Offshore Development Center (ODC): Game changer for your business in 2023

offshore development center 2023

The Offshore Development Center (ODC) model has appeared and quickly became a “trendsetter” since 2020 when digital transformation was crucial to all business survival in the midst of the pandemic storm. After 2 years, has the ODC “craze” cooled down in the technology industry? Sure, it does but still retains its position in the market as a “new normal” when the demand never stops increasing. But is the trend always right, and what should your business keep in mind before entering the ODC market in 2023? Stay up-to-date with the latest ODC reports and analysis in this article.

What is Offshore Development Center (ODC) and will it be the same in 2023? 

If you work in the IT field, the concept of Offshore development center is probably not new. If your business is in demand for IT outsourcing services, then ODC might have already been one of your considerations, and you have probably “passed through” varied versions of ODC’s dictionary.

That’s right, Offshore development center is still the same model – a development company that provides you with software development services, located in another country whereas it has much lower living standards.

On the ODC “rat race” for the past 2 years, thousands of businesses have approached the only one ODC above, but some succeed and some fail. Why so? The concept and essence of Offshore development center have not changed, the variable here is your business and the market situation.

To win this race, the initial factor you need to define is not the “cliche” stereotypical ODC concept and setup formulas, but the definition of who you are. Please keep in mind, ODC is not a trend, it is a solution, rather a solution to your business problem.

This article will help you define your own ODC concept – the “game changer” for your business in 2023. To unlock this dilemma, join us in finding answers to the following questions:

  • Why do you need ODC and not any other IT outsourcing model?
  • When is the golden time to establish ODC for your business?
  • How to pioneer the ODC market in 2023 instead of following the old “path”?
  • Where should you invest in ODC to optimize the solution for your business?

If you are the decision-maker of your business’s success, but still have a challenge in finding the above answers, then read on to “untangle” each one of them OR BOOK A FREE CONSULTATION WITH OUR EXPERTS.

 

Offshore Development Center vs Other Engagement Model: Choosing Right Partner

If you are still wondering which will be the “best fit” model for your business, let’s put them on the balance sheet!

 
Offshore Development Center Fixed Price Outsourcing Model
Client Chosen by huge international, global companies Preferred by startups, midsize businesses
Project size Best fit for large and long-term projects Works great for small and mid-sized projects
Approaching Method Suitable when using Agile project management. More preferable with traditional project management methodologies like the waterfall model.
Management Level Allow clients to control the development progress. Little to no management. All project details depend on the engagement model that is defined in the contract.
Time engagement Startup Time: The project immediately starts as soon as the client and development team both agree on the resources involved and contract terms.

During the process: Quick access to full-fledged software development teams.

Startup time: An internal assessment process (analysis, workload estimation, etc.) needs to be done before kicking off the project.

During the process: Team ramps up depend on the current project needs

Requirements Change Clients can freely change the resources’ work content, or adjust the priority of different tasks whenever they want in the development lifecycle. In the development lifecycle, if requirements are changed, the development team might need to re-estimate the total workload, adjust or remake the project plan, re-negotiate the cost for the requirements change, add or remake the contract, etc.
Delivery Deadlines Uncertain deadlines. Any adjustments to the project can postpone the final release and the project can become overdue. Strict deadlines because a clear plan and definite delivery timeframes have been agreed on at the very first step.
Total Price The client can control the total price of the monthly fee by flexibly adjusting the ODC team An accurate quotation is provided at the beginning of the software development project. The final price won’t be much different from the initial estimation as long as the requirements stay the same.

Do the Benefits Outweigh the Risks?

Advantages Disadvantages
Offshore Development Center
  • Flexibility: Clients are able to make informed decisions during the stages of software development, drawing on the outcomes of the previous ones (end-user feedback) and the analysis of the latest market tendencies. Therefore, features can easily be added or removed during the execution process to meet the customer’s expectations.
  • Clients’ Full Control of Project Management: project managers from the clients’ side are responsible for the team process, even deciding on which methodology to follow. Moreover, as the clients’ team directly collaborates with the ODC team throughout the project, it can be a promising opportunity for their employers, especially junior-level staff, to learn and improvise. This is no doubt beneficial for both themselves and their business in the long term.
Uncertain budget and deadlines: If everything in the Project-based contract is clear at the beginning stage, it is nearly impossible to identify the overall budget and timeline in the ODC outsourcing model. The final cost may go beyond the expected budget and so does the release date. Any adjustments to the project can shift the date of the final release and the project can become overdue. Besides, the software development price is approximate, so the clients hardly know how much money they have to spend.
Fixed Price Outsourcing Model
  • Little management efforts: When signing a Fixed-Price Outsourcing model, all responsibilities for the project’s success will be passed down from customers to the outsourcing providers. No matter what problems may come up in the process, it is the suppliers who take charge of it and have to solve it by themselves. This takes away the pressure on the clients.
  • Clarity On the Project Outcomes: This type of contract requires the supremacy of meeting deadlines and milestones while keeping the scope frozen until the sprint is over. Final acceptance is formalized and based on a number of criteria that the parties agree on in advance.
  • High cost: The fixed-price estimates are often higher when compared to other outsourcing models, as all foreseeable and likely risks are taken into consideration.
  • Nearly impossible to change: There is almost no room for alterations in each phase of the Fixed-Price Contract. Any changes you may want to introduce further in a project would require separate negotiation and payment. Therefore, this outsourcing model also leads to a slow project launch because it requires scrupulous preparation, planning, ongoing monitoring, and coordinated actions of everyone involved.

In conclusion, every coin has two sides, each model has its own pros and cons that would be suitable for different projects. Whether ODC or other IT outsourcing models, it is only the best solution when it meets your business’s demands, size and budget. Not only that, its advantages are what your business is lacking, and its disadvantages do not affect the final goal of the project.

