Types of Offshore Development Center Models – Leverage the Best One

In the hyper-competitive tech landscape of today, businesses are continuously in search of ways to make the most of their available resources and gain an edge in the market. However, as per reports, there will be a global shortage of over 85 million tech workers by 2030. As a result, delivering top-notch products and services becomes challenging.

That is where the offshore development center (ODC) come into the big picture. They empower businesses to gain access to a global talent pool, overcome resource shortages, and boost overall profitability. Moreover, they help businesses launch their products and solutions faster in the target market and stay ahead. 

While there are several offshore development center models available, selecting the right one for your business is crucial. In this article, you will get to know about the different models, their benefits, and when to choose which model. Read on to explore everything in detail!

What is Offshore Software Development?

Offshore software development is a model that allows organizations to hire a team of skilled developers from another country. The core aim is to address the talent shortage and complete software development projects with ease. The developers are usually located in places with lower labor costs and work remotely. 

The offshore software development benefits companies to gain access to a wider talent pool and deliver high-quality outcomes. If your business does not have the appropriate infrastructure and resources for efficient software development, opting for this method is an ideal decision. 

When to Choose an Offshore Development Center?

There are several situations when opting for offshore development centers (ODCs) proves to be an ideal decision. Delve into the prominent ones!

Software development isn’t your core business

When you are not into software development but need to build specific software, investing in the complete infrastructure and hiring professionals isn’t an ideal decision. Instead, hiring an offshore development team is a smart move. While you focus on your core business tasks, the professionals can develop the software as per your unique requirements.

Lack of Tech Expertise

Imagine having a short-term software development project that requires specialized knowledge and experience. Hiring new developers for such a project can be time-consuming and may not be feasible. 

That is where hiring an offshore development team proves to be beneficial. The model can enable you to gain access to the required tech expertise and complete your project in a hassle-free manner.  

Budget Constraints

If you are a startup or have a limited budget for software development, choosing an offshore development center is an ideal decision. Hiring proficient developers comes at a premium price. From dedicated office space to state-of-the-art equipment and employee-centric benefits like gratuity and health benefits, you need to take care of everything.

However, that is not the case when you choose the offshore development center. It can enable you to ensure cost-effective operations and provide you with higher returns. 

Benefits of Opting for the Offshore Development Center Models

The offshore development center can provide you with ample benefits. Delve into the prominent ones!

Access to Global Talent

With offshore development centers, your search for the right talent doesn’t have to be limited to geographical boundaries only. Instead, you can go beyond that and look for teams with the appropriate experience, technical skills, and interpersonal abilities. Hiring highly skilled professionals can allow you to deliver flawless solutions in the market and gain a competitive edge.

Improved Hiring Process

When you partner with an offshore development center, you do not have to navigate through the expensive and time-consuming recruitment process that includes onboarding and training. All you need to do is hire the offshore software development team, share your unique requirements, and get the job done. 

Better Adaptability

It is no surprise that the tech landscape keeps evolving. As a result, it can be challenging for companies and startups to adapt to the changes in the business world or market shifts. Offshore development centers provide the flexibility to adapt to the changing needs. Moreover, you can easily scale up or down depending on your project requirements. 

Also Read : Best Outsourcing Lessons Learned from Successful and Failed Startups

Constant Support

The offshore development centers consist of experienced developers, project managers, and more. So, you can expect continuous support. If your in-house team gets stuck during the development process, they can get the necessary support and overcome the issues in a hassle-free manner.

Improved Efficiency

In the competitive era, launching your software products faster is the key to capturing a larger market share and increasing your chances of success. With the expertise of the offshore development partners, improving overall efficiency and boosting productivity becomes simple and easy. 

Different Offshore Development Center Models 

Now that you have an idea of the benefits and the appropriate situations to choose offshore development centers, it is time to get an idea about the different types of offshore development center available. Delve into the prominent offshore development center models!

Dedicated Offshore Development Center

This is one of the most popular types of offshore development center. It is all about having a dedicated team of tech experts based in a remote location and solely working for your company. From setting up the essential infrastructure for the software testing solutions, the ODC will take care of everything. 

The best part of this model is that you can keep adding developments to the existing team without any long-term commitment. In other words, you can conveniently increase or decrease your team size depending on the needs of your projects.

