Recently, Offshore Development Center (ODC) is gradually becoming a popular choice for software development solutions thanks to its cost-effectiveness and excellent accessibility to technology professionals.
When a business lacks the essential resources for technology projects or wants to save costs, ODC is an option worth considering. Especially in case the requirements, scope, and specifications of the project are not clearly defined, or the enterprise is seeking long-term cooperation from external resources, ODC provides human resources for those missing positions in projects. Moreover, it supports activities under client enterprises’ guidance, such as software development engineers, Testers, UI/UX designer, human resource manager, etc.
If you want to get started with ODC but don’t know how to do that, this article will give you anthe most satisfying answer.
If you want to get started with ODC but don’t know how to do that, this article will give you an answer.
What is Offshore Development Center
Offshore Development Center (also known as Time and Materials Model or ODC for short) is an overseas team of experts providing technology services. Some of the popular IT services include IT outsourcing, web development, mobile applications, managed services, and maintenance and upgrades of software systems.
|Explore how to choose IT services for small businesses.|
ODC is considered the best choice for technology companies. Assuming businesses are falling into a human resource crisis or need assurance for their technology projects, ODC will be the provider offering practical solutions to help companies to overcome these difficulties. Some popular offshore development services include QA testing, software development, UI/UX design, etc.
Moreover, ODC also tends to optimize everything for businesses, especially in terms of equipment and infrastructure, which helps companies to minimize investment costs for offices and equipment as much as possible.
The Pros And Cons Of Offshore Outsourcing Team
Pros of ODC
It is not random to say that several businesses commonly work with ODC. The benefits of offshore development company are listed below..
1. Cut down the cost
Most ODCs will have their equipment and infrastructure. So your company doesn’t need to invest in anything further. Therefore, instead of spending money to build the entire system abroad, ODC is still an option that helps you save money significantly.
Talented human resources
People are a decisive factor in gaining success for the company. If you want your company to reach the top of success, the assistance of IT professionals who are highly qualified is a must. In addition, focusing on developing employees’ skills is also one of the first priorities of ODCs around the world. Because they surely know that their knowledge and skills will help them provide the best solutions for customers.
2. Control work effectively
In fact, ODC always strictly follows the requirements of the main office. So, with all principles as well as contract terms, you can thoroughly communicate with these ODCs. Thereby, you can easily control the status of projects. In case anything happens that makes you unsatisfied; you can report it back to them so they can flexibly fix it to meet your needs better.
3. Ensure the project with on-time completion
Late delivery of products is always a taboo in any cooperation. This causes discomfort as well as mutual distrust in the partnership. At the same time, the association will be labeled as unprofessional. Therefore, ODC rarely gets involved in this situation because they always work with the project timelines set by the main office. Hence, being late for appointments is a rare problem when working with ODC. Even the total project implementation time can be shortened if the working process with the company’s in-house team takes place effectively.
4. Rational resource allocation
Different projects will have different allocations of resources. You will have to increase or decrease the number of staff in your main office to meet the project’s requirements. In this situation, ODC can assist you in implementing in-house workgroups. Incredibly, they also can support you effectively in expanding your IT department. Resource allocation would be a very challenging job without ODC.
Cons of ODC
Coins have two sides, and ODC is also the same. Besides the great opportunities for business development, there are some obstacles that business needs to consider when working with ODC. Let’s take a look at these drawbacks below.
1. Difficult interaction
Although the strong development of technology can help people communicate remotely, communication difficulties are never entirely solved. For example, when the main office wants to present its thoughts or ideas, but the team working abroad cannot understand. Meanwhile, the number of times to communicate is also not much because scheduling is not an easy problem for both. That is one of the biggest obstacles when working with ODC. However, if you can arrange a lot of time for exchanging ideas, this may no longer be a serious problem.
