What Is an Offshore Development Center (ODC)? - A Comprehensive Guide

How you set up your own software development center to function varies depending on the project details: Goals, scope, budget, etc. A decent composition of an ODC includes multiple team members, and each of them is tasked with different responsibilities.

Management Team

This crew is tasked with project oversight, including business analysis, risk management, budget tracking, and communication.

Project Managers

This is an easily scalable model in which companies outsource specific IT functions or a particular process in the project lifecycle to an offshore service provider. With a strong focus on Service-level Agreements (SLAs) and Key Performance Indicators (KPIs), managed-service ODCs provide a higher degree of transparency, control, flexibility, and consistency.

Account Managers

An account manager works as a bridge between the ODC service provider and the client. Their main duties are to maintain healthy business relationships and track client satisfaction levels.

Business Analysts

BAs are primarily accountable for translating business requirements into technical specifications. Hence, they are key players in bridging the gap between the client’s needs and the team’s capabilities. They help stakeholders manage changes and make correct decisions to keep the project on the right track.

Technical Team

You can also call it the dev team or development team. This is a squad of executives who actually do software development work.

Developers/Programmers

They are the main force in an ODC and are responsible for building a software product from its initial idea. They can work together or independently to write, test, and maintain code for a given system to function properly.

UI/UX Designers

These professionals tend to the UI/UX design of software solutions and work closely with developers to implement design elements. They focus on creating engaging, user-friendly interfaces that enhance the end-user experience.

Technical Writers

These experts have a crucial role in an ODC. Technical writers support the development team and the end-users by translating complex tech concepts into user-friendly materials. Their tasks often include producing software documentation, manuals, and other user resources.

Quality Assurance Analysts/Testers

Their role within an ODC is to guarantee the quality aspect of the entire development process as well as the final product. They build and execute test plans, detect bugs, and work with developers to rectify them.

Support Team

You can also call it the dev team or development team. This is a squad of executives who actually do software development work.

Human Resources

HR agents are in charge of recruiting and onboarding outsourced staff. They are the ones in action to set up an offshore team for you.

Administrative and Support Staff

These are the ones behind the scenes to keep the engine running. This group handles administrative tasks such as payroll management, accounting, legal matters, and other paperwork related to the ODC’s operations.

Even though the benefits of having an ODC are undeniable, you should also be prepared for the potential challenges that may come along with it. Knowing what to encounter is also a good start to avoid or navigate through the difficulties blocking you from a fruitful ODC collaboration.

A major hurdle when it comes to managing an offshore development center must be cultural and linguistic gaps between one team and another. The differences in work culture, communication styles or language proficiency usually cause obstacles. For example, misinterpretation of instructions, lack of understanding, misalignment in project expectations or difficulty in expressing ideas.

If not handled well, these issues may impact team cohesion and productivity in a negative way. In the long run, it may ruin the entire workflow and project outcomes.

Fortunately, communication barriers are becoming the least common problem to be concerned with. With various communication tools available nowadays, both your in-house team and offshore one can work seamlessly and effectively. In addition, you or your service partner can implement cultural training programs or online team-building activities to foster mutual understanding and strengthen connections. Establishing a crystal-clear set of communication norms and protocols is also a must to secure consistency and clarity. For language barriers, consider hiring or building your ODC in regions or countries that use English as a common business language.

The next common concern that most companies have when working with an ODC is the limitation of control over the work being done in some specific circumstances. This is primarily due to the fact that the outsourced team is located in a far-away country and is therefore not in direct contact with the clients and their local teams.

Once again, clear lines of communication are crucial to cope with this challenge. Besides, transparency is also key to helping you have a better overview of how the project is being managed. Worry no more because a reliable outsourcing partner knows exactly how to help you have peace of mind. Regular reports, daily standup meetings, or sprint reviews are a few effective practices for monitoring project progress and maintaining close collaboration.

Especially when you need to collaborate in real time or demand instant responses, offshore development centers/teams are not for you.

But do you know you can turn the time zone differences into an advantage? Yes, you can. How? By leveraging the time zones and “follow-the-sun” model, your project can run 24/7. This means you can accelerate the entire development process and shorten delivery times. Additionally, by having a dedicated team working during off hours, any urgent issues or bugs can be addressed immediately without affecting your local team’s work schedule or causing project delays.

One more challenge that bothers most business owners is that they worry about being stuck with one single outsourcing vendor and completely dependent. Some are afraid that if anything were to happen, they would be forced to pay high fees to get support. Vendor lock-in issues do exist yet mainly when the contract is written poorly or without efficient exit clauses or penalty terms.

With caution, you can prevent this scenario from happening. Make sure to negotiate carefully with your potential partner and have a detailed and well-written contract that covers all the essential aspects of the partnership, including the exit strategies and costs. Do not hesitate to ask for support from legal experts, if needed, to ensure a fair and safe deal.

Another big challenge is indeed staff turnover. When you contract with a service provider for an ODC, it is likely that you will be collaborating with a specific team of experienced engineers on your project. What may happen if these staff members leave or are transferred to other projects?

It means your offshore team will be changing. With members jumping in and out, it is nearly impossible to maintain the project’s consistency and quality. If you are unlucky enough, your project is at risk of being postponed or even stopped for a while or longer. You don’t have that luxury time to waste at this point, do you?

High turnover rates not only disrupt project continuity but also cause other problems, such as loss of institutional knowledge, and increase recruitment and training costs. The very key to overcoming such a big obstacle lies within your choice of outsourcing partners.

A good partner for ODCs will be the one with stable and experienced workforce. Still, you need to demand a commitment in terms of staff retention rate as part of the contract. Ask for a strong contingency plan to be in place should any major turnover happen. Remember everything must be black and white before shaking hands.