The dedicated offshore development center is suitable for both large enterprises and startups. This model serves as a virtual team and provides the necessary support to the in-house team of the client.

Pros:

• Offers the flexibility to scale the team up and down
• Ensures long-term partnership between the offshore team and the client
• Guarantees better cost savings
• Doesn’t require any hefty upfront cost for infrastructure setup

Cons:

• May not be suitable for short-term projects
• Differences in language and culture may affect effective communication. 

Project-based Offshore Development Center

As the name suggests, this model focuses on setting up an offshore development center for a specific project with a set timeframe and well-defined requirements. In this model, the ODC takes the responsibility of effectively managing the resources and completing the project within the agreed-upon timeline and budget. 

As one of the top-rated offshore development center models, it proves to be an ideal choice for companies with short-term or one-time projects. Moreover, it is also suitable for development projects of low to medium-level complexity. In certain cases, organizations may develop long-term relationships, resulting in the establishment of a dedicated development center.

Pros:

• Ensures more clarity about the project scope and lowers the chances of misunderstandings
• Access to specialized technologies and expertise
• Better cost savings
• Faster time to market

Cons:

• Quality control can be challenging
• Limited ability to adapt to the changes in scope

Fixed-Price Offshore Development Center

The fixed-price model is one of the most prevalent types of offshore development center. In this model, you collaborate with the ODC to decide the project timeline and cost before the initiation of the project. 

In this model, the budget predictability is higher. So, you need not have to worry about budget overruns. This model is ideal for short-term projects which last for a few months. Moreover, it is also suitable for small and medium-sized companies with a clear idea of their project requirements and ultimate goals. 

Pros:

• The cost and scope of projects are clearly known
• Clarity on project deliverables
• Effective minimization of financial risks
• Better collaboration with the development partners

Cons:

• Not suitable for long-term projects that demand iterative adjustments
• Project planning can be time-consuming. 

Build-Operate-Transfer (BOT) Model

This model is indeed a strategic framework that encompasses three different phases. It includes team building, software development project operation, and transfer of operation. The BOT model can provide you with optimal control and proves to be one of the best types of offshore development center. 

In this model, the ODC will build a dedicated team for your company. Moreover, they will even set up the infrastructure as per the requirements of your project. Once the team is deemed to be ready, it will be transferred to the client.

The BOT model works best for businesses that are planning to establish an offshore presence permanently. Also, if you want to build long-term capacity, this model proves to be an ideal choice.

Pros:

• Allows you to gain access to the expertise of local partners
• Ensures low-risk expansions into new markets
• Offers better working control to the clients
• Minimizes potential risks in the team-building process

Cons: 

• Potential challenges may arise during the transfer phase
• Involves intricate planning and coordination

Hybrid Offshore Development Center

When it comes to the prominent offshore development center models, you cannot leave behind the hybrid model. As the name suggests, this model combines the project-based and dedicated team models. 

In this model, a dedicated software development team is assigned the task of handling your projects. However, when the need arises, extra resources can be hired for specific projects on a short-term basis. The hybrid model offers the flexibility to adjust the team size in accordance with the changing demands of the projects. 

This model is suitable for businesses whose project requirements keep changing over time. It is ideal for organizations willing to have a dedicated team with the flexibility to add more team members when required. 

Pros:

• Offers clients more time to focus on their core business tasks
• Ensures better adaptation to changing project needs
• Budget planning is easy
• Projects have a well-defined scope, thereby lowering the chances of misunderstandings

Cons:

• May give rise to quality concerns
• Accommodating changes in the project scope can be challenging. 

Also Read : Offshore Outsourcing Development – A Comprehensive Guide

Time and Material Model

In the time and material model, the payment relies on the resources and time utilized by the offshore development center. Simply put, the expense of the project is directly proportional to the efforts essential for its completion. 

This model is suitable for projects where the requirements, scopes, and timelines are uncertain. Moreover, you can also leverage this ODC model for complex projects where frequent changes are required. 

Among all the offshore development center models, the time and material model offers a greater degree of adaptability. As a result, making adjustments during the development process becomes simple and easy. 

