It’s no secret that the demand for software development is increasing around the world. In today’s global economy, businesses must be more competitive, responsive and — perhaps most importantly — useful, which means getting better products to market quickly.

This rising demand has led to a huge talent gap in the western world, with US and Europe-based tech companies struggling to find high-quality talent to join their ranks. Offshoring is one strategy companies are using to sidestep this issue. A flexible approach to hiring, offshoring has been adopted by many of the biggest companies in the world, including Google, Amazon and Samsung.

There are three core models of offshoring: development team extension, dedicated development team, and offshore development centre. The latter is the best option for businesses that require a more long-term solution when scaling their development capacity. Offshore development centres, or ODCs, offer a more permanent solution for businesses without the high costs of hiring in-house developers. ODCs have become increasingly popular in recent years and represent the future of software development.

But what are ODCs, and how can they help your business scale its software development operations?

An offshore development centre, also known as an ODC, is a permanent office space used to extend or host a business’s development resource. ODCs are located in a different country from the business’s main office, acting as the main hub for its offshore development team. Rather than working remotely, these developers work alongside the rest of their team in a dedicated office space.

This office space is fully functional, offering the developers everything they need to manage their projects efficiently, including state-of-the-art technology, amenities and process support. An ODC is typically managed by a project manager who works closely with the company’s in-house team. Exactly which roles a business’s ODC comprises will depend on its output, but it may include developers, QA engineers, product managers, DevOps and other specialists.

If your business wants to expand its software development capacity quickly, you need an offshore development centre. This model of offshoring is the most efficient way to scale your resources while retaining your business’s identity.

An ODC allows a business to move a large percentage — if not all — of its software development output to a separate location where a dedicated team works solely on those projects. The ODC team can focus on long-term projects, providing stability and consistency throughout the project’s life cycle. If the business has retained in-house developers, this frees them up to work on the business’s core product or focus on innovation that supports the business’s growth.

Unlike traditional outsourcing models, an ODC is a direct extension of your existing business. When you outsource work to a development agency, you forfeit oversight and control. With an ODC, you retain ownership. The developers within your ODC are employed by your business and work under your supervision, so you retain 100% of the operational control of the project. A project or product manager within the ODC acts as your direct liaison, working closely with the offshore and in-house teams.

All in all, you need an ODC if you plan on executing a large quantity of software development projects but don’t want to hand over ownership to a third party. It’s an interesting avenue to consider if you want to explore new agile and low-cost options that engage with the best talent located overseas.

These are the top-level reasons why you need an ODC. But how do you know if building an ODC is right for your business and projects?

Is an ODC right for my project?

Building an ODC won’t be right for every business. It is possible that other models of offshoring, such as a development team extension, may be better suited to your business, team, and projects.

Here’s how to identify if building an ODC is the right choice for your business.

You have unique data security requirements

Not all projects are suitable for outsourcing. Data security is a particularly hot topic at the moment; while governments are becoming increasingly aware of the importance of data security, legislation often lags behind what is actually happening in the world.

When you hire a third party, such as a development agency or contractor, to execute a project, you need to share sensitive business and product information. Each additional party you share this information with increases the risk of data breaches. This is why it’s recommended you keep any sensitive or confidential information within your own four walls.

An offshore development centre is an offshoot of your company rather than an outsourced third party, so you have full jurisdiction over the level of security it operates under. In comparison, when working with a third party and its contractors, the security of the project is in their hands.

Offshore development centres provide your team with a dedicated and private work environment equipped with devices owned and operated by your business, so you retain full control over who has access to this space, these devices, and the software the team uses.

With your development team housed under one roof, it is much easier to execute an effective security strategy that doesn’t require multiple compliance offers to oversee adherence to best practices.

You focus on large projects

Dedicated development teams are best placed to manage short-term or small projects, as they’re designed to be flexible and agile. Long-term projects with more complex requirements require ongoing support; ODCs facilitate this support while offering opportunities to scale the team and its output.

