The growing globalization and digitization have put offshore development at the next level. According to Statista, IT outsourcing is expected to reach $587 billion by 2027, which is a huge increase from its current value of $395 billion. With many new companies looking for offshore partners, a new phenomenon emerged – the Offshore Development Center model. Let’s explore what Offshore Development Center means and how to tap into it for your business,
What is an Offshore Development Center?
In most cases, companies have in-house teams of developers working in the same office and in the same country where the firm is registered. In such a case, an Offshore Development Center is when a company has a team of developers working from an office in a different country. In other words, you have a company branch in a different nation.
Often, businesses choose the Offshore Development Center model because it grants greater access to talent and is cheaper. The logic is simple. For instance, the average salary of a software engineer in the United States is around $130,000 per year. In turn, the average salary of a software developer in Eastern Europe is about $40,000 per year. With such a sizable difference, companies can find high-quality software services for reasonable prices.
Types of Offshore Development Center Models
As with any other outsourcing or augmentation model, different types are available. Choosing between them is vital for getting the most out of outsourcing. Respectively, there are three key Offshore Development Center types:
- Build-Operate-Transfer. This Offshore Development Center model is best for companies starting full-blown business operations. Often, the approach is essential for entering a new foreign market. At this point, an Offshore Development Center vendor and the hiring company agree to set up a new office location and transfer employees to that location.
- Build-to-Scale. This Offshore Development Center model is best for firms looking to build new teams of experts in a foreign country. These companies have previously experienced success with small offshore teams and want to scale. Often, this model entails moving from nearshoring to offshoring.
- Product Engineering Model. This Offshore Development Center model is suited for companies who want to extend their in-house team to handle a challenging project. In such a case, the approach is often used for a short period until the ongoing project is completed.
Choosing between different Offshore Development Center types grants various advantages. But, as you can see, it all depends on your business objectives, capabilities, and resources at your disposal. Now, let’s look closer at how the phenomenon works.
How Does the Offshore Development Center Model Work?
At this point, the basics of the Offshore Development Center model are clear – a company sets up a foreign office of software developers and other experts to handle more complicated tasks or expand its business operations. Yet, there are some additional elements functionality-wise to consider.
First, a team set up by an offshore Development Center vendor works under the brand as the company hires the team. Second, this team follows the corporate policies of the head office. Third, an offshore team does all the tasks and brings the same quality as the in-house team.
In such a case, hiring an offshore team does not mean you get lower-quality services. Besides, you can still hire software developers. Usually, an Offshore Development Center model grants access to QA engineers, front-end and back-end developers, UI/UX experts, technical writers, and leads of all kinds. However, all the operational and human resources capabilities are conducted by the head office or delegated to local service providers.
Offshore Development Center Benefits
Companies consider the Offshore Development Center model for the potential benefits it brings. However, what are these advantages? In short, Offshore Development Center benefits are the following:
- Low-cost access to the pool of experts and specialists. As we mentioned above, offshoring opens access to the global talent pool. As a result, you can hire experts throughout the world. In such a case, after a brief research, you will quickly find an Offshore Development Center offering high-quality services for a reasonable price. It means you can increase your product’s time-to-market and scale with fewer expenses.
- An ability to handle complex administrative tasks. In most cases, opening a new office in a foreign country will be a legal nightmare. However, with an Offshore Development Center model, it is easy and painless. You hire a local Offshore Development Center partner and let them do all the complex staff. They will handle all the administrative functions, and you will only reap the benefits an offshoring team offers.
- An offshore team must comply with your company’s industry regulations. They won’t be able to provide low-quality services. Besides, it means you won’t have trouble with regulatory agencies.
This triad of benefits is the key to understanding why companies use the Offshore Development Center model. At this point, the only thing left is to show how to start with the method.
Things to Consider When Using an Offshore Development Center Model
In a nutshell, to get the most out of the phenomenon, consider these aspects:
- Choose the offshoring destination correctly
- Pay attention to how far the country you want to offshore to
- Research the market within the offshoring nation
- Select the right Offshore Development Center partner
- Consider the tech experts the method provides
- Double-check whether the Offshoring Development Center model is the right one for your
These easy steps can be a game-changer. They help you save time and money on something you do not need.
Offshore Development Center means you set up an office of tech experts in a foreign country. To get the most out of the approach, consider the different types, benefits, and starting points outlined above. After all, if you get everything right, you will have access to the global talent pool and receive high-quality software services for reasonable prices.