Recent reports show that it’s challenging to find specialists with the required expertise. Hiring new talents, establishing infrastructure in a new office, and other tasks related to business scaling require significant investment. So, establishing an offshore development center in cooperation with a reliable service provider is a breath of fresh air in the given circumstances.
Check out our complete guide on how to set up an offshore development center to expand your business in remote locations.
Offshore development center (or ODC) stands for an office located abroad with tech expertise ready to scale the development of software products at reduced costs. Offshore development centers are typically set up in countries with a rich pool of tech talent, favorable business conditions, and reasonable price-quality combinations.
What’s the difference between outsourcing and offshoring? The main difference between outsourcing and ODC is ODC’s offshore location. But it’s not the only difference. While specific outsourcing engagement models are quite similar to ODC, there’s a slight difference: ODC operates like a separate unit of people, infrastructure, and operations dedicated to one client.
There are two orthodox ODC models that are typically employed but adapted to clients’ needs by offshore software development companies. They include:
- BOT (build-operate-transfer) — customers hire a service provider to set up ODC, and service providers cover all the funding, hiring, and infrastructure costs. The service provider may get revenue from the center, but in a certain period, it transfers the center to the customer.
- Managed ODC — this model also requires the supplier’s responsibility for infrastructure establishment and administrative tasks. With this model, a client gets a remote ODC operated by the services provider. Find out what ODC setup models you can leverage at Emerline.
The setup of an offshore development center you are not familiar with requires significant effort. Below are several areas you need to consider if you decide to set up an offshore development center by yourself:
- You need to be aware of or delve into the local legal regulations that work for foreign entities in offshore locations.
- You may face bureaucracy issues while opening a development center in another country, which will take much longer, especially in offshore countries located far from your principal office.
- It may be challenging to manage administrative tasks, office equipment acquisition, repairs, and other office-related tasks remotely without a local partner.
- To hire offshore developers you need to know the local tech community, platforms where you can find job-seeking profiles of tech engineers, and it requires deep research before entering the local market of job seekers.
Key Offshore Development Center Benefits
Taking into account the challenges you may face while opening ODC on your own, there’s an alternative option — partnering with an offshore development company. Below are the major benefits of ODC setup with offshore partners.
Reduced infrastructure costs. By employing an ODC model, you save on purchasing and maintaining hardware and office equipment. All the infrastructure costs are covered by the offshore service provider.
Reduced hiring and administrative costs. As a customer, you don’t take additional costs on recruiting, employee salaries, bonuses, etc. Service providers are responsible for this part.
Compliancy with your corporate policy. By choosing an ODC model, you get long-term cooperation with employees dedicated only to your project and working in accordance with your corporate standards and guidelines.
High scalability and flexibility. You can expand your business at any stage with no extensive investment required on infrastructure and operations.
Define Your Goals and Requirements
Before making a decision on working with offshore development teams, be sure you understand your needs. In particular, clarify the project requirements and outline at least a vague project scope to understand what ODC model will work best for you. Once you set up your project strategy, you’ll understand if offshore development services are the right choice for your project delivery. For instance, if you are going to set up a long-term project with a vast project scope where requirements will be changing a lot, you’ll need ongoing technical support, so an ODC model may be the best strategy.
Understand Whether ODC Will Work for You
As ODC doesn’t work for all project types, it’s essential to identify that this engagement model will satisfy your needs. If you find yourself in the situations below, offshore development center setup is a good option for you to consider:
- You need technicians with narrow expertise.
- You need to scale your company fast.
- You need to save on infrastructure, operation management, and hiring.
- You need to establish long-term cooperation and close adherence to your company standards.
Select a Country to Set up an ODC
When it comes to choosing an offshore location to open your ODC, cost-efficiency is always the pivotal argument for it. However, ODC setup is not only about low pricing, so you should consider other factors, too. Below are the things you should keep in mind when choosing a country to look for an offshore development company:
- Expertise in particular technologies
- Language proficiency
- The level of the IT sector development
- Hourly rates and developer salaries
To make it easier for you to decide on where to open your ODC, we’ve done that research for you. In the past years, Eastern and Central Europe have been playing a key role in offshore development. They are now regional hubs with rich tech talent pools that can solve even specialized technology problems. Ukraine, Belarus, and Poland are among the top destinations for offshore development team setup. Any of the three countries under research have shown significant growth in the IT industry, so the regions are known for a wide choice of software development providers and strong technical expertise in the labor market. Local technicians are also good communicators and demonstrate excellent English language proficiency. According to EF EPI 2020, Poland is ranked 16th, Belarus — 40th, and Ukraine — 44th out of 100 countries.
To demonstrate how much it may cost you to set up an offshore development center, we’ll compare hourly rates and developers’ salaries in the regions with US ones.
According to Clutch, there are 225 software development companies with offices in Belarus. Local hourly rates are much lower than in the USA and overage ranges from $25 to $99. In particular, the majority of Belarusian software development providers (162 firms out of 225 registered on Clutch) charge no more than $50 per hour for their services.
As far as developers’ salaries in the region are concerned, they are as follows according to the local salary calculator: the average salary in the IT industry for the past four months is about $1817/month.
As per Clutch, there are 843 IT firms in Ukraine, which is almost four times more than in Belarus. Hourly rates are also quite affordable in the region, ranging from $25 to $99. The predominant number of Ukrainian companies take $25-49 per hour, so it will cost you less than doing it in the USA. Developers’ salaries depend on the level of expertise, for example, senior Java developers in Ukraine cost $2200 per month and are higher according to local resources.
There are 834 Poland-based software development companies according to Clutch. Hourly rates are much lower than in the USA, and like in Belarus and Ukraine range from $25 to $99, with 362 firms charging $25-49 per hour, and 373 firms — $50-99. According to Glassdoor stats, on average, software engineers in Poland make about $2700 per month.
Choose the Right ODC Partner
Unless you dive into ODC set up by yourself, finding a reliable offshore development partner is crucial. They will accompany you from the very start of your project to its release and even further. So, pay attention to the research you should do to find a good supplier. Here are some practical tips for you:
- Check out the experience in ODC setup and what ODC models a service provider works with.
- Be sure an offshore software development firm knows the local market and understands your needs.
- Examine if previous clients are satisfied with their services by finding reviews in such platforms as Clutch.
- Compare ODC setup costs with other proposals and analyze the cost-effectiveness of your future investment.
- Explore the level of flexibility of your supplier and their abilities to serve your project needs.
Get Involved in the Team Setup Process
Once you hire an offshore development partner, it’s time for your dedicated team setup. This stage will include candidates recruiting and interviewing, so you need to decide if you participate in each step, or join interviews, or at a final approval step. It’s worth noting that multiple engagement options are available when working with offshore development firms.
Since ODC setup is a risky deal, you need a reliable partner to accompany you on your journey. At Emerline, we assist companies of any size working in various industries. If you’re searching for a reliable partner capable of reducing your hiring costs, offering flexible and fast project scaling powered by a cost-effective infrastructure, we’re glad to address your challenges.
Check out our option to request an offshore dedicated team and contact our experts to estimate your ODC setup costs.
Originally published at https://emerline.com.