Setting up a dedicated offshore development center is one of the most common approaches to working on a new digital product or modernizing the existing software. More and more companies prefer the offshoring model: offshore software development market size was valued at $122,257.5 million in 2021 and is projected to reach $283,457.5 million by 2030, growing at a CAGR of 10.13% from 2022 to 2030.
Such numbers are not surprising at all: compared with an in-house team, an offshore development center offers more cost-effectiveness, flexibility, and a wider scope of expertise. Plus, a software offshore team takes away the headache of managing the team and taking care of HR activities.
As good as it sounds, there are several nuances to take into account when setting up an offshore development center setup to ensure smooth and resultative collaboration. Let’s take a look at those.
This article describes the benefits and challenges of setting up an ODC as well as walks you through all the steps to hiring offshore developers.
What is an Offshore Development Center?
An offshore development center is a development team located abroad that assists a company with its technical tasks. Usually, companies select a dedicated offshore development center in a country with a high technical expertise level and lower cost of living to reach a good balance of high service quality and cost-effectiveness. One such country is Ukraine, where you can partner with a dedicated development team with experienced specialists at and reasonable cost.
How Does an Offshore Development Center Work?
So how to set up an ODC? Usually, a client contacts an offshore software development center from abroad for a certain scope of work, like developing a mobile app or modernizing existing software. Plus, companies can also receive long-term assistance with the maintenance of a product.
In most cases, there is a dedicated offshore development team working on a single project at a time. A project manager is there to organize the work, assist with any process nuances and answer all the client’s questions. Additionally, a dedicated team can be an enhancement to the in-house employees and collaborate with them on a daily basis to develop new products or improve the existing ones.
Dedicated Offshore Development Center vs Outsourcing vs In-House Team
An offshore product development center is an alternative to outsourcing and in-house software development. What are the differences between these approaches?
- A dedicated offshore development center is a set team from abroad that works on your project, often from the beginning to a polished final product. An offshore development office can be either an extension of your in-house team or work independently.
- Outsourcing is similar to a dedicated ODC but with a less level of involvement. It can be either a complete team or just one specialist that you need at the moment. Plus, an outsourcing company doesn’t necessarily have to come from a different country, it can be located even in the same city.
- An in-house team is made up of all the specialists who are working permanently for your company. While having an in-house team is necessary for certain long-term tasks, it takes more financial and organizational responsibility from you to keep a pool of specialists in the company.
These are the three main approaches to software development. Each one has its pros and cons; for now, let’s focus on the offshore development center (ODC) and discuss how to build an offshore development center.
Guide to Set Up Dedicated Offshore Development Center: 5 Essential Steps
Offshore development center implementation is a straightforward and painless process if you collaborate with an experienced provider who can effectively set up a dedicated offshore development center for you, from gathering requirements and signing contracts to integrating the finished product into your digital ecosystem.
We will now walk you through a guide on offshore development center setup, so you know what to expect after contacting a vendor.
1. Understand your scope of requirements
Your first task before starting the search for a dedicated offshore development office is to clearly define the desired results of your collaboration. Project requirements are all the parameters important to you when it comes both to the development process and the final software look and feel.
Examples of product requirements can include
- Product’s feature set or separate features
- Scope and type of services. Do you need an MVP in mobile app development, product modernization, or just UI/UX design?
- Performance capabilities. For example, consider how many users would access a product at once.
- UI/UX design preferences. You can provide the offshore software development company with wireframes, design guidelines, or reference materials for digital products you like.
- Compatibility guidelines. Think of which devices a product should run on, e.g. a mobile app only for iOS or for both iOS and Android.
- Security restrictions. Some industries, like fintech and medtech, have additional security requirements. Plus, there are generally recognized data protection regulations in each region, like GDPR in the EU.
- Integration with existing systems. If you already have some software or data, the team of offshore developers can integrate a new product seamlessly.
- Language and region support in the product. Decide which markets are you targeting as it will influence the content languages, legal requirements, and even UI/UX guidelines.
- Need for product deployment and maintenance
- Budget and timeline restrictions
Don’t worry if you don’t have all the answers and cannot provide detailed product requirements: a reliable app development team, like Perpetio, can assist you with drafting the product vision and deciding on its parameters so that it meets your business goals and users’ desires.
2. Select an offshore vendor’s location
After you clear out what kind of software development request you have, it’s easier to find an offshore partner who can help you create exactly the product you need. It’s best to start the search by narrowing down the suitable ODC locations.
There are several factors to consider when choosing an offshoring country for your project. These include
- Languages you and your team are comfortable communicating in
- Region’s work ethic standards and cultural integration
- Time zone differences
- Offshoring destination’s reputation and development expertise level
- Past client testimonials
- Cost of living and wages level in a potential destination
- Region’s technology infrastructure
- Location’s data security regulations and reliability level
By evaluating the possible destinations using these points, you will likely end up with several options to choose from. Among popular choices for starting offshore software development are Ukraine, Poland as well as some South American countries, like Argentina and Brazil.
