Offshore Development Center: The Complete 2024 Guide

Arfel Arriola

April 25, 2024

Last updated: July 10, 2024

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Developing products that meet global standards is essential to gaining an edge over competitors, but this takes time, effort, and money.

As a result, businesses are forced to produce the bare minimum because of a lack of talent.

Working with an offshore development center can help your company overcome that. 

In the last few years, companies have chosen to work with offshore development centers to hire the best and brightest developers to save on costs.  

Read our complete guide to learn how to kickstart your offshore operations.   

Let’s get started! 

What Is an Offshore Development Center?

An Offshore Development Center, or ODC for short, is your company’s development center operating in a different country.

what is an offshore development center

Picture it as your company’s overseas outpost.

Powered by a global team, this outpost operates from a country with lower labor cost, allowing your company to maximize expenses.

If that sounds exciting, wait until you hear about the benefits of working with an offshore development center in the next section.

Benefits of Having an Offshore Development Center

Having an offshore development center can reap numerous benefits for businesses. This strategy benefits companies aiming to improve efficiency and stand out in the expanding market.

benefits of offshore development center

The benefits of having an offshore development center include the following:

  1. Cost Savings: An offshore development center provides access to talented developers in countries with lower labor costs. Because of the lower overhead costs, you can maximize your company’s budget and gain maximum results. Opening multiple offshore offices is also possible, allowing your business to grow while gaining significant cost savings. 
  2. Access to Global Talent: An offshore development center lets you tap into the rich pool of talented software developers worldwide. With CoDev as your offshore development center, you can hire the best and brightest developers from the Philippines at lower rates. A diverse workforce brings professionals with different skills and backgrounds to create great things by leveraging one another’s strengths.
  3. Scalability and Flexibility: The offshore development center allows you to swiftly scale up or down team sizes in response to project needs. This enables businesses to adjust their resources dynamically, ensuring alignment with project demand and resulting in more growth and development.
  4. Cultural Diversity: It’s healthy for companies to collaborate with teams from diverse cultural backgrounds to enhance problem-solving, creativity, and team dynamics. Teams can learn numerous things from one another, which fosters an inclusive and innovative work environment.
  5. Round-the-Clock Productivity: An offshore development center leverages teams stationed in diverse time zones, allowing companies to maintain productivity around the clock. This distribution ensures tasks are tackled efficiently, even during the company’s off-hours, driving accelerated project timelines and continual progress. With this approach, companies maximize efficiency and tap, helping them efficiently tackle challenges.
  6. Focus on Core Competencies: By delegating your company’s non-core functions to an offshore development center, businesses can focus on their core strengths, positioning the company for more innovation and sustainable growth.
  7. Avoid Risk: An offshore company mitigates risks by diversifying geographically, reducing the potential impact of regional disruptions or unforeseen obstacles on local business continuity. Since the 2020 pandemic, the need for business flexibility has increased owing to possible lockdowns in regions. 
  8. Accelerated Time-to-Market: The ODC quickens development cycles, enabling businesses to swiftly introduce products and services to the market and gain a competitive edge.
  9. Technical Proficiency: Accessing specialized skills and state-of-the-art technologies with offshore development center locations ensures that businesses remain at the forefront of industry advancements.
  10. Improved Focus on Strategy: Outsourcing your routine tasks to an offshore center will allow you to focus your business’ internal resources towards more strategic initiatives, enabling long-term growth for your company. 

Remember that these advantages are not exhaustive, which means there are many more benefits of having an offshore development center that aren’t included in this list.

As your company grows in handling its offshore team, you’ll realize that the benefits are worth any challenge. 

Let’s look at how you can set up an offshore development center to start reaping the benefits.  

How to Set up an Offshore Development Center

Building bridges between diverse teams to unlock growth opportunities is difficult, so it’s helpful for you to set up (or work with) an offshore software development center.

Let’s look at how you can set one up in this section.  

Choosing the Right Location for Your Offshore Development Center

The decision of where to set up your offshore development center is essential because the right location can influence the success of your business.

choosing the right offshore development center

Your chosen location can impact cost, talent availability, and overall operations.

Here are some pointers to help you make an informed decision: 

  1. Talent Availability: Is the country known for the specific expertise you desire? Look for regions that are heralded for their educational and technical prowess. Having a rich talent pool is crucial for the success and sustainability of your offshore development center. 
  2. Cost Efficiency: Although affordability is appealing, balancing infrastructure quality and available talent is crucial. Better long-term strategies often yield better results than opting for the cheapest alternative. Sometimes, more affordable isn’t the best way. 
  3. Cultural Alignment: Seek an offshore destination where the work culture mirrors yours, promoting communication and integration. It’s to your advantage if the region you’re looking at speaks and understands English widely because this will lessen miscommunication. 
  4. Stability of Political and Economic Domains: Political and economic stability are vital for sustained offshore development center success. Before working with an offshore company, evaluating the country’s political climate, legal systems, and economy is crucial because these can impact business operations. 
  5. Government Requirements: Different regions offer varying incentives and regulations for offshore companies. Familiarize yourself with these to streamline procedures effectively.
  6. Connection and Time Zone: Consider how you can adjust to the time zone differences to enable continuous operations. Countries or areas with solid internet connections will foster smooth collaboration between the offshore development center and your company’s home office, enhancing overall efficiency.

These simple steps will help you decide where to set up your offshore development team.

Setting up Your Offshore Development Center

Here are steps you should consider before embarking on your journey:

  1. Analyze the Market: Conduct market research on potential locations for your offshore development center. Evaluate available skills, quality of facilities, living expenses, and legal obligations. Assess them as if you were expanding your home office to another location. 
  2. Choose a Location: After researching, choose your location based on the required technical expertise and cultural preferences. The location of your center will determine the parent company’s expenses, depending on the foreign employees’ salaries and cost of living. 
  3. Legal Entity: Register with the local government to become a legal entity. Study the legal requirements of the countries you’re looking at. It’s essential to understand how taxation and employment laws work and comply with them accordingly. 
  4. Facility: Find an office space within your budget to rent. Consider the area and safety, and look for spaces at the heart of the business centers. If you plan to work with an offshore company like CoDev, you don’t need to worry about this because we have offices in five locations around the Philippines that cater to our developers. 
  5. Office Design and Setup: Design your space to reflect your company’s identity and values while ensuring that it promotes productivity. Plan out how to accommodate your team and consider equipment, too. 
  6. Security: The right security technology is essential when working with remote teams. Invest in secure internet connections and specialized security software. 
  7. Training and Recruitment: Start building your team by recruiting locally. Look for people that resonate with your company’s culture and values. Implement training programs to help your people get up to speed with company standards and to aid their upskilling.  
  8. Growth and Maintenance: Regularly monitor and optimize operations in your offshore development center. Consistent monitoring is crucial to the continuous improvement and scalability of your company.  
  9. Create Workflows: Executing a clear workflow from communication channel protocols to operation protocols will ensure smooth collaboration between your on-site and offshore teams.

These steps will help facilitate a smooth transition as you venture into offshore software development and will set the foundation for your offshore operations in the coming years. 

Overcoming Offshore Development Center Challenges

While utilizing an offshore development center can benefit your company, it poses a few challenges. However, challenges are necessary to help your company grow, so don’t get discouraged by what you’re about to read.

Instead, use it to propel you and your team forward as you navigate the world of offshore teams! 

overcoming offshore development center challenges

Here are some challenges and how to help your company overcome them to ensure excellent team collaboration:

  1. Communication Challenges: The in-house and remote teams will likely experience communication differences. Various factors, including culture, can cause barriers. Fostering effective communication is paramount to success when establishing an offshore development center. Another excellent way to overcome these is to operate an offshore development center in a region with a similar culture. Companies should intentionally communicate with their offshore team and cultivate an open environment. Other ways to mitigate barriers include conducting workshops, team-building activities, and encouraging interactions outside of work.
  2. Cultural Differences: As mentioned above, cultural differences can contribute to communication barriers but can become barriers themselves. Integrating your global offshore team with your in-house team can become challenging if not appropriately addressed. Initiating cultural workshops, virtual meetups, and remote game nights can help your people learn about each other’s culture. 
  3. Quality Control: Controlling your offshore team’s quality and development process can be challenging. Companies should establish quality standards, protocols, and quality assurance testing procedures for every project to help control quality. 
  4. Infrastructure Challenges: Some regions lack fast or stable internet access. When looking for an office space, consider the business districts of the area you’re considering. These business districts are found in cities and metropolitan areas, which are great places to start because they have the proper infrastructure for offshore development centers. 
  5. Timezone Differences: You’ll need to adjust your schedule when working with remote teams. Your team might be up while you’re in bed, and vice versa, but this can be a good thing when leveraged well. Have overlapping hours throughout the day (or specific days) to sync up with your team through chat or video calls. For example, if you’re on Pacific Time (PST), you can set up daily meetings with your offshore team at 3 PM your time, which would be 6 AM Philippine Time for them. 

There are many ways to work around timezone differences, and it shouldn’t discourage you from setting up an offshore development center because the benefits truly outweigh the challenges.

Look at it this way: while your in-house team is in bed, you’ll have a dedicated team fully awake from the other side of the world, ensuring your operations continue.

How cool is that?

As I mentioned earlier, growth requires challenges. This list should empower you to strive for excellence when building your company’s offshore development center. 

Do you need help overcoming these challenges? Allow us to help you.

When to Utilize Offshore Development Center Services

Let’s explore why you may contemplate establishing an offshore development center to expand and enhance your business.

Assessing whether your business needs an ODC is vital to your success before you dive in.

Here are reasons to consider if this is the right path for your business:

  1. Goals to Expand: What are your expansion goals? If you plan to expand to new markets or scale your operations, an ODC will be strategic in helping you achieve the substantial workforce needed to accomplish this. 
  2. Lower Operation Costs: If budget constraints hinder your company’s growth, starting or partnering with an offshore development center can alleviate the financial burden. You’ll have some breathing room without compromising the quality of your workers. 
  3. Skill Gap: If you observe that the talent pool in your area needs to improve or lack the required skills to do the job, an ODC will help you bridge this gap and connect you with talented developers ready to take on your project demands. 
  4. Long-Term Goals: Offshore development centers are ideal for the long run. Evaluate your company’s long-term vision and determine if it requires more than meeting immediate needs. If your vision is big, an ODC can aid continuity and commitment. 
  5. Cultural Fit: Check if your company can integrate a diverse team of workers from different backgrounds into the company culture. Leaders should do everything possible to bridge the cultural gap to ensure smooth collaboration and foster teamwork. 
  6. Good Security: The local security and data protection laws should align with your company’s values and business standards. 

As businesses grow, it’s natural to scale operations to keep the company moving forward.

However, barriers exist to constant improvement, making it an uphill battle.

If stagnancy hinders your company’s goals, consider working with an offshore development center to drive growth.

Real-World Examples and Case Studies

Here comes the exciting part! (as if you weren’t excited already). 

We’ll tackle real-life examples of CoDev clients who experienced the benefits of working with our offshore development center to scale and grow their company. 

Heggerty’s Partnership with CoDev

Heggerty is dedicated to advancing literacy by giving teachers rich educational resources. However, the company’s mission and dedication to learning were met with significant challenges in optimizing its customer relationship management system.

As they expanded, the need for Heggerty to acquire a specialized Salesforce developer became crucial, but the high cost of talent in the U.S. was a hindrance. 

The Challenge

The company desired to foster literacy and prepare students for lifelong learning by investing resources into product and service development rather than paying high overhead costs. Building their CRM was essential to their strategy, but the starting salary for a salesforce developer exceeded $70,000, posing a financial challenge for the company. Heggerty aimed to keep expenses low without sacrificing quality service.

That’s where CoDev stepped in.

The Solution

Heggerty worked with CoDev to solve their staffing issues. Our value proposition to them was simple: provide highly skilled offshore developers at a lower cost than domestic workers. Using a thorough selection process, CoDev provided Heggerty with qualified candidates who were technically skilled and a good cultural fit for their company’s team-first approach. 

To read more about this case study, view the article here: Case Study: Heggerty’s Strategic Partnership with CoDev.

FMG Suite’s Expansion with CoDev’s Support

FMG Suite, a frontrunner in marketing technology tailored for financial advisors, prides itself on a great customer satisfaction track record.

To uphold this standard of service excellence while balancing expenditures, FMG Suite encountered the task of growing its Customer Service Team in a cost-saving manner, emphasizing long-term retention.

The Challenge

FMG Suite is committed to being financial advisors’ go-to marketing tech hub. However, the company found that hiring a large team of customer service reps in the U.S. strained their budget and posed retention challenges.

And you guessed it, that’s where CoDev came in to save the day. 

The Solution

FMG Suite sought assistance from CoDev to tackle this staffing hurdle. With CoDev’s proficiency in deploying offshore teams, an ideal solution emerged. Drawing on our extensive network and track record, we succeeded by providing FMG Suite with a team of 14 individuals tailored to its specific needs. This team wasn’t just skilled but matched to align with the company’s mission and values, ensuring a smooth transition into its culture. 

The partnership resulted in significant improvements for FMG Suite. 

To read more about the case study, visit the article: Case Study: FMG Suite’s Expansion with CoDev’s Support.

Find Great Talent With CoDev

Global inflation is hitting companies hard, but offshore companies can help ease the burden. Working with an offshore company can reap many rewards, which include hiring great talent and attaining cost savings.

When you partner with CoDev, you’re matched with skilled professionals who share your company’s mission and values.

Book a free call to learn more about how you can grow your business with us.

Arfel Arriola

Arfel Arriola

Arfel is a seasoned content marketer with four years of experience in digital marketing. A bookworm at heart with a love for tech, Arfel brings a unique perspective to his work. His content aims to inform and inspire, building the bridge between awesome companies and great developers.

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