There are many people questioning themselves on how to open the offshore development centers (ODC), meanwhile, there are people who are questioning themselves on what is the offshore development center.
ODC stands for a software development company that provides a team of developers or development services and located in another country. Offshore development teams usually work on software development, testing, support, and other tasks. ODCs centers are usually opened in countries with a suitable business climate, a significant number of tech talents, and a comparatively low cost of living.
Pandemic has shown that offshore development centers are very effective, since that they have become more popular. Companies that were relying on in-house teams, started considering ODCs also because of remote working trends. Pandemic is not the easiest time for anyone, especially for business. Consequently, the ODC in Ukraine is a very good solution for any other country with a suitable business atmosphere. In fact, ODC represents the company, shares corporate policies, values, vision, mission, etc. However, it is a more independent unit. There are pros and cons of opening ODC.
Among pros, it is possible to highlight the following points:
1. Ownership and full control
You have the ODC under your own control. You create and establish the processes and project management methodology, also choose team members, and can train them if necessary. You can control them in case you are not happy with the speed of their performance or the quality of work.
2. Talent pool
Offshore software development gives you access to different talents. In general, you can find a team of specialists with appropriate skills. The geographic position is not a limitation. Having the proper research, you can open an ODC in any geographic location with the best talents and affordable prices. There are also cases when the top management sees very prospective staff and invites them to the head office.
It is possible to reduce costs by launching ODC. Often taxes in the different countries are lower and there are favorable government policies.
4. Assistance with current projects
Whenever you are short of time, your talents in another country can take the project.
There are also cons, like cultural differences. This can be a reason for some problems with outsourcing. However, it will not be necessary for you to communicate with a team very closely. There might be different attitudes and approaches to all working processes. To be more specific about the models of ODC, there are two common models.
The first model is called the “Contractor ODC Model”
This model is appropriate for small and medium-sized businesses. It performs different tasks from analytics, the development of new software, the update of existing products to support as well as research and development. It is staffed by different specialists. It completes projects regarding the technical tasks which are provided by the main office.
The second one is called the “Customer ODC Model”
This model is suitable for enterprises. The client’s company that establishes ODC pays maximum attention to analysis, design, management tasks. It is less independent and has a narrower field of specialization. This is a team of software engineers, testers, and project managers, they are focused on producing a very qualified code, meanwhile, the other processes are held in the head office.
Many professionals consider Ukraine for opening the ODC. Why is Ukraine considered to be one of the best places for creating an ODC and hiring team? Even though the Philippines, India, China, Poland stay in the row with Ukraine and are well known for software development. There are reasons why Ukraine is the best for opening an ODC and hiring an offshore development team.
- Ukraine stays among the top 20 offshore locations in EMEA (Gartner) and among 25 IT service exports (PwC).
- Ukraine is a tech hub that contains 220K of IT professionals and every year these numbers are getting higher.
- Ukrainian specialists take 5th place in the world for their professionalism.
- Ukraine has a comparatively cheap working force.
- Developers in Ukraine are oriented to long-term cooperation. They have a good level of English and are culturally close to the West.
- According to the rating of the independent resource Kearney, Ukraine is 20th in the top of all countries that provide outsourcing services and has already won the trust companies like Google, Samsung, Microsoft, Snap, Crytek, SoftServe, Ubisoft, Oracle and others.
- There are startups in Ukraine which have appeared recently: Revolut, Preply, Reface, Very Good Security, Propertymate, Elision, 3DLook etc.
After getting the benefits of setting an ODC in Ukraine, there is a question on how to. There are several ways on how you may do that.
One of the ways is to go for a business trip, spend some time and open ODC by yourself. You may get consultations and help from local specialists who know the area, laws, and local “technics”. This will give you the right way to control everything yourself. For the successful creation and further performance of ODC, you will need to hire the right team in Ukraine and provide appropriate work conditions. There are some steps you need to follow to establish ODC.
- Register a company as a legal entity.
- Rent an office, put furniture in the office.
- Plan security measures for ODC.
- Find out all details of the local tax system and pay taxes.
- Hire Ukrainian team. You need to create very comfortable conditions to attract the best working force on the labor market
There is also a second way to create an ODC center. You can find a representative, who will do everything for you. For that option, all you need to do is to select the right service provider.
Once the ODC is created, there is a question on how to manage that offshore development center. One of the most important factors of success is to treat the members of your ODC like if they were in-house workers. Initially, it is essential to make them feel a part of your team and company. There are some recommended steps to be done.
- To provide employees with a clear vision of objectives. It is important for people to share a company’s values and culture. Employees should have not only necessary hard and soft skills, but also to fit the company’s culture.
- To provide employees some time for a learning curve. New IT specialists who are coming to your company, will need some time to adjust to the company and to get some training.
- The clear explanation of business requirements, match of business and project requirements. It is essential to communicate with the team and explain everything in a clear way. Otherwise, misunderstanding will be a reason for the job performed not at a highly qualified level.
- Provide every employee with feedback. If you give feedback to the members of your team, you will get a team which will be very accurate at the job and will be careful about every detail, trying to improve everything all the time.
There are companies in Ukraine that help to create offshore development centers. The most trusted one is DNA325. DNA325 can help you to establish a very effective offshore development center. The company spent 10+ years in IT recruiting and related services. If you are going to organize the ODC center, the agency helps you with that. DNA325 will assist you with all steps of ODC creation. The agency can provide your business with different services: legal support, office facilities, recruit the best suitable people that fit your corporate culture, accounting, administrative services, office management.
Above all, the agency provides operational support by preparing different documents and agreements for employees (job offers, contracts, NDAs, terminations agreements, etc.). DNA325 implements new employee orientation and onboarding programs and can help you with career development plans for your employees.
There are some cases when DNA325 was helping the other businesses to open remote R&D centers. iSG2 Technologies has been providing top-notch software and services to Fortune 100 clients in the metals, automotive, energy sectors since 2002. The company is based in Chicago, USA. The software used by companies allows users to manage part information, recommend order size and exact time for metals providing different functions.
Once iSG2 decided to scale their business. They wanted to retain talents and acquire more of them. Co-founders decided to recruit in-house staff. They wanted to develop a long term partnership with a company that knows the IT sector well enough. Meanwhile, that company is hiring the in-house employees, iSG2 could have focused on their core business. Regarding the fact that it was a remote team, iSG2 needed someone to manage their team of employees daily. DNA325 SPaaS has appeared to be the best solution as it provides unique working conditions for residents. It was pretty hard to open the R&D center from nothing.
There are countries where it is very profitable to settle an ODC center. Offshore development centers can reduce expenses of business. Above all, it is not required for the company members to go to the country and maintain all the process of setting the business. There are agencies that can help you with that. DNA325 as an example of cooperation with many companies has shown that your business can be controlled even remotely with not less effect. Smart management of the ODC is the key factor for successful business.