In this article, we are going to cover the key points revolving around the ODC model; we will also tackle the main concerns about the risks and benefits associated with this model, highlighting its key pros and cons.
The decision to set up an offshore development center is a good strategic move for companies striving to expand their production with a reasonable amount of company resources. It is an ideal option for those that are looking to reduce time to market and attract advanced specialists to the project. The model is designed with clients in mind, whose strategic goal is to empower their own development department by supplementing them with experts from an external partner. It is then important to summarize why ODC is so popular and what drives the decision-making process of entrepreneurs choosing no other than this offshore model.
Establishment of offshore development center (ODC)
Companies that look to keep development costs to a minimum and hire advanced engineering teams with wise resource distribution oftentimes look no further than the offshore development center model. It lets you benefit from advanced expertise in another country, and about 40% of our clients already use this model. As a customer, you create it by hiring sub-developers overseas and treating them like they are your employees while another company hosts and manages that for you.
When you establish an outsourcing development center to build software solutions, you immediately get a pool of experts in your field – graphic and UX/UI designers, front-end and back-end developers, mobile developers, QA engineers, a scrum master and a project manager who leads your project, controls the team and keeps you up-to-date with the pace of progress.
The purpose of ODC is to supply stable and scalable technology support at reasonable prices. The customer holds complete supervision over the ODC interfacing with the development team member through the PM or without. The team, infrastructure, and processes are under the full control of the customer.
Benefits your business gets when it decides to go with an ODC:
GBKSOFT has more than a decade of experience partnering with global business leaders and supplying the best team with all the necessary specialists to build sustainable technology for various industry domains. Our approach is an excellent fit for complex and multi-layered projects.
- Our delivery team always conducts research and gathers all comprehensive info about the customer’s business, its strengths and weaknesses, key needs, and gaps to supply the perfect development team.
- Our experts select the top IT experts from our wide range of dedicated specialists, to craft an outsourcing development team that matches your project’s needs and seamlessly integrates into your organization. This enables you to meet any business objective with fast, effective, and actionable results.
- Professional participation in many projects enabled us to develop an incredible knack for recruiting exceptional engineers who build high-quality software products.
- All project activities are performed on the basis of the company’s offshore resources, from requirements preparation, solution architecture, analysis, and design to coding, testing, bug fixing, implementation, and support. The dedicated team model is most beneficial in cases where the critical factor of the project is its cost, and at the same time, rapid deployment of the solution is required.
- Project management and communication functions are assigned to the project manager who oversees project execution based on proven and well-defined templates and metrics. In some cases, we recommend that key representatives of the offshore team be present at the client’s site for a limited period of time in order to ensure their involvement in the project, exchange knowledge and establish the necessary level of trust between the company and the client.
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What problems can ODCs help solve?
The establishment of an offshore development center is beneficial for companies that want to launch unique tech projects and seek engineers with narrow, sophisticated areas of expertise. Companies that face the problem of quite limited resources and are unable to scale up and expand into new markets can benefit from ODC. Industry titans like BigCommerce, Oracle, and Reddit have also opted to benefit from hiring offshore developers.
It enables you to establish a strong position on the market with your own brand benefiting from the skills of developers under the effect of your corporate policies. It enables you to keep absolute control over the engineering process and minimizes the risks for invasion of your intellectual property rights.
|Signs to look out for showing that you need to establish an offshore development center||Problems the establishment of ODC solves|
|You have launched a voluminous and complex project and need many services.||Finding the needed experts locally is difficult.|
|Security sensitive software.||Helps reduce hiring costs.|
|Desire to gain access to and leverage expertise at a reasonable cost||Access to a scalable team in unforeseen situations.|
|You lack a team of professionals possessing skills in the needed tech stack||Team stability(mature operational processes), matching your tools and processes.|
|The team of such a dedicated center is fully integrated with the internal team of the customer, which is convenient if you are eying continuous cooperation with recurring development processes. This is a strategic choice for outsourcing.||Dedicated development centers created on the basis of reliable vendor resources operate with a high degree of autonomy, have their own physical space, networks, assets, security tools, and other resources at the request of the customer.|
Operational and legal risks of the offshore development center
Although setting up an offshore dedicated center may sound like a perfect alternative, it also has its drawbacks. The main issue being that there are certain operational and legal risks involved, which should always be taken into account by the company seeking the software vendor. There are certain critical points to consider while deciding to set up an offshore development center:
- You need to manage the team by yourself, organize them, choose tools, tech stack, source control, bug tracking;
- Steady workflows, budgets, and stability are all critical;
- Difficulties in finding a vendor with full expertise in operational management to have access to advanced specialists that will build the solution fully catering to your individual business needs;
- A competent service supplier with defined KPIs which will allow you to hire the specialists quickly with minimal risks;
- It may be challenging to choose the vendor that allows to compile the list of needed services and pay only for the things you need;
- Management challenge;
- Transparency and visibility in communication;
- Unrealistic expectations from the customer;
- Hold tech stack and methodologies;
- Budget overreach;
- No stated deadlines;
- Legal challenges.
However, while choosing our experts, you minimise all the risks, choosing a cohesive team with advanced expertise and rich practical experience. All the project processes are transparent and well planned out. We facilitate the project, helping you to save your time and money, with no requirement for you to be deeply involved in managing the team and hiring specialists, yet the results won’t suffer. We stick to all legal compliances and always sign non-disclosure agreements. Our team always has strict deadlines and guarantees accurate budget planning with no hidden costs.