Pros: 

• Ensures easy and quick adaptation to the evolving needs of projects
• Making continuous improvements is easy
• Guarantees optimum transparency of progress and costs
• Easy access to skilled resources

Cons:

• Going over the initial estimates is a possibility
• Necessitates active involvement of clients.

Also Read : Fixed Price vs Time & Material vs Dedicated Team

Software ODC Trust

Software ODC Trust is a special model that is designed for clients who require the highest level of security.  Therefore, it is suitable for developing unique software with patent rights. 

Moreover, it is also ideal for confidential software projects. In this model, the development site is planned with high-security measures in place. The core aim is to prevent unauthorized users from gaining access to any sensitive information of the software, thereby preventing potential leakage. 

Pros:

• Offers high-level security for sensitive projects
• Ensures the optimum privacy of software concepts

Cons:

• Increases the overall cost of software development
• Limited flexibility of the project team.

Contractor Offshore Development Center

In this model, the offshore development center is owned and operated by a reliable vendor. That means the vendor is responsible for setting up and managing the local infrastructure, operations, office space, and on-premises data security. Moreover, the vendor even takes care of the recruitment process. 

The client just has to specify their unique requirements of the project to the offshore development center. The rest of all is taken care of by the vendor. The ease of managing software development makes the contract ODC one of the popular types of offshore development center. 

Pros:

• Access to a wider pool of skilled tech professionals
• Ensures better cost savings
• Increase in the adoption by businesses looking to leverage offshore talent

Cons: 

• Collaboration between the offshore and onshore teams can be challenging
• Management of the remote teams can be tough. 

Project Engineering Model

In this model, a Software product development team is established with skilled in-house management. It is ideal for organizations that are planning to expand their in-house team and speed up their development process. 

Moreover, if you have an urgent need for a short-term project, you can rely on the project engineering model. It allows you to develop high-performing and feature-rich software applications in much less time. As a result, you can ensure faster time to market and get better outcomes.

Pros:

• Allows rapid set-up of a dedicated development team
• Meets the urgent team requirements of businesses
• Offers easy access to in-house expertise

Cons:

• The model is likely to be resource-intensive
• Integrating the new development team with the existing team can be challenging.

Build-to-Scale Model

When you have already worked with small offshore teams and want to expand, choosing the build-to-scale ODC model is an ideal option. This model is often viewed as a way of effectively transitioning from nearshoring to offshoring. 

The build-to-scale model is ideal for companies that are planning to set up Offshore Development center in India, China, Poland, etc being the top favorable countries for ODC approach. 

Pros:

• Allows easy scaling of your tech team to meet the evolving project requirements
• Ensures greater cost savings in the long run
• Offers access to a wider talent pool of tech experts 

Cons:

• Transitioning from nearshoring to offshoring can be challenging
• Managing larger teams is complex.

Also Read : Staff Augmentation Vs. Managed Services: What and Why To Choose?

A Guide to Choosing the Best Offshore Development Center Models

With so many offshore development center models available, selecting the right one can be indeed confusing and challenging. To make your task easier, delve into the key factors you must take into account. 

Project Needs

If security is a top priority of your software development project, you must go for the software ODC Trust model. On the other hand, when greater cost savings are the main requirement of your project, selecting the contractor ODC model is an ideal decision. Moreover, when you need a skilled workforce for a longer period of time, you can opt for the dedicated offshore development center model. 

Team Skill Sets

The skills and experience of your team members have a significant impact on the software development process. If you completely lack the necessary tech skills, opting for a dedicated offshore development center model is a good decision. However, if you require special skills for a short-term project, choosing the project-based ODC model is a smart move. 

Budget

If you are on a tight budget, consider leveraging the fixed-price model. It is indeed a cost-effective model and can enable you to save a lot in the long run. By choosing this model, you can be rest assured of completing your project within the set budget. 

The Project Stage

Among the different factors, the project stage is also a key determinant of the right choice. If you are in the ideation stage and have an idea about the final outcomes but are clueless about where to start, opting for the time and material or fixed price model is the right choice. 

Harikrishna Kundariya

CEO, eSparkBiz

Harikrishna Kundariya, a marketer, developer, IoT, chatbot and blockchain savvy, designer, co-founder, Director of eSparkBiz @Software Development Company where you can Hire Software Developers. His 12+ experience enables him to provide digital solutions to new start-ups based on Web app development.