Advancements in technology have been taking the world by storm, even more so recently. This also means IT companies will face bigger challenges in the form of increasing customer demands and competition. Luckily, Offshore Development Centers (ODCs) can help them keep up with the demand.
ODCs can help IT companies optimize their software development processes and deliver high-quality products quickly and efficiently.
In case you’re wondering, an ODC is a dedicated team of software developers and IT professionals, usually from another country with a lower cost of living and a large pool of talent, that companies use to smartly run their operations. The ODC works as an extension of the client’s in-house team and follows their requirements, standards, and methodologies. The offshore development company merely provides the infrastructure, resources, and support needed for the client business’ smooth operations.
ODCs can be incredibly useful for IT companies, for reasons including, but not limited to:
- Cost: Did you know that big IT companies usually use 45% more than their budget and end up delivering only 56% of what was promised? They can reduce this by delegating their IT projects to an offshore team, cutting the cost down by up to 60%, according to some sources. They can save not only on salaries, but taxes, overheads, and infrastructure expenses. The different currency rates and tax incentives in some countries are an added advantage.
- Skills: With an ODC, you get access to a wide range of skills and expertise that may not be available/ affordable in your local market. It allows you the option to hire developers with experience in various technologies, domains, and industries. You also get to leverage the knowledge and best practices of the offshore development company, which would’ve worked with multiple clients and projects from across the world.
- Scalability: With an ODC, you have the flexibility to scale your team up or down according to your project needs and budget. It allows you to easily add or remove developers without worrying about the costs. You also get to adjust the size and composition of your team based on the project’s different phases and requirements.
- Work coverage hours: You can get more done for your time with an ODC, leveraging the benefit of different time zones. Imagine getting a 24/7 work cycle by collaborating with your offshore team during your off-hours? You can also benefit from faster delivery times and shorter feedback loops.
- Business extension: ODCs can help you expand your business reach and opportunities by tapping into new markets and customers. By leveraging the local presence and network of the offshore development company, you can explore new possibilities and partnerships. You also gain a competitive edge by offering better quality and value to your clients.
- Business growth: Collaborating with an ODC helps you get an edge over business development activities as compared to the companies that don’t. Having an ODC to manage your IT operations helps you get more time to focus on key development activities that take your business to the next level.
All that said, setting up and managing an ODC is not without challenges. Let’s address them one-by-one below.
Challenges to setting up an ODC
- Communication barriers: Language differences, cultural elements, and time zone gaps can be big hurdles if you’re not prepared to face them. You may face misunderstandings, delays, or conflicts if you fail to establish clear and frequent communication channels and protocols.
- Legal and regulatory requirements: Setting up an ODC usually requires compliance with various laws and regulations — both your home country’s and the offshore location’s. You’ll have to deal with contracts, intellectual property rights, data security, taxation, labor laws, and more before proceeding to employ them.
- Quality control: Quality control can be challenging when working with an offshore team. You may happen to face issues such as poor code quality, bugs, errors, or other deviations for your work.
How to overcome the challenges in setting up an ODC
- Goal definition: Define your goals and expectations before you start looking for an ODC partner. This would help you achieve a clear idea of what you want with your ODC partnership. Do you want to extend your existing team? Do you want access to certain skills? Or is it just a project you’d like to outsource?
- Location definition: Select the right location and partner for your ODC. Consider the many factors such as the availability and quality of talent, the living costs, the labor costs, the legal and regulatory environment of the place, the cultural compatibility, the time zone challenges, and the infrastructure and connectivity. Also conduct a thorough research on the potential ODC partners.
- Governance and communication planning: Establish a governance model and communication plan right before you begin your contract. Define the ODC’s and your roles and responsibilities, the decision-making process and power, the escalation mechanisms, the risk management strategies, and the conflict resolution methods. This makes things clearer at the outset itself.
- Transition and integration management: Manage the transition and integration process with the ODC. This includes knowledge, data, processes, tools, and systems transfer from your onshore team to the ODC team. You’ll also have to take care of the training and development of the ODC team.
- Performance optimization: Monitor and optimize performance using the KPIs and SLAs initially agreed upon. This is essential as it helps identify areas of improvement or opportunity. Also make sure to celebrate achievements and recognize contributions from your ODC team to ensure a lasting partnership.
- No micromanagement or unrealistic work expectations: Begin with a clean picture of the ODC’s activities and responsibilities. No assumptions. And once a project is initiated, make sure to work with the team to align on timelines and track its progress using project management tools. Set executable expectations with KPIs.
ODCs can be incredibly helpful in helping businesses access top talent at reduced costs. Over time, partnering with an established offshore software development services company can help you build an efficient offshore development team and achieve your business’ growth goals. If you’ve been looking for one, contact us. We can help.