In this article, we’ll learn about what it is, its benefits, how to set up an ODC, and the qualities when looking for an ODC vendor. 

What is an offshore development center (ODC)? 

An offshore development center is an organization that offers software development services but is based in a different country. This form of business is considered a subsidiary of your primary company. 

Benefits of offshore software development centers 

Cost reduction 

ODC is frequently located in countries with lower living costs than the headquarters location. Therefore, businesses can use the cost difference to cut costs in materials and labor while growing sales, or they can move the major focus to other aspects. 

Shorter timeframe 

Setting up an ODC on the other side of the world can help accelerate application development by allowing for a 24-hour workday where someone is always working on the project. This kind of work environment makes the most of available space, equipment, and resources, resulting in a shorter time to market.  

A shorter timeline for development projects meets the present world’s tighter competition, shorter product lifecycles, and a stronger desire for a quick return on investment. 

Large teams with diverse skill sets 

 If you want to form a team of 50 or more people, vendors can build up a separate office where all your developers, PMs, QAs, and marketing professionals will work for your employee branding. 

Access to the Talent Pool 

 Having your business in a different country means having the benefit of that country’s talented workforce to enrich your organization’s working culture and improve your overall talents. 

Offshore development center models 

There are many development models you can consider: 

• Software ODC trust: for customers requiring the highest security level in their design models. This strategy is appropriate for customers whose software is unique and must be kept confidential. 

• Software ODC classic: the most common software development model of ODC. This approach includes a committed team with technical expertise to complete the project on time, which a project manager manages. This approach is ideal for projects with a wide range of duties, such as upgrading older software, migrating to other platforms, or writing new code. 
• Software ODC branded: the best choice for enterprises and corporations who want to be regularly active, involved, and in charge of the process and its development. 
• ODC full-form: also known as private ODC. Clients can set up their own development centers in other countries using this concept. Based on the client’s specifications, the team will plan, research, analyze, create, and manage projects in close collaboration with the client’s headquarters. 

How to set up an offshore development center 

#1 Select your ODC location. 

You must first decide on the best site for your offshore development center. There are numerous aspects to consider, ranging from tax policy to English proficiency. 

#2 Hire a legal consultant 

A qualified advisor is needed to assist you in researching the validity of a business entity and selecting the best legal structure. 

#3 Register your ODC as a legal entity 

You have to submit a bundle of documents to the regional registration department once you’ve settled on a legal form. 

#4 Seek out, rent, and makeover an office space. 

After you’ve completed all of the paperwork, you’ll need to choose a location for your offshore unit. Most offices will require a makeover, new equipment, and other office furniture. 

#5 Get used to the local tax system. 

Now it’s time to figure out the tax enigma and learn more about your tax responsibilities. 

#6 Hire recruiters and staff members and support employees. 

As a full-service office, your ODC requires trained staff to manage the workplace and your business procedures.  

#7 Launch a branding campaign. 

When everything is in place, your new branch will require some exposure to build its market presence and gain its place in the new business sector. 

#8 Recruit developers  

At this point, you may think that establishing an overseas office is time-consuming and costly. You’re right, but it doesn’t have to be if you have a reliable ODC vendor onboard with years of experience in establishing offshore centers. In this situation, the duties (and costs) are limited to selecting your ODC site and verifying completed activities. 

Looking for an ODC vendor? Contact us now for further consultation. 

What qualities should you consider when selecting a vendor of offshore development services? 

#1 Evaluate the relevant experience 

No matter how deep your vendor’s technological expertise is, it is useless without practical experience. Therefore, digging deeper into the vendor’s portfolio is the ideal way to build up your effort for success. 

The portfolio should ideally include projects that are comparable to each other in the same or a related field. Make sure the partner you choose has experience setting up offshore development centers and related procedures. 

If you are unable to find suitable projects, you can also contact the partner directly; due to confidentiality concerns, not all projects are included in the Clients section. You can also get a sense of the vendor’s maturity by reading customer reviews on directories like Clutch, GoodFirms, and others. 

#2 Evaluate IT expertise 

Typically, the main reason for a company to use a third party is a lack of technical knowledge on-site. For example, if a corporation wants to drive digital transformation but has no resources to construct a BI and analytics system, they might outsource the job to a vendor. At this point, you should think about the particular tech stack that you are interested in.  

Aside from in-depth technical understanding, your partner should understand every aspect of your sector to link technology with commercial value. Developers with domain understanding can also contribute technically and reduce development risks. 

#3 Focus on cost-effectiveness 

In terms of decreased development costs and ease of management, a fully managed ODC has considerable promise. However, only a small percentage of deals turn into profitable investments, and the ODC model is no exception. 

 Low-cost labor is frequently a crucial component of pricing calculations. However, it is not the only one that can be used to analyze the profitability of the offshore development center concept. 

Acquisition, project management, traveling, and other hidden expenses can prove costly in some situations, reducing your cost gains to zero. The key to finding the true ODC vendor is to figure out the value you expect from the offshore development center and to link this value with the work and cost needed. 

Final words 

CMC Global is a top software development firm in Vietnam with numerous benefits, such as employing developers, QAs, and business analysts, as well as developing an appealing package of incentives for your staff members. 

With CMC Global, you will never have any difficulties in establishing and operating a development center. Contact us for further consultation.