Setting Up an Offshore Software Development Center: A Step-by-Step Guide

26 Jun 2024

How do you open an offshore software development center? Are you worried about specific steps and factors to keep in mind? This article will guide you in detail step by step to set up a software development center abroad in the most effective way.

What is ODC - Offshore Development Center?

Offshore Development Center (ODC) or offshore software development center is a remote working unit, usually located in a country different from the host company's country, to develop software and related services. related services. ODC operates as an extension of the company, providing technical solutions, improving product quality and saving costs.

What is ODC
ODC is an effective strategy for companies to take advantage of global resources

Top Benefits of Utilizing Offshore Software 

  • Cost savings: Reduce labor and operating costs compared to domestic development.
  • Access high-quality human resources: Leverage the skills and knowledge of software professionals from around the world.
  • Speed ​​up development: Thanks to different time zones, projects can be developed continuously 24/7.
  • Focus on core business: Offload software development work to focus on core business activities.
  • Easy Scaling: Easily expand or shrink your development team depending on project needs.
Benefits of Offshore Software
Using Offshore Software is very diverse and can bring a lot of value to companies

A Step-by-Step Guide to Setting Up an Offshore Software Development Center

1. Define Your Objectives and Requirements

The first and most important step is to clearly define your goals and requirements. You need to answer questions like:

  • Why do you need an ODC?
  • What do you hope to achieve from this ODC?
  • What are the specific technical and business requirements?

Defining clear goals will help you make detailed plans and avoid unwanted risks.

2. Choose the Right Location

Choosing a suitable location is a key factor for ODC's success. You should consider factors such as:

  • Labor costs: Choose a country with reasonable labor costs.
  • Quality of human resources: Ensure the availability of highly skilled software professionals.
  • Information technology infrastructure: Make sure the country has good technical infrastructure and stable internet.
  • Legal and policy framework: Make sure the country has a legal and policy framework that supports software development.

3. Understand Legal and Compliance Requirements

Understanding the legal and compliance requirements of the country you choose to locate your ODC is important. You need to understand:

  • Labor and recruitment regulations.
  • Tax and financial regulations.
  • Information and data security requirements.

4. Plan Your Budget

Create a detailed budget plan that includes expenses such as:

  • Initial setup costs: Office rental costs, equipment, software.
  • Monthly operating costs: Staff salaries, office operating costs, system maintenance costs.
  • Costs incurred: Costs for risk management activities and system upgrades.

5. Infrastructure Setup

Setting up the infrastructure is an important step that includes:

  • Office and equipment: Ensure the team has enough space and modern working equipment.
  • Software and tools: Equipped with the necessary software and tools for software development.
  • Network system and security: Set up a safe and stable network system, ensuring information security.

6. Recruitment and Team Building

Recruiting and building a team is one of the most important steps. You need:

  • Definition of positions to be recruited: Clearly define the roles and responsibilities of each position.
  • Effective recruitment process: Build a strict recruitment process to select suitable candidates.
  • Building team culture: Creating a friendly working environment, encouraging creativity and collaboration.

7. Establish Management Processes

Establish management processes to ensure ODC operates effectively:

  • Project management: Apply project management methods such as Agile, and Scrum to ensure progress and quality.
  • Resource management: Use resource management tools to optimize the use of people and resources.
  • Quality management: Establish quality inspection processes to ensure products meet standards.

8. Set Up Operational Procedures

Establish detailed operating procedures to ensure ODC operates smoothly:

  • Workflow: Define daily work processes, from planning to implementation and testing.
  • Communication process: Ensure there are effective communication channels between team members and with the parent company.
  • Reporting process: Establish reporting processes to track work progress and performance.

9. Continuous Monitoring and Improvement

Continuously monitor and improve ODC to ensure the highest efficiency:

  • Track work performance: Use KPIs to evaluate team performance.
  • Evaluate and improve processes: Regularly evaluate processes and find ways to improve to increase efficiency.
  • Training and development: Invest in training and skill development for your team to improve work quality.
Setting Up an Offshore Software Development Center
9 Steps to set up an Offshore Development Center (ODC)


Best Practices for Managing an ODC

Effective Communication Strategies

Effective communication is key in managing an offshore software development center. To achieve this, businesses need to use modern communication tools such as Zoom, Slack, and Microsoft Teams. These tools make it easier to connect and interact between team members, wherever they are in the world.

Furthermore, encouraging open communication is necessary to create a work environment where people can freely exchange information and opinions, thereby improving understanding and cooperation within the team.

Leveraging Project Management Tools

Using project management tools is an effective way to optimize work within an ODC. 

  • JIRA is a powerful tool for managing tasks and tracking the progress of each specific task. 
  • Trello, with its Kanban methodology, makes project management more intuitive and easier. 
  • Asana is also a great choice for planning and tracking project progress, helping teams stay on track and get work done on time.

Ensuring Data Security

Ensuring data security is an important factor that cannot be overlooked when managing an ODC. Businesses need to use security tools like VPNs and antivirus software to protect information from external threats. 

Training employees on information security principles is also a necessary measure, helping them become more aware of the importance of security and how to protect data. 

Ultimately, establishing detailed and strict security policies will help create a safe and trustworthy work environment.

Top Countries for Offshore Development Centers

1. Vietnam

Vietnam is a top destination for offshore software development centers thanks to low labor costs, which can be up to 90% less than those in Western countries. The country is home to over 500,000 IT engineers, with more than 50,000 IT graduates annually. 

Vietnam has a well-developed information technology infrastructure, with 70% of the population having internet access as of 2023. This ensures effective operations for Offshore Development Centers (ODCs) and a pool of talented engineers to support various projects.

Vietnam is an attractive destination for Offshore Development Centers


2. India

India is renowned for its offshore software development services, boasting over 4 million IT professionals, the largest pool globally. 

According to The Economic Times, India also has extensive experience in the industry, with IT services exports worth over $150 billion in 2022. 

The robust IT ecosystem ensures high project quality and adherence to timelines, making India a reliable ODC destination.

India is a leading country in the field of Offshore software development

3. Poland

Poland is an attractive choice for ODCs, supported by its high-quality education system, producing over 15,000 IT graduates annually. 

The country ranks 3rd in the world for the quality of its software developers, according to HackerRank. 

Its strategic location close to major European markets facilitates easier communication and cooperation. Poland's IT sector is expected to grow by 5-6% annually, further strengthening its position as a top ODC location.

Poland attracts technology companies to invest and establish development centers

Finally, setting up an offshore software development center is a smart strategy to help businesses save costs and increase business efficiency. By following each step you will ensure that your ODC operates efficiently and delivers the most value to your business.

FAQs about offshore software development

Offshore Software Development Center vs. Traditional Outsourcing: Which is Better?

ODC brings greater control and quality to long-term projects, while traditional outsourcing is suitable for short-term and low-cost projects.

How do I choose the right offshore development partner?

Choose a partner with experience, a good reputation, high technical capacity, clear working processes, and a compatible work culture.

What are the risks involved in offshore software development?

Risks include unsatisfactory product quality, data insecurity, communication difficulties, and legal non-compliance.

How can I ensure the quality of work from an offshore team?

Establish clear quality standards, perform regular quality checks, train employees, and maintain regular communication.

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