODC Vs. Other Engagement Models

Since software outsourcing is the most popular, Ill evaluate various engagement models, including offshore product development, assembling a team of specialists, and outsourcing software projects.

Tech businesses use all of these models, but they all provide distinct outcomes:

Project Outsourcing: Itis a cost-effective and reliable option for IT firms that wish to test the waters first.

A Dedicated Team: Itis employed by product tech businesses when they have faith in the effectiveness and viability of conducting business practice in an offshore nation in detailed proposals.

The business owners recruit coders from outside employment firms and only occasionally use engineers.

Build-Operate-Transfer (BOT): It is a more profound engagement model that is similar to offshore software development.

To do this, you must engage in a contract with a local vendor who will construct, run, and subsequently transfer to you a software-development facility.

In terms of knowledge transfer, including people transfer, BOT is not yet ready for the big time and presents numerous hazards.

Offshore Product Design: Itis the most sophisticated choice that supports freedom and adaptability.

Software engineers can be directly hired from your business for an entire project, giving you total control. Additionally, flexible pricing is offered.

The main challenge is operational management, but a dependable partner may assist you in overcoming it so that you can concentrate on your IT product.


Making Mistakes When Launching Your Own Business Offshore Development Center

Making Mistakes When Launching Your Own Business Offshore Development Center

When establishing an offshore product development unit, numerous factors need to be taken into account. Your foreign development centers debut may be challenging as a result of these crucial errors.


1. Involve A Number Of Employment Agencies

Tech businesses frequently work with many agencies at once to streamline the hiring process. This is a poor tactic because applicants could receive the same interview invitation more than once.

This could lead to unsuccessful recruitment efforts and harm the reputation of your company.


2. Neglect Employer Branding

Whenever they enter the new employment market, many business executives neglect to market their organization. Candidates may reject you as a result of this.

The easiest approach to avoid this issue and speed up hiring is a short employer branding effort. Promote your business as a fantastic place to work to draw in additional talent.

Its crucial to understand that the IT community must be the target audience for the offshoring employer marketing campaign.


3. Leave Office Location Information Out

You shouldnt allow a wide range of work or a breathtaking view to cloud your judgment. Prior to signing a contract, its critical to pay attention to key characteristics like soundproofing, sunshine, air conditioning, and 24/7 access, as well as other crucial elements.

Work closely with a real estate manager to make sure all the details are accurate.


4. Company Rules That Are Not Adaptive

While your companys HR policies may be effective for internal teams, offshore software engineers who are situated in a nation with its own labor laws and holidays may not be covered by them.

Be adaptable and discuss choices for vacation and days off with your outsourcing crew.


5. No Agreement Regarding Intellectual Property

Its crucial to sign a non-disclosure agreement even if your team of engineers is reliable. Companies that deal with intellectual property must make certain that they are aware of their legal rights.

IT experts can assist you in drafting a thorough agreement that will stop the leakage of sensitive data.

Read More: Useful Tips And Tricks On How To Hire Offshore Software Developers


Your Offshore Team Eastern Europe

Your Offshore Team Eastern Europe

There are many offshoring destinations around the globe. Eastern Europe is the heart of emerging IT countries. There are more developers in Eastern Europe than ever before.

This region is home to some of the most attractive destinations for foreign investment, including Romania, Poland, and Hungary.

Why are there so many tech corporations setting up offshore development companies in this region? Because of the vast talent pool, which includes over 1,000,000 software developers, an ODC was built in Eastern Europe.

In this area, Poland holds the top spot (430K), and Romania is in second place (140K).

More than 300 universities in Eastern Europe also provide top-notch STEM education for the rising number of graduates in the tech sector.

Numerous prestigious universities throughout the world offer IT specialists who can grow in their jobs swiftly. A wide range of disciplines, including e-commerce and artificial intelligence, are accessible to software developers.

Numerous Silicon Valley firms and international ranking organizations, such as SkillValue as well as Harvard Business Review, have lauded the technical proficiency of Eastern European hire dedicated programmers.

In addition to being a technical powerhouse, local developers excel in soft skills and English language proficiency.

They have a solid sense of the importance of work ethics and an entrepreneurial perspective. Eastern European engineers are proactive and demonstrate a strong desire to grow personally.

These benefits are financially advantageous and include reasonable pay, a business-friendly environment, and low tax rates.


Developers.dev Is Your Trusted Partner

Developers.dev Is Your Trusted Partner

An offshore product development branch is the ideal answer for businesses wishing to stop outsourcing. The modern alternative to traditional outsourcing is a software branch abroad.

It provides both protection and freedom. You can benefit from our relationship by setting up your own offshore software development company with Developers.

devs assistance. Individualized services, if you cooperate with us, our team can follow these offshore development stages:

Get Started With Recruitment: Our team, which consists of more than 40 IT recruiters and researchers, will select the top prospects.

Developers. Developer headhunters use a private database with more than 200,000 developers. We commit to hiring.

Locate An Office: For your business, the company is searching for IT talent. The hunt for office space for future staff will be started by our real estate managers or other project managers.

You must choose the site, parking, security setup, and office design. We can also assist you in setting up a remote office and supporting infrastructure for your programmers in Eastern Europe.

Get Legal Support: Important contracts like SLAs, NDAs, or lease agreements can be signed with the assistance of our attorneys.

You will only pay a 5% tax if you decide to start an offshore business in Poland to develop software. If they work under a B2B contract, Polish programmers are paid between 8.5 and 12 percent.

Your income taxes in Romania will be exempt for the first ten years if you form an ODC.

Developers. dev can assist you with tax preparation, tax law, M&A support, and tax planning in any jurisdiction.

Get Procurements Done: In order to furnish your new workplace, we can assist you with furniture selection and IT infrastructure setup.

This covers software, servers, security measures, and internal messaging. Everything is required to launch a prosperous offshore software development firm in Eastern European countries on business day for an offshore R&D center in the tech market by senior engineers or skilled software developers.

Recruit People: When you have chosen the top offshore software developers, you are prepared to offer employment.

Finally, the hiring process for your offshore development companys initial staff members has begun.

Payroll Organization: Your foreign software centers success depends on operational management. Payroll and accounting are included.

Our staff will take care of health insurance payments, leave requests, and money transfers from the offshore product development unit to the corporate office.

After considering all the benefits, an American business that creates AI platforms for B2B sales(platform for sales team) contacted our team.

The business had to set up an offshore R&D facility in Eastern Europe. However, they began collaborating with several providers at once, which slowed down the debut.

Within four weeks, our team was able to locate a suitable office and, over the subsequent months, hired more than 25 developers.

Additionally, we offered comprehensive operational support, including help with financial and legal matters.

Get a Free Estimation or Talk to Our Business Manager!


Final Thoughts

Offshoring is a wise corporate move for a variety of reasons. However, there are particular difficulties specific to offshore software development.

Its critical to balance the positives and negatives. You can only develop a cost-effective approach after that or cost reduction or other price model.

Our group will assist you in maximizing an offshore model. You can get all the assistance you need from Developers.

dev to turn Poland, and any other country across Eastern Europe, into a top-notch outsourcing site. With our full backing, you may combine all of these activities to establish your own R&D department.

We provide a flexible working arrangement that enables you to pick the additional services you want from a dedicated software development team and other services for startups.


References

  1. 🔗 Google scholar
  2. 🔗 Wikipedia
  3. 🔗 NyTimes