What is Offshore Development Center (ODC): All Benefits and Possible Risks

What is Offshore Development Center (ODC): All Benefits and Possible RisksNewxel BlogFollow6 min read·Dec 29, 2021 --

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Globally, we are experiencing huge talent shortages, especially in the IT sector. Experts predict that by 2030, organizations around the globe risk losing $8.4 trillion in profits if they

don’t find a solution.

To curb the talent shortage, most companies are leveraging outsourcing and outstaffing. According to Statista data, the worldwide outsourcing industry reached 92.5 billion U.S. dollars in

2019, with Offshore Development Center (ODC) services accounting for a significant portion of this total.

Also, studies show that over 80% of the world’s top 500 organizations choose to use the ODC framework for software development. And at present, Ukraine provides software development services

to over 100 Fortune 500 companies.

In this article, we take a holistic look at what an Offshore Development Center is, how you can use it, and more. We’ll delve deeper into:

What an offshore software development center meansThe advantages of offshore development centerWhat to look for when choosing an offshore development centerThe basics of setting up an ODCAnd

how to hire offshore developers for your projectsWhat is an Offshore Development Center (ODC)? An offshore development center means a software development services location that is not

based in your country.

Companies keen on benefiting from international talents at reduced costs can set up a remote office. They can establish an ODC that is basically an office with the right infrastructure and

personnel to carry out development functions from start to finish.

For instance, when you establish an offshore development center in Ukraine you will incur less operational costs as compared to when you run a similar center in the US or the UK. Check out

these Ukraine outsourcing rates to see how much you stand to save when you outsource to the Eastern European country.

Who Needs an Offshore Development Center? Depending on their needs, different types of technology companies can benefit from ODCs. Such companies include:

Software companiesIT service companiesEcommerce companiesTelecomsCloud servicesFintech companiesData providersIoT among others Organizations in the business of developing revolutionary

technology require special talents to accomplish this. Both startups and established companies agree that a specialized offshore development center is a great option.

Top Offshore Development Center Benefits Working with an ODC has numerous benefits for an organization. Here are some outstanding offshore development center benefits to remember:

Access to a Skilled and Diverse Talent Pool Establishing an offshore development center will expose your company to an employee population comprising of very knowledgeable and talented

individuals. It will also take you less time to hire a developer in Ukraine and Poland compared to doing so in the US.

Increased Efficiency and Reliability Offshore Development Centers spend less time on development projects thereby more efficient. This is because they have a wide pool of experts and good

infrastructure. Their prices are friendly and services highly reliable.

Access to Established Infrastructure The established infrastructure and personnel in an offshore development center are the perfect solution for companies looking to outsource development

projects but lack expertise in global project delivery. It would otherwise take a company months or even years and so much money to develop a single IT application.

Reduced Development Costs An offshore development center is a great way to reduce costs and ensure consistent quality delivery. Your project will stay on track and within budget. Did you

know that by offshoring to a country like Ukraine, you can save up to 40% on your development costs?

Allows You to Concentrate on Your Primary Business If your company is not entirely focused on information technology, managing your own IT department is a daunting task. Outsourcing these

tough IT tasks to an ODC will save you the hassle. You can then channel this effort to other important profitable tasks.

How To Set Up an Offshore Development Center Here is a very helpful offshore development center checklist to get you started.

To set up an offshore development center you will:

Choose a Location When it comes to how to set up an offshore software development center the most important step is getting the location for your offshore development center. Based on

economic considerations, Eastern Europe and Asia are the two popular locations for IT companies. But when selecting a location for your ODC with IT staff augmentation services in mind,

Ukraine has quickly established itself as the most preferred destination.

Why Ukraine?

As of 2020, there were over 212,000 IT specialists in Ukraine who are highly educated with an estimated 84% of them having a bachelor’s degree. A large number is also fluent in

English.Ukraine’s IT industry has experienced commendable growth from 0.06 percent of GDP in 2013 to 3.3 percent and is valued at $5 billion.Ukraine has a cordial relationship with the

United States with 80% of work coming from there.Find a Trusted Partner To be successful in setting up an offshore development center you need a partner you can trust. Get someone who

understands your business, knows the local laws and conditions, and can link you up with a talented team for exceptional delivery.

Refer to this infographic when selecting a partner for your ODC:

Start Recruitment Your success largely depends on the people you work with. Recruitment is therefore a vital part of the process. Hire highly qualified experts and maintain an amazing and

lasting relationship with your partners. Establish a department of programmers with good history and recommendations.

Find an Office Get an offshore development office with a team of software engineers and all the resources you need for smooth business operations. Create a workspace that encourages

productivity, motivates developers, and is appealing to visiting clients.

Get Legal Support Getting legal support for your offshore development center is imperative. The right local lawyers will help negotiate the best deals possible.

Make Procurements Another important step in setting up an offshore software development center is making it well-equipped.

Organize HR Payroll For your new ODC you will need an organized accounting and HR payroll system. Get an accountant to process invoices and a specialist to ensure you comply with

regulations. Also have someone to help you monitor your employee’s performance.

Getting a development team to work on your offshore project is not easy. But we can help! At Newxel our goal is to help companies set up an offshore development center by providing them with

all the resources needed. Request more information here and we will help you get started!

Offshore Development Center Model and its Risks Here are the risks associated with setting up an ODC:

Organizational structure challenges: Different companies have different structures. What works in your country may not work where you are establishing an ODC, and this can potentially affect

everything.Communication challenges: When working with an offshore team, pay particular attention to the communication aspect. Create channels to reach them easily and at the appropriate

time. Consider the difference in time zones in your communication schedule.Data privacy and security risks: Be cognizant that such risks exist. Ensure your offshore vendor has established

strong security measures and policies with someone to oversee the effectiveness of this. Sign NDAs and offshore development center security protocols before sealing the partnership to

protect your company.Legal risks: There are many legal risks involved in offshore software development considering how complex the process is. Critically evaluate the legal environment in a

given country to find out if this works for your business before engaging.Final Thoughts Establishing an offshore development center is a fantastic choice for many companies. Rather than

using an in-house employee setup or a home-based developer, businesses can offshore their work to other countries. In fact, this can be an extension to the in-house team.

For many enterprises in the US, Europe, and the UK, establishing an offshore software development center in Ukraine is an absolute win. The country has a really friendly legislature,

friendly costs, and an environment for foreign startups. Find the right partner like Newxel and you will be well-set for success.