How to setup a Dedicated Offshore Development Center in India?

How to setup a Dedicated Offshore Development Center in India?
blog-author Robert 15+ Years of Exp. Team Leader

The worldwide economic crisis, as well as the widening gap between opportunities and available IT expertise in Western countries, has boosted the growth of Offshore Development Centers (ODCs). According to a recent Deloitte study, 59% of countries globally choose to outsource their requirements to India. The reason for this is probably a large abundance of tech talent in India. A reliable offshore software development center has a dedicated team of software engineers that take care of your project management needs. Scroll ahead to learn more about the dedicated offshore development center model and choose the best foreign country to start your own ODC.

What is an Offshore Development Center (ODC)?

A dedicated offshore development center is an extended, skilled, and integrated overseas workforce comprising skilled offshore developers. This dedicated in-house team is usually headquartered in a foreign or offshore country and provides assistance to the company on the basis of sound technical skills and following the best practices pertaining to the use of the latest technologies. A dedicated offshore development center will function as a subsidiary (remote team) of a firm, carrying out certain functions. An ODC will hire dedicated developers, engineers, managers, designers, etc., to function as a separate arm of the company. Most businesses, regardless of their size, seek to establish an offshore development team in a location with lower costs, flexible engagement models, and reasonable local laws.

 

offshore development center
Source: Freepik

Difference Between a Dedicated Offshore Development Center and Outsourcing

Initially, it can be natural to confuse offshoring with outsourcing. Both have different meanings and as a business, you should know the main differences between the two.

The following table distinguishes offshore development and outsourcing.

Difference Between Offshore Development Centers and Outsourcing

Offshore Software Development Software Outsourcing
It implies setting up a development center in an overseas nation This term means hiring a vendor in your own country to meet project requirements
Comparatively low labor costs Medium costing and good for fixing projects at a brisk pace
The level of control is high due to the presence of a dedicated development center There are no fixed working hours or dedicated resources
Talent acquisition is under your control You have no control over hiring professionals
There is a comparatively high level of confidentiality There can be chances of data leakage if the outsourcing firm is not reliable
The overall process can be lengthy and expensive upfront Outsourcing is a quick fix for projects and does not demand a long development duration

 

Offshore Development Center Benefits

Offshoring your development process will always be a major business decision; thus, the advantages must be substantial and quantifiable.

1. Growing Talent

Growing Talent

Sangeeta Gupta, Senior VP, and Chief Strategy Officer, Nasscom, said in an interview with the Hindu, “The increasing pool of graduates coupled with a maturing talent ecosystem is helping the growth of digital talent pool in the country despite the churn for the right talent.”

India has risen to prominence as the world’s ‘digital talent nation,’ with Indian IT leading the way. The country’s IT industry employed more than 5.8 million people in FY22, with 1.6 million of them being technically skilled. So, the presence of skilled IT professionals with relevant technical expertise makes India a remarkable location to set up a dedicated offshore development center.

2. Expertise

Expertise

The emphasis in ODCs is on developing their hired talents’ abilities so they can provide the best solutions.

Indians have time and again proven their mark in software development and testing globally, and it is one of the most stable industries in the country.

In India, developers, testing engineers, designers, and support staff are mostly familiar with front-end and back-end development technologies, the latest programming languages, design tools, and testing tools needed to create cutting-edge software or mobile applications. In addition, the country has the necessary infrastructure to work on a top-notch software product with ease. So, setting up an Indian-dedicated offshore development center becomes an apparent decision. 

3. Costs

Costs

Software development mostly happens in major cities, and these metropolitan areas are notoriously expensive; therefore, salaries, rent, rates, and practically everything else associated with running a business are inherently expensive. Compared to these developed countries, India has a relatively cheaper cost of living.

On average, a skilled talent will cost around $60-$200 an hour depending on the requirement and then the additional cost for health insurance and traveling. Whereas in India, the average developer cost to hire dedicated developers is significantly lower, even in tech-focused cities like Bangalore.

Besides the cheaper living cost, India is also cheaper to build infrastructures, and since many Indian ODCs rely on remote talent, it is even cheaper to set up a dedicated offshore development center in India. Managing remote teams has never been easier. You can communicate with anybody, anywhere, and at any time of day with instant messaging and video calling applications. Notably, you will have full control of the operational management and receive the service of skilled software developers without much hassle.