3. Consider your budget
The amount you can spend on offshore development services also influences your options. For many companies, the cost-effectiveness of hiring dedicated offshore developers is one of the main factors that motivate them to choose this approach.
Many offshore development destinations have considerably lower costs of living and wage levels compared to the US or some parts of Europe; that’s why it makes sense to look into the offshore IT market for more practical software development collaboration options.
At the same time, the offshore development center cost depends not only on its location but expertise level, company size, and positioning. That’s why when selecting an offshore team, you need to consider your budget limitations too and ask around for quotes from several vendors.
4. Choose an ODC model
The offshore development model comes in several shapes, depending on your project size, the scope of services, and business needs. Some of the possible models of offshore development for your company include
- A dedicated team model is when a permanent team with a project manager on the provider’s side works exclusively on your project.
- A time and materials model is when specialists come and go on the project depending on the tasks at a particular time. This approach gives you more flexibility as you might need only a developer to work on the product at a time but can hire a product manager or a tester later on when a need arises.
The choice of a model depends on your project type; for example, projects from scratch require a dedicated team for continuous and well-arranged work; at the same time, a time and materials model works better for updating existing products or seeking out enhancement for an in-house team.
5. Create an offshore development center checklist
After you have considered all the critical nuances for your perfect offshore programming team, collect these in one checklist to compare the candidates. While evaluating a certain company for your project, you can assess their skills, organizational questions, pricing, and cultural fit based on a pre-made checklist.
We prepared a vendor selection checklist to help you make an informed decision. By answering questions in each of the 10 points, you will be able to understand how good of a provider you are dealing with. You can find the checklist at the end of this blog post.
This is a short guide to set up dedicated offshore development center. By following our recommendations step-by-step, you will be able to select a team that matches all of your business and organizational requirements.
Benefits of a Dedicated Offshore Development Center for Your Business
60% of US businesses are outsourcing at least part of their development in 2023. That’s quite a big number but there is good reasoning for it: outsourcing, and especially offshore development center infrastructure setup, brings several benefits to businesses of all sizes and domains. Let’s take a closer look at why collaborating with an offshore research and development center is a good idea.
Lower development cost
We will first address the elephant in the room: offshore software development is commonly more affordable than hiring people in your in-house team. Consider this: recent research states that the cost of completing the software development project on-site is around 60% higher than doing the same project at an offshore facility.
As we have mentioned above, the reason for that is the difference in the regions’ costs of living and compensation levels. For many companies, it makes sense to get development services from a foreign team with a similar or higher expertise level for a lesser price.
For example, you can hire middle- and senior-level developers in Ukraine with English proficiency and high work ethics for the same budget as you would hire a junior-level team in the US.
Scalability and flexibility
One of the key advantages of hiring an offshore development team are its scalability options and the ability to adjust resources according to project needs. Whether you experience sudden spikes in workload or require additional expertise to tackle a growing project scope, offshore teams can readily adapt to accommodate these changes.
You don’t have to go through a long and expensive process of hiring more people in-house only to later realize that the job is done and there is no need for so many specialists anymore. Your offshore development team can assign more people for some time and then carry on with a smaller team as the volume of work go down.
Access to a wider pool of talents
Instead of being limited to the experts currently available in your local market, you can discover talents from remote locations who might have more specialized experience in your domain and preferred tech stack. Let’s be real, it’s not always possible to get a perfect match of a developer currently available for a short-term project with experience in particular frameworks and a background in, let’s say, donation app development.
Don’t settle for less and get rid of the demands from your checklist; a better idea is to look for offshore development companies that specialize exactly in what you need and are available immediately.
No team management from your side
Hiring people in-house is time-consuming and takes a lot of resources from your company. Plus, of course, you need to take care of all the HR, legal, and management aspects of having a full-time or even part-time employee on your team. Sometimes it’s simply not worth it, especially if you need to complete a new product or get some updates as these are short-term projects lasting a maximum of one year.
Alternatively, you can create an offshore development center where your management responsibilities are minimized: the vendor takes care of hiring, setting up a functional mobile app development team, providing employee benefits, signing contracts, training and onboarding, and managing any conflicts.
Technical and business consulting
One more advantage of offshore development strategies for tech businesses is that software development providers usually have extensive experience with a variety of technologies and niches. As a result, they can consult new clients on the best strategies for developing a competitive and effective digital product.
For example, we at Perpetio specialize in mobile and web development in such niches as fitness and wellbeing, on-demand services, travel, e-commerce, and e-learning industries. We even made an AI selfie generator! We provide free business and technology advice to all of our clients to help them build a profitable product based on our experience with similar projects, technical expertise, and deep understanding of digital business models.
