Offshore Development Centre (ODC): Great things you need to know in 2023

Setting up an Offshore Development Centre (ODC) is a new strategy to take a competitive advantage in the digital age. It has become increasingly popular in recent years as a way to save money and improve their efficiency. Offshore Development Centres offer a number of advantages, including lower labour costs, access to a wider pool of talent, and the ability to scale up or down the team as needed.

Have you thought about the Offshore Development Centre but considered how to get started? In this article, we will discuss everything you need to know about the Offshore Development Centre in 2023. We will cover the benefits and challenges of ODCs, the different types of ODCs, how to choose an ODC provider, and how to set up an Offshore Development Centre.

offshore development centre (odc)

1. What is an Offshore Development Centre?

An Offshore Development Centre (ODC) is a dedicated centre, typically located in another country, that provides specialised software development services for an organisation. It is an extension of the client’s own remote development team and operates as a separate entity, often with its own management and infrastructure. 

ODCs are established to take advantage of cost advantages, scalability, and access to skilled resources in another location. They provide services such as software development, testing, maintenance, and support. ODCs can operate in various models, including full-time staff, project-based, or a combination of both.

2. Pros & Cons of Offshore Development Centre

2.1. Advantages

Here are some of the benefits of setting up an Offshore Development Centre:

  • Cost savings: Offshore Development Centres can offer significant cost savings compared to hiring in-house developers. This is because the cost of labour is lower in many countries where ODCs are located.
  • Access to skilled talent: There is a large pool of skilled IT professionals available in many countries where Offshore Development Centres are located. This can give companies access to the talent they need, even if they don’t have the resources to hire in-house developers.
  • Increased agility: Offshore Development Centres can help companies to be more agile and responsive to market changes. This is because they can quickly scale up or down their development team as needed. For example, if a company needs to launch a new product quickly, they can outsource the development to an ODC.
  • Improved quality: Offshore Development Centres can help companies to improve the quality of their software products. This is because they often have a strong focus on quality assurance and testing. 
  • Scale up or down quickly: Offshore Development Centre can be a good option for companies that need to scale up or down their development team quickly. This can be useful for companies that are facing seasonal fluctuations in demand or that are launching a new product.
  • Bring the product to market quickly: Offshore Development Centre can help companies to bring their products to market faster. This can be a good option for companies that are competing in a fast-paced market.

2.2. Drawbacks

It is also important to carefully consider the challenges of using an Offshore Development Centre:

  • Communication and cultural differences: Communication and cultural differences can be a challenge when working with an Offshore Development Centre. It is important to have a clear understanding of the expectations and requirements of both parties. Moreover, you should also be aware of the different time zones and holidays that may affect communication.
  • Security and compliance: Companies need to be aware of the security and compliance risks associated with outsourcing their software development. They need to take steps to mitigate these risks, such as by using secure communication channels and ensuring that the Offshore Development Centre is compliant with all relevant regulations.
  • Lack of control: Companies may have less control over the development process when they use an Offshore Development Centre. This can be a challenge if the company needs to make changes to the project scope or timeline.

3. Offshore Development Centre Models

There are three main offshore development centre models:

Captive ODC model

In this model, the company sets up its own Offshore Development Centre in a foreign country. This gives the company the most control over the development process, but it can also be the most expensive option, as the company will need to invest in infrastructure, staff and other resources.

The captive ODC model is typically best for large projects that require a lot of control to ensure the development process is closely aligned with their business goals.

Vendor ODC model

In this model, the company contracts with a third-party vendor to provide Offshore Development Centre services. This is a less expensive option than the captive model, as the company does not need to invest in infrastructure or staff, but it gives the company less control over the development process.

The vendor model is a good option for smaller projects, or projects that require specialised services. 

Hybrid ODC model

This is a combination of the captive and vendor models. The company may set up its own Offshore Development Centre in a foreign country, but it may also contract with third-party vendors for specific services. This can be a good option for companies that want to get the benefits of both the captive and vendor models.

For example, a company may set up its own ODC to handle the core development work, but it may contract with a vendor to provide testing or maintenance services.

The best ODC model for a company will depend on its specific needs and requirements. Some factors to consider include the cost, the level of control, and the specific services that are needed.

Here is a table that summarises the key features of each ODC model:

4. Factors You Should Consider While Hiring an Offshore Development Centre (ODC) Vendor

Here are some factors to consider when hiring an offshore development centre (ODC) vendor:

Cost 

The cost of the offshore development centre vendor should be a major factor in your decision. You should compare the prices of different vendors and make sure that you are getting a good value for your money.

There are different ways to get an idea of the cost of an ODC vendor. You can get quotes from different vendors, read reviews from other clients or use a calculator. When comparing quotes, be sure to factor in all of the costs, including the cost of development, testing and support.

It is also important to consider the long-term cost of the project. The initial cost of the project may be lower with an ODC vendor, but you may need to pay more for support and maintenance in the future.

Experience

The offshore development centre vendor should have experience in developing software for the type of project you are working on. They should also have a good track record of delivering on time and within budget.

You can get an idea of the vendor’s experience by looking at the portfolio of work. You should also ask the vendor about their experience with projects similar to yours.