You require niche expertise

One of the biggest challenges recruiters face in the tech space is finding talent with the right skills. Many projects require expertise beyond JavaScript, and people with those niche skills are in short supply.

In the US, the average developer’s salary is around $90,000, not including bonuses and other benefits. Those with specialisms will likely expect higher salaries that reflect their additional training and have the bargaining power to negotiate. If your company can’t afford to hire these experts, you need to look elsewhere.

Building an ODC in a country such as India means you can more easily access these niche talents or upskill your team at a lower cost through in-house training.

The average annual income of a software developer in India is around five lakhs ($6,000). India is also the largest provider of IT outsourcing worldwide, with over 1.5 million students graduating with engineering degrees each year. These students are ambitious, and it has been noted that Indian developers over-index on programming languages and mobile development skills, highlighting a high proficiency in programming languages.

You want to reduce costs but not output

ODCs aren’t just great for scaling existing development projects but beginning new ones. If your business does not already have an existing development team, building an ODC is a great way to get started.

Not only is building an ODC more cost-effective than recruiting talent to work in-house due to cheaper salaries, rent, bills, benefits and overheads, but they are also extremely focused.

DC vs outsourcing: what’s the difference?

What is the difference between an ODC and outsourcing? The short answer is that ODCs are a new take on outsourcing.

Outsourcing is when you work with a software house or freelancer to access development resources. This is typically on a short-term, temporary basis. The most common method of outsourcing is through an agency. The workers are not dedicated to your company and will be working on multiple projects at once. They can be based anywhere, from your city to Shanghai.

Offshoring is simply when a business based in one country, say the US, hires developers or other professionals based in another country, such as India. ODCs are one model of offshoring.

When you create an ODC, the developers are your employees; the only difference between them and the team that works in your head office is that they’re located in another country. They work alongside your business rather than operating separately from you, absorbing your culture and aligning with your company’s goals.

Let’s summarise the key differences:

Outsourcing:

• You hand over ownership of the project to the agency
• Based in your country or overseas
• Developers are hired by the agency and are not your employees
• Developers work on multiple projects for other companies

ODC:

• You retain ownership of the project
• Based overseas
• Developers are your employees and align with your culture and goals
• Developers work only on your projects

Offshore development centre vs in-house team: which is better?

If you’re new to building development teams, you may wonder about the benefits of investing in an offshore development centre over hiring in-house. What is right for your business will depend on your ways of working, your projects and your available budget.

The main difference between an ODC and an in-house team is their location; the ODC is located overseas, whereas the in-house team is based in the same country as the business’s head offices. These developers may work within the head offices or from home, depending on your business’s setup. However, they most likely live in the same geographical area as the business’s headquarters.

There are dozens of benefits to creating an ODC. Here are six of the most compelling reasons to consider:

Cost-effective

Staffing costs are one of the most expensive aspects of running a business. Building an in-house team from the ground up can be incredibly costly. Office rent, operating costs and high salaries all add up. Plus, if you want to access the best and most experienced talent locally, you need to offer competitive salaries and benefits.

Building an ODC is much cheaper, comparatively. While paying a fair wage is important, hiring internationally opens you up to a global talent pool where salary expectations may differ. Overheads are also considerably cheaper in countries such as India.

Offshoring can offer cost optimisations of up to 50%, saving you thousands of dollars to invest in your projects.

Specialised skills

India is an emerging market that is rivalling the US and UK in terms of development talent. It is the largest provider of IT outsourcing around the world and is only set to grow.

With over a million graduates leaving university with engineering degrees each year, there are a greater number of developers who are experts in niche software and programming languages in India. Building an ODC in an emerging market grants you access to experts who would be unavailable to you in your local geographical area.

Quick scaling

Traditional hiring processes are slow. In fact, it can take between three and six months to get a development team up and running.

