In recent years, the global demand for offshore development centers (ODCs) has surged, with India emerging as one of the top destinations for establishing these centers. Renowned for its skilled workforce and cost-effective solutions, India has become the go-to choice for global companies looking to outsource their software development needs. If you’re considering setting up an offshore development center in India, this comprehensive guide will walk you through the essential steps, benefits, and potential pitfalls from a client’s perspective.
The Rise of Offshore Development Centers
In today’s dynamic business landscape, where the IT skill gap is widening and economic uncertainties prevail, companies are increasingly turning to outsourcing solutions. Offshore development centers have become a strategic necessity, enabling organizations to harness global talent and optimize costs. Remarkably, nearly 59 percent of companies choose India as their preferred outsourcing destination, emphasizing the country’s prominence in the IT outsourcing market.
Top 4 Reasons to Choose India for Your Offshore Development Center
Access to Global Talent
One of the primary reasons to set up an offshore development center in India is the unparalleled access to a vast global talent pool. By establishing an ODC, you open doors to skilled professionals with specialized knowledge and experience. This not only augments your IT team but also provides an opportunity to expand your business into new geographies successfully.
Cost Benefits
Setting up an ODC in India can yield significant cost savings, with companies saving up to 70 percent compared to in-house hiring. Additionally, the absence of the need to develop and maintain infrastructure further enhances cost-effectiveness, allowing businesses to allocate resources more efficiently.
Flexibility
Flexibility is a key advantage of offshore development in India. You can hire resources on a full-time, part-time, or hourly basis, tailoring your workforce to match project requirements. Say goodbye to concerns about sick leaves, day-offs, or staff unavailability as you scale up or down based on your project needs.
Reduced Time to Market
Establishing an offshore development center in India can drastically reduce your time to market, providing a competitive edge. With efficient operations and skilled professionals, you can launch your software projects ahead of competitors, ensuring a timely market presence.
15 Essential Steps to Set Up Your Offshore Development Center in India
Step 1 – State Your Vision and Define Your Requirements
Define your vision and business requirements before venturing into setting up an ODC. Clarity on software development needs, skills required, and the specific market you are targeting ensures you move in the right direction.
Step 2 – Outline the Scope
Clearly define the purpose of your project, whether it’s developing a new product, adding features, or upgrading with the latest technologies. Evaluate project complexity and make well-informed decisions about the scope, features, and technologies involved.
Step 3 – Define the Engagement Term
Determine if you want to engage with the offshore development team on a short-term or long-term basis. Decide if you need permanent, recurring, or one-time technical support.
Step 4 – Determine the Talent Requirements
Outline the number of experts needed at different project stages and specify the required skills. This helps in choosing the right engagement mode, such as hourly cost, fixed cost, hybrid model, or retainer model.
Step 5 – Select a Development Methodology
Choosing an appropriate development methodology is crucial. The agile methodology, known for flexibility and collaboration, has gained popularity. Consider your project’s nature and complexity to make an informed choice.
Step 6 – Decide a Location
Evaluate various factors like project complexity, availability of resources, government policies, stability, hourly rates, and infrastructure when selecting a city in India for your ODC. Choose between tier 1 and tier 2 cities based on your project requirements.
Step 7 – Evaluate the Service Provider
Partnering with a reliable offshore development company is critical. Use a checklist to assess experience, offered services, development methodology, company size, technical expertise, and global presence.
Step 8 – Select Your Offshore Team
With a chosen service provider, focus on selecting your offshore team. Define a transparent team selection process and establish HR policies, including engagement terms and project payments.
Step 9 – Develop Legal Documentation
Work with legal advisors to create essential engagement agreements, including employment agreements, business agreements, NDAs, work permits, coding standards, and privacy policies.
Step 10 – Infrastructure Setup
Define infrastructure requirements for systems, internet bandwidth, server backups, data security systems, and communication channels. Establish management policies, data exchange protocols, and access procedures.
Step 11 – Security Management
Prioritize data security by developing Term of Engagement contracts with NDAs. Regular security audits help prevent information leaks and data theft, ensuring the safety of sensitive data.
Step 12 – Project Management
Define the organizational structure with an extensive process framework, outlining the scope of work, outcomes, chain of command, workflow hierarchy, feedback mechanisms, escalation matrix, and knowledge transfer processes.
Step 13 – Training and Mentoring the Team
Conduct training sessions for team members from diverse backgrounds to ensure smooth communication and workflow. Effective training fosters better collaboration and outcomes.
Step 14 – Define Milestones
Define project milestones to provide the offshore team with a clear timeframe for task completion. This ensures timely project delivery and client satisfaction.
Step 15 – Communication Management
Establish effective communication using tools like Google Meetings, Zoom, Slack, Trello, and Jira. Implement daily scrum meetings for project updates, minimizing the chances of micromanaging work.
Avoiding Common Mistakes: A Client’s Perspective
Setting up an offshore development center involves strategic decisions and client responsibilities. Here are five common mistakes clients should avoid:
Lack of Clear Long-term Goals
Define long-term goals related to location, team size, infrastructure, and tech stack to avoid challenges in scaling up and increased operational costs.
Overlooking Workforce Diversity
Prioritize workforce diversity for innovative ideas and success. Understand and acknowledge the emotional psyche of the offshore development team to build a productive and resilient team.
Focusing Too Much on Cost
Consider factors beyond cost, including industry experience, domain expertise, and team efficiency. A sole focus on cost may result in hiring an inefficient team.
Failing to Select Appropriate Communication Tools
Invest in proper communication infrastructure and tools to facilitate seamless interaction between the remote and in-house teams. Effective communication is crucial for project success.
Selecting a Wrong Partner
Choosing the wrong offshore development partner can impact project outcomes. Consider factors like relevant experience, resource availability, tech stack, framework, and client references.
Frequently Asked Questions
Conclusion
Setting up an offshore development center in India is a strategic move that requires careful planning and execution. By following the outlined steps and avoiding common mistakes, clients can establish a successful ODC, leverage global talent, optimize costs, and achieve their long-term business goals. Embrace the opportunities offered by India’s thriving IT outsourcing market and unlock the potential for growth and innovation through a well-established offshore development center.
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