Faster development process
One more reason to consider offshore coding services is that the offshore development center setup process will move forward faster through all the stages of app development as compared to building an in-house development team from scratch. The offshore vendor’s team members already worked together and have well-established processes and positive team dynamics. With a project manager engaged the work moves faster as there are set procedures for managing client requests, processing tasks, conducting performance evaluation, and resolving bottlenecks.
Challenges of Setting Up a Dedicated Offshore Development Center
A decision to set up an offshore development team indeed brings numerous benefits to businesses as it saves budgets, speeds up the process, and introduces an extra level of tech expertise. At the same time, there are certain red flags to look out for in the potential vendors so that your offshore team hiring process and collaboration go smoothly and more fruitful.
Communication gaps
If the team’s English or other communication language proficiency is not at a sufficient level, it might be hard to build working communication strategies and give or receive feedback. Misinterpretations of requirements, unclear instructions, poor time zone management, and language barriers can hinder progress, leading to delays, rework, and even compromised quality.
At Perpetio, we value open and transparent communication. That’s why every team member has a voice in the project and can communicate with clients directly. English proficiency is one of the compulsory tests in our hiring process. All our employees speak at least an intermediate level of English.
Level of involvement and control
When working with a remote team, clients may feel a loss of direct oversight and control over the project's progress. This can result in concerns about the team's ability to align with their vision, adhere to project requirements, and deliver desired outcomes.
Our teams at Perpetio realize that we are building products for our clients, not ourselves. So, no matter our personal preferences, we can only give recommendations based on our experience but the final word is always the client's.
Plus, we share access to all the collaboration tools, like Jira, and regularly send progress reports to the clients. Of course, we also have daily or weekly meetings with the client’s representatives and are ready to answer any questions through messaging.
Security measures
Clients often have valid worries regarding the legal considerations of protecting their intellectual property and sensitive data when working with remote teams. At Perpetio, we prioritize risk mitigation and address these concerns comprehensively. We enforce strict security protocols and ensure that all client information remains confidential and secure throughout the collaboration. We sign a contract and NDA with each client outlining the protection of their data and product rights.
Unlock Success with a Reliable Offshore Development Partner
Perpetio is a reliable partner that meets key criteria for successful collaboration. Not to brag, but we are checking all the ticks on a checklist of success factors for an effective offshore development collaboration. See for yourself:
- Diverse team composition with extensive industry experience
- Tailored services in mobile app development, web development, UI/UX design, and quality assurance
- Located in Ukraine with access to a large talent pool
- Competitive pricing
- All the specialists have at least an intermediate English level proficiency
- Free business and tech consulting
- Flexible payment options
- Several collaboration models
- Favorable time zone overlap with the US and Europe
- Contract and NDA provided
- Ongoing support from your personal account manager and project manager
- Proven track record of successful projects
- Effective communication and problem-solving skills
And most importantly, we care about your success. We want to see your product on the top, it’s not about writing lines of code for us. That’s why our services are more than just development: we take a comprehensive approach and are not shy to offer our advice.
Experience the benefits of partnering with us — explore our services and let’s discuss your project requirements.
Summing Up
A dedicated ODC offers numerous benefits for companies seeking to build new digital products or enhance their existing software. The offshore software development market is growing rapidly, driven by factors such as cost-effectiveness, flexibility, and access to domain-based expertise. However, it's important to navigate the nuances of offshore collaboration to ensure a successful partnership.
Perpetio, an experienced offshore software development service provider, offers assistance with creating a variety of digital products, such as mobile apps and web solutions. Contact us and let’s discuss how we can help you!
FAQ
What are the key steps involved in building an offshore development center?
The key steps involved in building an offshore development center include defining project requirements, selecting a suitable location, setting up infrastructure, hiring skilled professionals, and establishing effective communication channels.
How can I set up an offshore development team effectively?
To set up an offshore development team effectively, you should carefully define project goals, establish clear communication protocols, choose the right talent through a rigorous hiring process, provide proper training and support, and foster a collaborative work culture.
What is the concept of an offshore development center (ODC) and how can it benefit my business?
An offshore development center (ODC) is a dedicated facility located outside the home country that provides software development services, and it can benefit your business by offering cost savings, access to a larger talent pool, increased productivity, and round-the-clock development capabilities.
What factors determine the cost of hiring an offshore developer?
The cost of hiring an offshore developer is determined by factors such as the developer's skill level and experience, the complexity of the project, the location of the offshore development center, and the duration of the engagement.
Just as we promised, here is a free offshore development vendor selection checklist! By evaluating the 10 points and answering questions we provided for each of them, you can understand how well of a fit a software development provider is.
Not a member? Subscribe to our blog to get useful resources and our insights for free!⬇️
Consider these 10 points when evaluating your potential offshore software development partner:
