ODC | Choosing The Right Offshore Development Center
The Buzz - Offshore Development Center
There is some buzz surrounding software development outsourcing to Asia, and people refer to it in many ways – Business Process Outsourcing (BPO), Offshore Outsourcing, Offshore Software Development, Offshore Lab, Offshore Development Center (ODC) and more variations.
These variations reflect the reality businesses are increasingly taking advantage of outside resources in many forms depending on their business needs or how their in-house teams are structured. In fact, according to a report by market watch, despite the pandemic crisis, the global market for IT Outsourcing was estimated at $342.9 billion and projected to reach $410.2 billion by 2027. Changes in how workers engage with work during covid, it pushed companies to reconsider how best they can insource and outsource talents. For more and more SMEs, hiring people remotely or outsourcing is becoming a viable option as a strategic way of securing the right resources for success.
What is an Offshore Development Center?
While simply the word “outsourcing” has no geographical implications, Offshore Development Center (ODC) denotes hiring a software development company that supplies you with a team of dedicated developers or related services in a foreign country – usually locations with lower wage level. But the word Offshore Development Center and Offshore Delivery Center can be used interchangeably.
And through ODC model, technological service providers especially in Asia and Eastern Europe have enabled businesses around the world render business agility in a competitive world, by fulfilling software development work, business operations, security audits etc. Depending on, service providers / staffing agencies can be accounted for the entire project or just specific features or phases in the product life cycle.
The main benefits of this ODC outsourcing practice are access to flexible resource pool and cost reduction, but why should you choose an offshore development center (ODC) as solution to strengthen your business? And how do you ensure that your ODC is set for success?
ODC or Offshore Outsourcing Benefits
Thanks to ODC providers, instead of hiring and training people at high cost, experienced engineers and developers would be assigned to complete security audit, software testing and application development works – whichever line of work you need executed.
Specialized solutions such as software development using blockchain, quality assurance and testing for airline industry, test automation for data analytics requires the right talents with right skills. And for SHIFT ASIA, our niche is software products that requires high quality development and product development teams that need extra hands for time-consuming test designing, execution and even automation.
An example is, SaaS company based out of US well adopted to global delivery model with supporting resources spread out between US, Japan, Vietnam, and India to take advantage of wage differences, localization capability, favorable governmental policy, and bigger talent pool. In order to maintain motivation of their own engineers, they hired in-house QA lead that work with product teams and outsourced repetitive testing and security testing that would have been otherwise very expensive in US or Japan.
Often for products available in numerous languages/geos, owner companies decide to use multiple vendors to assess which company has the most updated technical stack and skilled resources with local language capability. Even in this case, as long as requirements are set right and there is someone to verify the output, it is almost easy to realize high quality output while working with multiple vendors.
Well-managed ODC offer cost savings, efficient resource allocation, increase in internal team’s motivation, access to latest technology and many other benefits.
Top Offshore Software Development Companies
Year of establishment: 1999
Offices: Hanoi, Vietnam (HQ), North America, Europe, Eastern Europe, Africa, Asia-Pacific
Revenue: 500 million USD (2020)
FTP Software is now known as one of the biggest software outsourcing companies in the world with 29,000 employees and 30 offices around the globe. The company focuses on delivering core services such as IT outsourcing, analytics, IoT, mobility and cloud services, as well as digital consulting, and has helped about 700 clients digitize and innovate their solutions.
FPT Software owns Citus Cloud Suite, Citus Cobol Suite, Emobiz, akaBot, akaWORK, akamins, and AkaDOC — cloud and automation digital products.
Industries: Automotive, Banking & Finance, Media & Entertainment, Healthcare, Logistics, Manufacturing
Year of establishment: 2004
Revenue: 2million Euro (2020)
Belitsoft is a company from Belarus with world-class software development services. that focuses on web portals and applications, e-commerce, and more. The Company provides a full cycle of software development services from project idea to product deployment, integration, support, and maintenance. Home to over 50 domain specialists, the company has left its footprint in various industries such as healthcare, e-learning, finance, and telecommunications, etc.
Year of establishment: 2005
Offices: Japan, Singapore, and Vietnam
Revenue: 300 million USD (2020)
Founded in 2005, specializing in manufacturing and business process improvements. In 2007, it entered the software testing industry by undertaking consultancy work for the improvement of E-commerce testing and Gaming. 2009 and onwards, the company then grew so rapidly to be listed on the Tokyo Stock Exchange Mothers market in 2014. The group and its core business have the market capitalization of 143 billion yen that makes it the largest of the listed Japanese companies specialized in software quality assurance and testing services.
Industries: Manufacturing, Finance, Insurance, Healthcare, Entertainment, E-commerce, Automotive, ERP and more.