Your team in India will deliver excellent work at a lower cost leading to a steep growth in revenue, and with the expenses down, your profits are bound to shoot way up.

Challenges That You Can Face While Setting Up an Offshore Development Center in India

Before embarking on the journey to set up a dedicated offshore development center, it is crucial to understand the problems that you need to overcome. Here are some of the main pointers that you should consider before you build an offshore team in India:

  • Cultural Mismatch: India is different from the Western world. Cultural differences can have an impact on obligations, outlook, and authority. So, choosing an offshore development center partner with experience working with clients from the West becomes crucial to negate this challenge
  • Collaboration and Communication: Digital solutions like MS Teams have improved the global communication scene to a great extent. Still, you can never guarantee a seamless flow of messages due to technical challenges at the offshore site. You can overcome this issue by evaluating the infrastructure of your desired Indian IT vendor
  • More Available Options: The Indian IT sector has several trustworthy offshore development companies. So, choosing the most appropriate partner for long-term association can often become complicated. As a solution, you can assess the portfolio and nature of communication to select the most suitable vendor
  • Unclear Guidelines: In most cases, conveying all the desired information in the form of guidelines can be challenging. There can always be some missing information that can lead to project delays. Luckily, there is a solution. You can ask for the scope of documentation of your preferred offshore software development partner
  • Undefined Team Lead: A dedicated project manager for your offshore development center is significant. However, not every Indian service provider has an experienced professional who can document your project’s details. So, choosing a dependable offshore development partner becomes crucial to overcome this challenge

Overall, once you take care of these aspects, setting up your dedicated offshore development center in India becomes easier.

Offshore Development Center Models

An ODC (Offshore development center) is a flexible asset that can meet your business requirements profoundly. You can discuss the different working models of an offshore development center with the specific vendor. This section puts forth the standard ODC models.

Fixed Price

As the name suggests, you can decide on a fixed budget for a project with the offshore software development center. Such a model is called ‘fixed price.’

One of the most significant benefits of this working model is that you get a prior idea of the cost and duration of the project. However, you must be adept at defining the project scope and requirements.

On the downside, such offshore development center models lack flexibility. So, companies that require long-term project professionals must explore other options.

Temporary Contract

Temporary contracts have the following two main facets:

  • Time
  • Resources

Offshore development center services charge the client based on the project’s duration and resources. Such a model is helpful if your project scope is not well-defined.

The flexibility of the ‘time and material’ model is one of its most significant advantages. However, you need to monitor the expenditures as it is possible to overlook this aspect during work.

Build-Operate-Transfer (BOT)

Sometimes you want to establish an offshore development center in India or another booming location. In such a case, allowing professionals to source apt candidates and build the ODC is logical.

Next, the team operates and works on one of your projects. After satisfactory completion, you can take ownership of the dedicated offshore development center. This model is known as BOT.

Dedicated Team

The final offshore development center model type revolves around forming a specialized workforce. The dedicated team model considers your project requirements.

Consider this team to be an auxiliary support to your in-house staff. The choice of the offshore development center vendor has a significant influence on the success of this model.

How to Setup Your Offshore Development Center Services in India?

1. Clear Vision to Set Your Dedicated Offshore Development Center

Clear Vision

You must know why it is impossible to fulfill your software development requirements locally and what sort of skills you want before considering building an ODC.

Understanding your company’s and project’s IT infrastructure needs, as well as defining the ODC’s purpose, is the first stage in building up a specialized offshore development service.

Define your project’s goals: Do you need to create a new product, add new features to an existing product, or upgrade it to more advanced technology? What features would you like to add? Which technology would you like to incorporate? Is it a simple or complex development with constantly changing requirements? Sharing a more comprehensive and thorough vision of your new product assures that you are on the right trajectory. Notably, sharing the details on such large projects with the service provider can prove crucial for lowering development costs and improving the chances of success. As a result, it can be easier to set up your dedicated offshore development center confidently.  