2. Cultural differences
Cultural differences can lead to different styles in how people work. This difference may cause conflicts in the working process. For example, people from countries with a relaxed working style will feel constrained to people from hierarchical countries. Gradually the relationship between the main office and your offshore development company will be covered with negative feelings. As a result, cultural incompatibility can make work less effective.
3. Legal conflict
Open policy towards foreign companies is one of the factors that businesses need to pay special attention to. Some countries have laws that prevent foreign companies from setting up business in their territories, which poses a big challenge for businesses looking to expand their scale abroad.
4. Security threats
A long distance between the main office and your offshore development company cannot guarantee data security. Information will be very easily leaked by cyber robbers. In addition, in some exceptional cases, the government of your offshore development company may require your confidential information checked to ensure their country’s security.
Offshore Development Center Models
Regarding the overseas software development model, there are two main common types. That is the contractor and customer model. Each model has its own characteristics and challenges.
This is an offshore development center model where the main office will send detailed requirements to the contractor or the offshore development center. Then, a team will be chosen to meet their requirements. This team will be responsible for various tasks of management and techniques such as analytic and system design, updating and developing software, writing code, and so on.
Most businesses also use this model to attract talent, especially experts in the IT field. In addition, because it costs less to complete the project, this model is very popular with businesses.
This offshore development hub model is more common for large corporations. General Electric was a prime example of this model when it launched one of the first offshore development center services in India in 1996.
Basically, in this offshore development hub model, a group of senior staff at the main office will have all the power to manage and direct the project and make all the important decisions. However, development and testing will be done by an overseas team. In other words, the way this model works is similar to that of a subsidiary and main organization.
ODC vs Outsourcing: What’s the Difference?
Outsourcing is assigning a third party to a project that has been completed internally. Here, two different companies are involved in a project, with one responsible for the internal processes of the other, regardless of the location difference.
Offshoring is the software outsourcing model in another country. For example, a US-based company hires a Ukrainian company to undertake a project. It would simply be outsourcing if both companies were based in the US. While outsourcing is not location-related, outsourcing is an international agreement. In this particular case, the ODC’s model behaves more like a branch of an organization.
Overall, the basic difference between Offshore Development Centers and Outsourcing is their main purpose. ODCs often aim to increase the workforce but at a low cost. Meanwhile, outsourcing does not necessarily mean low cost, it usually takes place when a client company needs some outside expertise.
Vietnam is coming the next global Offshore Development Center. Here is Top 10 IT companies in Vietnam you should consider.
How to set up an Offshore Development Center in 8 Easy Steps
You want to start a group abroad but don’t know where to start, aren’t you? Maybe you will find it very difficult. But don’t worry, we will guide you through 9 steps to set up an offshore development center.
- Step 1: Determine the vision and requirements of the business
- Step 2: Choose a suitable location. Here, the location is mentioned not only in the country but the city and region where your foreign team will operate in the future.
- Step 3: Identify the challenges you may face when working with foreign teams from different backgrounds and ethnicities.
- Step 4: Select your foreign software team based on project requirements, technical expertise, years of experience, and soft skills.
- Step 5: Create legal documents with the support of legal advisors from both countries.
- Step 6: Determine the infrastructure requirements for the System used, Internet bandwidth, Technology and communication channel, Server backup, Management policy, Data security system, Access protocol data access and exchange, and KT Process.
- Step 7: Team training and mentoring are a must to ensure smooth interaction between your inbound and outbound teams. To make sure the team works and delivers the project on time, you must define timelines for them to follow.
- Step 8: Set up scrum meetings for regular updates on project progress, feedback, changes, and bottlenecks.
Vietnam ODC Services
According to Statista, Vietnam is among the top 6 leading countries in offshore business services worldwide in 2021. Although Vietnam’s economy has been hit by Covid 19 pandemic, Vietnam strives to become one of the most attractive places providing good ODC services. As a result, more foreign businesses tend to choose companies in Vietnam as ODC providers. Below are some advantages when hiring an ODC in Vietnam.