Year of establishment: 1989
Offices: US, Finland, UAE, Latvia, Belarus,
Revenue: $79 million USD (2020)
Founded in 1989, ScienceSoft is a provider of IT consulting and software development services with history. Having started as a small AI product company, switched to IT services in 2002 and ever since the company has helped non-IT organizations and software product companies improve business performance and quickly win new customers.
Industries: 23+ industries, including healthcare, manufacturing, banking, retail, telecommunications, education, oil and gas, and more.
Communication is key
ODC teams always strive to meet the deadline with the flexibility in resource utilization. Besides, compared to fully outsourcing it to a 3rd party company, with ODC mode, the customer has a greater control and visibility into the project’s progress. Although offshore vendor is entrusted with the work, the ODC teams will still follow the company’s guidance and work as a team that feels much closer
Assessing the outsourcing partner’s capabilities and cultural fit
Good communication guarantees the project’s success, therefore things like time zone differences, employees’ qualification and the company’s cultural fit that may impact the overall communication should always be taken into consideration.
SHIFTASIA receives inquiries from all over the world, but we don’t always say yes because we want to make sure it’s a win-win partnership after our client considered all important aspects.
Factors we always recommend potential clients to consider:
・Case studies of relevant projects
・Engineers’ qualifications – Years of experience in agile, ISTQB certification for example
・Time zone difference
・Contracts – time and material, fixed etc.
・Quality assurance scheme – whether they have qa specialists to work with developers
We have summarized a checklist you can immediately use to compare pricing range per region and factors like the ones just mentioned. Check out our offshore outsourcing guide.
Outsourcing Guide & Checklist
Key Contributors in Offshore Development model
As you establish a dedicated offshore development team, you would want to consult with your partner / vendor company about the optimal set up in order to avoid excess and also lacking support.
# Role & Responsibilities
1 Account Manager - Relationship management, billing and alignment on business goals
2 Project Manager - Project management to oversee that milestones and deliverables are met
3 Scrum Master - Plan sprints, create tickets and ship changes to meet scrum milestones
4 Designers - Product and interface design suitable for selected tools
5 Developers - Architecture design, coding and maintenance work
6 Test Engineers / QA Specialists - Test plan, design and execution to verify bugs fixes
7 Usability, UI/UX consultants - Work with designers, developers and project manager to improve usability
・Here you can also read about How to effectively manage offshore QA teams
As we know, one of the reasons businesses turn to offshore software development is cost reduction, so the decision making can be solely made on how much money they can save vs hiring someone domestically. But does the cheapest solution always achieve high yield?
According to the report from Kearney’s 2019 Global Services Location Index research, Vietnam is among the top 5 IT service providers. Even big corporations like Intel, IBM, Samsung, Nokia, and Microsoft continue to select Vietnam as an attractive location to invest in for their growing population of skilled workforce. Japan and Korea are the country’s biggest investors in IT, and Vietnam currently has 20,000 employees working for Japanese companies in this capacity. So, you would naturally assume prices are going up year by year as the country’s workforce gains popularity and experience.
So, what happens usually is, you reach out to about 8 different vendors then you receive various price offers:
2 companies offer very cheap rate – because they are out of touch from the reality and don’t have the best talents.
4 companies offer moderate rate – because they are middle players who offer not best-in-the-field services at mediocre price.
2 companies offer higher rate – because they have won clients and have differentiators they sell with confidence
So which one is most cost effective? The key to knowing which group can bring out the best value, depends on your objective.
Offshore Vendor Selection Steps
The person in charge of looking for potential partners to build offshore delivery location differs from company to company. Sometimes, head of software himself must do the research, project manager, vendor management controller, finance manager or even business admin. Whoever you are, whether you are planning to outsource your project long-term or short-term, following these steps will ensure that you find the closest to best match company for your objectives.
・Identify business objectives
・Outline product requirements, expected outcome, problems you want to solve using offshore resources
・Determine the right range of solutions you want to use (how much operation you want to outsource of product life cycle)
・Research companies and list up 5~10 companies to get in touch with
・Request information (Easier to have RFI or RFP)
・Communicate security requirements / checklist
・Compare proposals and start trial
In our offshore selection guide, we have listed the full list of steps to take.
Outsource Pricing & Checklist
We have dedicated this article to help anyone understand the steps it takes to find a reliable partner when setting up an offshore delivery center. Finding the best offshore development company certainly is a lot of work.
SHIFT ASIA works with many clients in finance, manufacturing, ERP industries to help transform their quality assurance scheme into something modern and comprehensive. Please reach out to firstname.lastname@example.org for any questions about this article, and email@example.com for business inquiries.