2. Choosing the Right Offshore Software Development Center

Choosing the right ODC

When you have the project requirements in place, you can start looking for a suitable partner to help you with your project development. Do your homework, study what different organizations have to offer in terms of offshore product development services, and choose the one that gives you the best value for your money. Make sure the firm understands your requirements and provides an optimized roadmap.<

Even though India has developed several centers in the IT industry over the last two decades, there remains a huge discrepancy in the distribution of computer expertise. If you need a simple in-house IT team with basic coding language skills and expert developers for your project, a tier 2 city is a much more cost-effective option. But if your project is complex and requires a considerably larger team, then a Tier 1 city is your best option.

3. Hire Talent Personally to Set Up an Offshore Team in India

Hire Talent Personally

Outline the various professionals required for the project at different stages of development. It will assist you in determining the best mode of engagement with the hired team.

Your offshore development company will provide you with the portfolios of the software development team who are qualified for your project. Go over them and make an appointment for the interview. To analyze the experts’ abilities and talents, ask as possible you can.

4. Manage Time-zones Differences to Leverage Your Dedicated Offshore Development Center 

Manage Time-zones Differences
One of the most significant challenges organizations face when establishing a virtual office in India is the time zone difference.

Determine meeting times that are appropriate for the team, i.e., the team’s local time. Absences and undue strain on employees may result from working early in the morning or late in the evening. Also, keep in mind that restricting meetings/calls to vital and/or crucial topics allows developers more time to work on their projects.

Although Agile methodology is unconventional when it comes to dealing with time zones, you may use it to improve communication with remote teams, especially if you have many teams working on different product components in different locations.

Clear requirements and task assignments are essential. Because onsite and offshore teams frequently work with the same source code, a consistent version control system is essential, as it ensures that everyone provides adequate comments on the sections he or she adds. This way, you can set up an offshore team in India that will be convenient for your work timing preferences. 

5. Communicate Consistently with Your Offshore Development Center Team 

Communicate

Effective, constant, and regular communication is crucial to the growth of any team, particularly an offshore team. It is vital to establish an open-door policy when it comes to communication. This is critical when dealing with an overseas workforce to bridge the physical distance for both you and your offshore employees. Encourage team members to contact you with any questions or concerns they may have and pay carefully with what they have to say.

Conflicts of cultures are unavoidable. You’re dealing with people who have different beliefs and perspectives as they grew up in a different environment. Cultural differences should be addressed right from the start. Even the tiniest cultural variations may have a significant influence on your workflow, from fundamental politeness norms to professional ethics.
Thanks to the multitude of virtual solutions these days, staying in touch with your staff on a daily, weekly, or monthly basis is simple now. A weekly informal Zoom team meeting, a 10 min Skype catch-up, or a daily “huddle” may make all the difference. Staying in touch with your offshore employees, regardless of the technique you use, is critical to building a successful dedicated offshore development center. 

Best Locations to Start Your Offshore Development Center

With several countries across the globe, it can become daunting to select the most appropriate ODC location.
This section can help simplify this process as it includes several apt locations to start your offshore software development center. Refer to the table below.

Popular ODC Locations Across the Globe

Continent Country
Asia
  • India
  • Philippines
  • Vietnam
  • China
Europe
  • Poland
  • Hungary
  • Romania
  • Ukraine
  • Bulgaria

So, businesses in developed countries like the USA, the UK, and Australia can explore the above locations.

Choose Reliable Offshore Development Center Services Today!

An offshore development center in India might be the first step toward reaching your company’s full potential. A dependable and trustworthy offshore partner, like eLuminous, also a top-rated custom web application development company, can assist you in attracting the right personnel, technology, and opportunities, allowing you to create a dynamic, scalable, and efficient

So, contact us and initiate your vital task of setting up an offshore development center in India without delay.

Frequently Asked Questions

1. Can you create an essential checklist to find an ideal offshore development center?

To locate an ideal offshore development center, ensure that you cover the following aspects:

  • Global Research
  • Shortlisting prospects
  • Portfolio evaluation
  • Review analysis
  • Preliminary discussion
  • Project meeting
  • Resource allocation
  • Budget discussions
  • Finalization of ODC

2. How do you manage an offshore development team?

To manage an offshore software development center team, hire suitable team members, and adopt an agile methodology. Next, using hi-tech communication tools, encouraging a collaborative workspace, and avoiding micromanagement are valuable tips for managing such a team.

For more insights, refer to our blog on The Best Practices for Managing Offshore Resources.

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