Setting up an Offshore Development Center (ODC) in Vietnam does not require too much labor and office space rental costs. Raw materials and human resources in Vietnam are fairly reasonable, and the labor quality is not inferior to other countries. Therefore, it helps save on outsourcing costs and focus their budget on other factors such as marketing, software development, etc.
Having highly-qualified developers
Foreign businesses can work with talented teams when choosing ODC services in Vietnam. ODC is an appealing choice when some complex projects require human resources with specific expertise and in case the business cannot add suitable personnel in a short time. And Vietnam boasts thousands of talented people fully equipped with proficient soft skills and technical skills. They are highly adaptable, flexible, and can meet strict requirements. That is the reason why Vietnam ODC can provide high-end services to customers.
Having Governmental supporting policies
The Vietnamese Government currently has introduced policies to attract more foreign investment. Besides, the GOV has approved the National Digital Transformation Programme, which targets businesses that want to adopt digital transformation to boost their production, business efficiency, and competitiveness.
There are plenty of companies in Vietnam delivering ODC services. Rikkeisoft takes pride in being among the best software development companies in Vietnam that provide high-quality ODC services. Rikkeisoft – with 10 years of experience in the IT industry, helps businesses solve problems and make breakthrough development with technology. And we boast a team of brilliant and talented engineers fluent in both English and Japanese. Rikkeisoft is committed to providing you with the most excellent ODC services in many fields, such as software development, mobile app development, web development, UI/UX design, business process management, quality assurance & testing, etc. We strive to meet all stringent requirements and bring you the best service you expect.
Offshore Development Center Checklist & Proposal
Technical skills and quality
From the beginning, businesses need to determine which country provides the best service, so your budget is not wasted. Vietnam is gradually becoming a destination attracting the attention of many foreign businesses. Simultaneously, Vietnam also has a large team of excellent software developers with great IT backgrounds and constant updates with the latest technologies. Some of the leading IT companies in Vietnam are Rikkeisoft, Savvycom, and Saigon Technology,…
One of the fastest ways to know if a company is good and right for you is to look at the projects they’ve completed. In addition, you can poll information from their customers to get the most objective and honest reviews.
The most helpful advice for you is to cooperate with companies specializing in ODC services with many years of experience. These companies are familiar with using the right technologies for ODC projects, and they also keep up with the most advanced trends in the technology world. Most importantly, these companies are also more reliable in keeping projects and information secured.
Communication is one of the significant difficulties in working with ODC, as mentioned in the pros & cons of offshore outsourcing. For companies that want to reduce labor costs, finding employees from countries like Vietnam and the Philippines will make job exchange easier because English proficiency in these countries is considered fairlygood.
FAQs Related to Offshore Development Centers
1. Where can we find an Offshore Development Team?
Well, there are many reliable ODCs in Vietnam that you can consider working with. The most prominent among them is Rikkeisoft, one of the leading IT companies in Vietnam. With nearly 10 years of experience in the technology field with many prestigious awards, we understand very well the processes and how to work as a reputable ODC. Therefore, we guarantee to bring the best results to our customers.
2. What is the main difference between Onsite and Offshore Teams?
Onsite Team refers to the team at a particular location. In business, it is often defined as a manufacturing facility rather than an administrative office.
3. What are the best practices for maintaining an Offshore Development Center?
Establishing an offshore development center is only the beginning. The more critical element of an offshore development center is its management. Effective management will ensure higher software development project sucess. Here are some effective methods that can support you in maintaining your ODC:
– Set up a standardized method of communication
– Make sure the documentation of all work in progress
– Treat your foreign team as part of your business, not external organizations
– Create scrum meetings regularly to ensure you are constantly updated on the work.
We realize more and more clearly the benefit of offshore development companies in today’s digitalized world. Rikkeisoft would be vastly grateful if this article could be of any help to you. Besides, based on the above useful information, we hope you will work with ODC successfully and effectively.
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