Skillset

The vendor should have the skills and resources to complete your project successfully. You need to consider whether the team of developers are familiar with the technologies you are using.

When evaluating the vendor’s skillset, be sure to consider the specific skills and technologies that are required for your project, or their capacity to scale up or down their team as needed.

Communication

Good communication skills and the ability to communicate effectively with you and your team throughout the development process are two of crucial requirements for the offshore development centre vendor.

You can assess the vendor’s communication skills by asking them about their track record of delivering on time, or even about their process for managing and tracking projects.

Timeliness

Something that the vendor should have is a good understanding of your project’s requirements and ability to adjust their schedule accordingly to meet your deadline.

To get an idea of the vendor’s timeliness, you can ask them about their track record of delivering on time and their process for managing and tracking projects.

Flexibility

The willingness to work with clients to meet their needs and to make changes to the project scope or timeline if necessary is an important thing that the vendor should have.

Some questions you should ask them are: Are they willing to accommodate changes? What is their process for handling changes to projects?

Security

It is important that the offshore development centre vendor should have a strong security system in place to protect your data. They should be able to keep your data safe and secure. 

Remember to ask them about their track record of delivering on promises, or also ask for references from previous clients.

Reliability

The ODC vendor should be reliable and trustworthy, as they should be able to deliver on their promises and meet your expectations.

Culture and values

Keep this question on your mind: “Do they align with your own?”. You need to make sure the vendor’s culture and values align with your own. This will help you to ensure that you have a good working relationship with the vendor and that you can trust them to complete your project successfully.

5. How to Set Up an Offshore Development Centre?

Here are the steps involved in setting up an offshore development centre:

5.1. Define your goals and requirements

The first step is to define the goals and requirements of the Offshore Development Centre. This includes the type of work that will be done, the size of the team, the skills and experience of the developers, and the budget.

5.2. Select a location

The next step is to select a location for the Offshore Development Centre. This decision will be influenced by factors such as the cost of labour, the availability of skilled talent, the time zone difference, and the cultural compatibility.

5.3. Choose an Offshore Development Centre model

There are three main ODC models: captive, vendor, and hybrid. The captive model is the most expensive but gives the company the most control. The vendor model is the least expensive but gives the company the least control. The hybrid model is a combination of the two.

5.4. Recruit and hire developers

Once the location and Offshore Development Centre model have been selected, the next step is to recruit and hire developers. This process should be carefully managed to ensure that the right people are selected for the job.

5.5. Set up the infrastructure

The next step is to set up the infrastructure for the Offshore Development Centre. This includes providing the developers with the necessary hardware, software, and tools.

5.6. Onboard the developers

Once the infrastructure has been set up, the next step is to onboard the developers. This includes providing them with training, introducing them to the company’s culture, and setting expectations.

5.7. Manage the Offshore Development Centre

The final step is to manage the ODC. This includes tracking the progress of projects, ensuring that the quality standards are met, and resolving any issues that may arise.

>>> Read more: How to set up an Offshore Development Centre (Dedicated team) in Vietnam

6. Why choose Vietnam for an Offshore Development Centre?

There are many countries that are popular for offshore development centres, Vietnam is among one of them. As our company is based in Vietnam, we will introduce Vietnam as a popular destination for offshore development centres.

Low cost of labour

The cost of labour in Vietnam is significantly lower than in many other countries, such as the United States, Canada, and Western Europe. This can save companies a significant amount of money on their software development costs.

Highly skilled workforce

Vietnam has a large and growing pool of skilled IT professionals. Many of these professionals have been trained in Western countries and are fluent in English.

Time zone compatibility

Vietnam is in the same time zone as China, which makes it a good choice for companies that want to develop software for the Chinese market.

Government support

The Vietnamese government is supportive of the IT industry and offers a number of incentives to foreign companies that set up offshore software development centres in the country.

Political stability

Vietnam is a politically stable country with a strong legal system. This makes it a good choice for companies that are looking for a reliable and secure place to outsource their software development.

Strong infrastructure

Vietnam has a strong infrastructure, including a good telecommunications network and a reliable power grid. This makes it possible for offshore software development centres to operate efficiently.

Favourable business environment

Vietnam has a favourable business environment, with low taxes and a streamlined regulatory system. This makes it easy for foreign companies to set up and operate offshore software development centres in the country.

Dedicated workforce

The Vietnamese workforce is dedicated and hardworking. Many Vietnamese IT professionals are willing to work long hours and are motivated to learn new skills.

Conclusion

To wrap up, offshore development centres can be a valuable tool for businesses that are looking to improve their software development process. However, it is important to carefully consider the factors involved before making the decision to use an Offshore Development Centre. By understanding the benefits and challenges of ODCs, businesses can make informed decisions about whether or not an ODC is right for them. 

Moreover, I would like to introduce AgileTech as a trusted ODC vendor for your company. When you work with us on a project, each member of the team will have to sign a contract to assure that there will be no data leakage and no intellectual property rights violation. Our team includes a variety of technical experts and specialists with years of experience in software developing and team management. Since 2015, we have completed more than 150 projects worldwide and delivered the best products to customers in more than 10 countries, mostly in the U.S, U.K, Germany, France, and Singapore. 

If you need further information and consultation for your project, feel free to fill out this form to meet our IT experts!