ODCs, on the other hand, can be built in as little as three weeks when you work with an offshore management company. These partners are experts in building development teams and typically have access to a pool of vetted talent they can introduce you to, expediting the hiring process.

Likewise, when developers inevitably leave your team or experience illness, your offshoring partner can quickly fill the gap, ensuring the project experiences no downtime. That means no delays to timelines and fast scaling when you are ready to step up your capabilities.

Greater flexibility

In-house teams are typically contracted to work from 9am to 5pm, Monday through Friday. Your ODC will most likely operate in a different timezone, meaning that when your in-house team clocks off, they’ll be working hard, with new work ready to review by the next morning.

Competitive advantage

If you are looking to broaden your company’s horizons and rival your competitors, expanding your presence to new countries is a great idea. An ODC is a low-risk and low-cost approach to scaling as it offers a physical presence in a new market and gives you a direct insight into the customer base located there.

Greater focus for in-house teams

If your in-house team is overwhelmed with competing requirements or does not have the capacity to take on new projects, an ODC can help. When you hand over all your IT operations or one larger project to your ODC, your in-house team has more opportunity to focus on other priorities, such as developing their skills, working on new innovations, or scaling your core product.

It’s time to open the doors to your offshore development centre and embrace new opportunities. But how do you do this?

Find an offshoring partner

While you can build your ODC alone, an offshoring partner or management company can support you through the process. They manage every aspect of the set-up process, from finding a location for your ODC to paying your developers on your behalf.

An offshoring partner will also advise you on taxes, legal regulations and payroll, so you don’t have to worry about those intricacies.

WeAssemble is made up of experts in offshoring, with teams located across the UK, India and Scandinavia.

Define your project scope

The next step is to understand the function of your ODC. This will determine how many roles you need to recruit for, the size of your office space, and its running costs.
Take the time to think about these questions:

• What projects will the team based at your ODC work on?
• How many roles do you need to hire for?
• Do you require specialists?
• What is your budget?
• Do you need to hire a product or project manager to act as a liaison?

Choose your destination

There are numerous countries and cities where you can base your ODC. Popular options are India, Ukraine and China. At WeAssemble, we recommend building your ODC in India due to cost benefits, the country’s investment in the tech sector, its developers’ high proficiency and more.

Set up your office space

For an ODC to work effectively, you need a dedicated office space. WeAssemble finds a suitable space for your team’s size, decorates the space with your branding, and gets the team’s workstations set up with state-of-the-art equipment.

Recruit your developers

Recruitment for an in-house development team typically takes several months, but hiring for an ODC can be cut down to a matter of days. Hiring developers in a new market can feel daunting, which is why it’s important to have the right partner on your side.

Here are some of the roles you can expect to recruit for:

• Project managers: Responsible for project planning and execution
• Product manager: Oversees the development of products to meet customer needs
• UX/UI designers: Ensures the product is usable and accessible
• DevOps engineers: Unifies and automates processes
• Business analysts: Lead on understanding business problems or opportunities
• Development team lead: Directs the development team by overseeing primary functions
• Front-end engineers: Build products that the user will experience, such as websites
• Back-end engineers: Builds and maintains the server-side of web applications
• QA engineers: Tests products before launch to assess quality

Using our Filtered Talent process, which targets the top 3% of developers in India, WeAssemble puts candidates through several rounds of testing and interviews, which assess everything from their technical expertise to their cultural fit. After all, as these are your employees, you need to build a team that’s intelligent and aligns with your business’s values. In a final stage interview, you meet the best of the bunch.

Once you’ve chosen your developers, your dedicated Europe-based Account Manager liaises with our expert HR team to extend offers on your behalf. This entire process can take as few as ten days.

Get your team set up and ready to go

Finally, it’s time to get your new team set up. Your offshoring partner will set your team up with first-rate equipment, get them connected to your technologies and train them on your management processes so they’re ready to start working.

