Offshore development centre

Benefits of the offshore development centre

  • Krunal Mendapara
  • |
  • 1 April, 2022

Do you know the average salary a software developer gets in the US is $76,800 per year while it is as low as $6700 in India? The difference is vast. Undoubtedly the concept of Offshore Development Centre is gaining popularity across the world.

It offers several other benefits such as:

  • Access to the best talent at reduced costs.
  • An edge over competitors.
  • A dedicated offshore team working round the clock.

Offshore Development Centre (ODC) is a profitable and convenient option. Therefore, software development companies in the USA are setting up ODCs to address their IT and custom software development needs.

What is an Offshore Development Centre?

Offshore Development Centre is an IT company located in another country. It provides software development solutions at much-reduced rates. With a team of high-skilled professionals, these companies deliver brilliant software solutions.

As a part of business strategy, several software development companies set up ODC as its subsidiary.

How is it different from outsourcing?

There is a subtle difference between outsourcing and offshoring, which is why most professionals confuse them with one another.

In outsourcing, the selected company provides software solutions as a third-party company. It aims to increase the company's productivity, reduce turn-around time and save costs.

On the other hand, offshore development centre utilizes cost difference between the two countries to reduce the company's expenditure. ODC is a subsidiary of the parent company, not a third-party service provider.

Key benefits

Lower wages

ODCs are generally set up in countries where wages are low but abundant talent is available.

For example, in the USA, a company has to pay around $77,000 to a software developer yearly, while it costs just $25,000 in Poland, $17,000 in Bulgaria, $14,000 in Colombia and $6700 in India.

Business expansion at cheaper rates

By setting up an offshore development centre in a low-cost producer economy, the organization can bolster its position as a multinational company at a limited investment.

Also, it helps companies localize their products. For example, if a company wants to introduce a product in Bulgaria, then local employees can share valuable insights that can help the company give their products a local touch.

Establishing an ODC in a foreign country considerably increases the chances of success in a foreign and unexplored market.

Intact confidentiality

Lack of trust & control and risks to intellectual property and data security are significant challenges of outsourcing a project to a third party. In Offshore Development Centre, the company can set up a team that works exclusively for the company's project.

It ensures the confidentiality of the project as the company can determine its terms and conditions. In case the strength of the team is greater than 50, the company can also establish a separate office.

Broad access to the talent pool

The world has become a global village, and ODCs enable companies to make their most. They can hire the best from the talent pool regardless of the boundaries. In addition, cross-cultural knowledge transfer enhances the employees' skills and enriches the organization's work culture.

How to make the most of it?

Establishing an ODC is always a good idea, and it offers multiple benefits. However, if the company wishes to garner optimum benefit, it must keep the below-mentioned points in mind.

  • Determine the key stakeholders and understand their goals. Prepare a business plan that aligns them all.
  • Communication is the key. Keep in touch with the local employees. If possible, pay a visit or two. It will help the ODC employees understand their importance and contribution to its overall business growth.
  • Conduct activities that help develop trust within the teams and between the ODC and the parent company.
  • Pay heed to the cultural changes and make them a part of working culture. It will play a crucial role in building integrity.
  • Draft an agreement that fulfils the organization's requirements while setting realistic goals.

Nourishing an ODC with the proper working environment, talents, and policies can turn it into a profitable subsidiary in no time. All it needs is initial attention and investment.

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