The best proof of the trouble and hassle-free experience that GBKSOFT provides are the real client reviews:
It has been an absolute pleasure working with the team at GBKSOFT. We have never been blocked or impeded by their work. They operate efficiently and quickly to get the job done.
Ian Cash, CTRL Golf project
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The Difference Between Offshore Development Centers and Outsourcing
Many people struggle with finding reliable and experienced vendors to upgrade existing software solutions with new features, or for building solutions from scratch. The reason is that the modern market offers a variety of options, and it may be difficult to choose the best one in terms of expertise and price-quality ratio.
While analyzing and comparing the two options of setting up the offshore development team versus outsourcing to the existing one, let us examine the key issues and nuances that may influence the choice of the vendor.
- Offshore development teams are usually located physically far away from the client. The rapid pace of technology development enables them to supply the software virtually, thus reducing the cost (typically due to lower labor costs overseas), thus providing a better cost basis than their onshore counterparts oftentimes without necessarily compromising development quality.
- The idea of your own R&D center, as a rule, presupposes that these centers are located on the other side of the globe from the clients.
- Outsourcing is assigning a third party to a project and one party takes up the responsibility for the internal processes of another party. It pays no regard to location, while offshore implies the establishment of an inter-country arrangement.
- Offshoring or international outsourcing proves to be more cost and quality-effective than local outsourcing.
When it comes to setting up the ODC, it is more like a branch of an organization and is built specifically according to the customer guidelines. Unlike the regular outsourcing management where a third party controls all the processes, in offshore development center model – an executive of the client company manages all the processes.
More and more companies choose to outsource to dedicated teams or in-house teams rather than establishing an ODC since they gain access to a unique pool of talent and quality-price ratio vis-a-vis setting up an offshore development center from scratch.
- You as a client hire a few developers, and you do not even have to manage them, it is stable for them, and you can benefit from productive cooperation that boasts a good price-quality ratio.
- They may use your tools, follow your company philosophy and you can treat them practically as your own employees and educate them.
- They can accumulate a lot of precise knowledge about your product and client and the way you do business. It is a huge benefit that will be missed in case you chose another hiring model.
- No infrastructure costs are needed.
- You can choose each developer, make the decision about which one you want to interview, give them a test project, and go through a fairly ordinary hiring process. This kind of flexibility adds huge value.
- It allows developers to have the professional environment and infrastructure necessary to make sure you are working with a legitimate company that pays their taxes.
- It is a viable working model enabling to accelerate the development of large-scale projects.
- enables full operational control over the project allowing the rational allocation of time and resources.
- allows you to raise productivity since the developers will stay on the same project for a long time.
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Exist various billing methods used in ODC. Get to know more in the table below about the most wide-spread ones:
|POC (Proof of Concept)||This billing method is the best option for a customer requiring the demo version of the product, before implementation of the particular idea. It often includes POC of completion of modules.|
|Fixed price model||Here the key issues are predefined, including specifications, scope, documentation, deadlines and estimation.|
|Time and material||Nothing is defined clearly and can be modified. A customer can benefit from the flexibility and introduce any changes when needed. Billing is made one in a certain period judging from the specifications, tech resources and team size.|
Software vendor in Eastern Europe: real benefits and popular locations, budgeting
Choosing your tech vendor is a responsible task since you fully entrust the third-party provider with digitizing your business. The software supplier is fully responsible for the quality of the solution, thus business owners should approach this all-important decision carefully and meticulously.
More and more global leaders choose tech providers from Eastern Europe since it presents a unique blend of the most affordable, innovative products with excellent communication and transparency on the global IT market. Among the most popular outsourcing hubs are: Ukraine, Poland, Belarus, Romania, Czech Republic, etc.
According to Outsourcing Journal, Ukraine is now the number 1 digital, technology, and IT outsourcing destination in Central & Eastern Europe. Gartner named it in the top 20 offshoring destinations in the EMEA region, and PwC has noted that it’s in the top 25 IT exporting countries in the world.
Besides the above-mentioned benefits, you get:
- Access to unique talent hub;
- Leverage of the latest methodologies and models;
- Absolute English proficiency;
- Agile pricing models ;
- Cross-methodology tech solutions;
- Shared cultural heritage and outlook;
- IT experts who’ve earned university degrees;
- Convenient-enough time-zones and perfectly accessible locations.
Get more info on outsourcing to Eastern Europe in our extensive blog article. Discover the best partners and see the approximate budgeting here:
Price quality ratio and advanced expertise are the key drivers making company leaders take decisions to entrust their development to European companies. Here is the approximate table with the specialists’ rates and most popular experts hired:
The real advantage GBKSOFT has over its European counterparts
- Leading business practices;
- Credibility and reliability in the eyes of customers;
- Cross-industry wearables;
- Innovative business solutions;
- Wide domain expertise;
- Agile approach;
- Extensive involvement with IoT technology;
- The company offers all the resources and infrastructure to bring enhanced efficiency to your organization;
- Connect with the best developers in your sector;
- Allows saving about 40% of the budget on your software development project execution expenses saving more on infrastructure;
- Business development support with strategic planning support and scaling of projects;
- -Built-in network security;
- Tight deadlines that we are able to deliver under;
- Diverse tack stack;
- Ability to add the needed specifications on the go;
- Good matching on the skill level.
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Setting up an offshore development center is a tricky and challenging undertaking since it demands a serious approach, advanced management skills, the ability to choose a reliable vendor as well as gather the necessary tech team. Making a decision to outsource allows hiring a team of advanced experts together with the project manager (PM), who will maintain all the processes and manage the team successfully. Moreover, this cooperation model allows you to easily scale your team and keep up with the latest innovations at a good “price-quality” ratio.