During this stage, it’s important to define how you’ll manage the team. You can manage them directly or hire a project manager to act as a liaison. It is also worth investing in a project management tool such as Jira and a communications system like Slack to keep lines of communication open.

What challenges might you face?

With any new venture, you will experience build pains and teething issues. These are some of the largest challenges and risks you will face when building an ODC.

• Communication: As the team working from your ODC won’t be based in your locality or time zone, there are communication challenges that may arise. It is important to invest in project management and communication tools that mitigate these issues and develop processes for managing handovers, reviews and feedback.
• Language barriers: If your ODC is located in a non-English-speaking country, there is a chance you may experience language barriers. Indian developers typically have a strong understanding of English, though you may want to consider hiring a bilingual project manager to support effective communication.
• Cultural differences: No matter what, when employees from two different countries work together, they will experience cultural differences. From opposing styles of communication to taking time off for national holidays, these differences may throw a spanner in the works. However, this does not need to become an issue if considered ahead of time and handled sensitively.
• Legal complications: When expanding your reach to new markets, there are legal ramifications to take into consideration. You need to engage with your legal team or counsel to correctly register the business in this new market, set up contracts with new employees, and ensure you adhere to tax requirements and other regulations.
• Security risks:As discussed, security is always a risk to bear in mind. When building an ODC, you must consider how to avoid data leaks, such as restricting access to sensitive information and implementing additional security measures. A focus on security should be built into the infrastructure of the ODC. Before getting started, conduct a security risk assessment and take the necessary steps to protect your business’s sensitive data and intellectual property.

If you’re interested in building an ODC, you may consider hiring an offshoring partner or management company. These companies are experts in offshore hiring, with experience working with businesses to build dedicated development teams and ODCs.

They have a deep understanding of the industry and can manage the hiring, interviewing, negotiation and set-up processes on your behalf, delivering fantastic results while allowing you to concentrate on other more pressing matters, like scaling your business.

Here’s what to look for in a good offshoring partner.

Tech and market expertise

Sure, they talk the talk, but do they walk the walk? A good offshoring partner will have experience building teams in the market you’re interested in and should boast a strong understanding of technology and software development.

When explaining your project requirements and business set-up, you should feel comfortable that you’re understood and that your best interests are always considered. Take the time to review their previous projects and ensure they have experience building ODCs in your chosen location.

WeAssemble was founded by experts in technology and team building, so you can be confident in our experience.

Culture and team structure

Just like your offshore development team, your offshoring partner should align with your business culture. That means getting to know their processes and team structure.

WeAssemble takes a unique approach to offshoring. Every decision is inspired by our values, from the exceptional talent we hire to the businesses we partner with. These values make up the foundation of our work, pushing us to dream big and deliver better results every time.

Our global team has a vision for the future: a world of work that replaces ego with partnership. We do this by breaking down geographical and cultural barriers and advocating for exceptional teamwork.

Methodology

Take the time to review and understand their approach to building a team. Does it align with your priorities and take your needs into account? Do they offer support that continues after your ODC is set up and running? Who do you contact if you have a question or problem?

WeAssemble’s methodology is designed to be agile and cost-effective, so we can create a team that’s aligned with your long-term goals. We offer ongoing support even once your ODC is up and running so you can get the most out of your offshoring experience.

Pricing structure

Price transparency is key to a healthy business relationship. Your perfect partner will take you through their pricing structure, explaining how they charge for their services and manage payment to your developers. There should be no hidden costs or nasty surprises, so make sure you get all the information you need upfront.

WeAssemble’s pricing is designed to be flexible, just like your team, and we think you’ll be pleasantly pleased with our competitive costs.

For larger teams with demanding project timelines and increased scope, we assemble your dedicated offshore development centre in India. We recruit 30+ hires to get your development team of top-level talent up and running in no time. Get scaling with We Assemble today.