If your company has a solid understanding of the project and a limited budget, then a project-based model would be the best fit. On the other hand, if your project requires a flexible process, then there is no better option than the Offshore development center.

 

When is the golden time to establish Offshore development center for your business?

After looking at the above analysis and you have determined that Offshore development center is the model you are looking for, the next question is when should you start? You can start at any time, but to get the best results, you need to wait for that golden moment – when all the following factors are defined:

  1. Clear goals and objectives: Make sure your goals are realistic and achievable.
  2. Comprehensive research: Setting up an ODC is a long-term journey, so make sure you do your homework before getting started.
  3. “Best-Fit” partners: It’s crucial to cooperate with experienced and reputable vendors when setting up an Offshore development center.
  4. Comprehensive plan: This should start from selecting a location to setting up office space.
golden time to set up offshore development center
Golden time to set up offshore development center

How to break the stereotypes and create your own ODC model in 2023?

There is no fixed way to successfully and efficiently set up and run an Offshore Development Center. Therefore, applying one formula for all businesses is not efficient.

In addition, the world is constantly changing, especially the development speed of the technology market is always many times faster than other fields. Then is the formula in 2020 still suitable for the current market? Moreover, quickly grasping the needs of the market, a bunch of outsourcing software development companies appears with the same promise to bring the best value. How to make your business not be hooked on the temptation of unreliable tech “hunters”?

The following 5 experiences will become crucial “luggage” to help you set up your own ODC model, optimize productivity, easily overcome upcoming traps, and minimize possible risks:

1. Carefully select the suitable location

No need to discuss further, choosing the ODC model helps your business to optimize costs because Offshore development center companies are located in countries with a lower cost of living. But do not focus too much on the cost factor that forgets to ensure the quality of the capacity, experience and skills of human resources. You should avoid going to small cities with too few specialists available in your specific domain and less potential. Labor costs and capacity are two factors that must always go hand in hand.

There are a number of aspects to consider, including:

  • The cost of living in the country
  • The availability of skilled workers
  • The time difference between the Offshore development center country and your home country
  • The legal and political stability of the country
  • The cultural fit between your company and the country
>> Learn more about Marketplace Insights: Vietnam reigns top countries for ODC setup

2. Find a reliable vendor

Initially, check an outsourcing vendor’s website and pay attention to every detail you’ve noticed. Here are a few critical factors to keep in mind before making any decision:

  • Technical Knowledge and Expertise

These are offshore development centers’ initial and most vital characteristics. The service providers must comprehensively understand your project’s technical conditions and have hands-on experience managing ODCs because these companies will be responsible for recruiting IT talent and creating the offshore development team.

  • Previous Performances and Reviews

Examine the portfolios of the outsourcing vendors to assess their technical expertise and experience. The list of clients they have provided services to will reveal a lot about their abilities. Do they have prior experience in your field? How satisfied are their clients with the quality? You can contact some clients to get first-hand feedback on the outsourcing vendor you are considering.

>> Take a tour to our Case Studies Exhibition!

3. Working Methodology

Check to see if the vendor’s working style and process are compatible with yours. You must understand the outsourcing vendor’s working style to determine whether it matches yours. You can also be more active by showing vendors the type of work methodology you want.

4. Professional skills of the staff

As you establish an offshore development center, it’s important to carefully discuss and identify the key members in the Offshore development center with an offshore vendor. An offshore team should include these major roles:

  • Account Manager – Account Manager – In charge of the relationships management with particular customers, ensuring that all needs are met.
  • Project Manager – Responsible for the entire project from planning to executing, making sure that all the required resources in the project are covered.
  • UI/UX Designers and Developers – Accountable for the software’s design, installation, development, and maintenance.
  • Test Engineers – Accountable for the product’s integrity, quality, and non-functional requirements.
  • Usability Engineers – Perform tests to evaluate the usability or user-friendliness of your product.
  • Graphic Designers – Creates visual and graphical concepts or language to promote a product’s unique persona or brand.
  • Content and UX Writers – Create content and instructions integrated into the software.

Please make sure to carefully pick a dedicated team of qualified, experienced staff to ensure quality.

professional it experts in offshore development center
Professional IT experts in offshore development center

5. Sign an NDA to ensure security management

Working with an outsourcing vendor means presenting them with private and/or commercial data. Here is one of the core drawbacks of outsourcing. A Non-Disclosure Agreement (NDA) is an authoritative document that sets up all the requirements for utilizing and transferring data, etc.

6. Communication management

Communication is the key to sufficiently incorporating offshore development team with internal team. Clear and consistent communication via emails, messages, and online meetings can help create and develop active and sustainable relationships, which is of great advantage for better management.

Three factors directly influence communication between the Offshore development center and in-house teams:

  • Time Zone: Make sure there is a significant time difference between the two teams so they can work on the project during their work hours. You can appoint a project manager as a liaison between the two teams, allowing the ODC team in Vietnam and the in-house team to collaborate smoothly.
  • Language: Select a vendor whose team members are fluent in English. This will aid in the prevention of misunderstandings and miscommunications during the project development process. You need not be concerned about this because the IT workforce in Vietnam is fluent in English.
  • Cultural Distinctions: Cultural differences between the two teams may impact their communication. As a result, you should ensure that the Vietnamese vendor you select has a team of professionals who understand your company’s culture and values. Alternatively, you can hold virtual team-building activities to help all team members get to know each other better and establish a good rapport.

 

Choose LTS as your Offshore development center, Why Not?

Here are 5 reasons why LTS is your best fit Offshore development center partner:

1. Located in Vietnam – reigns top countries for IT outsourcing services

Vietnam ODC services have become an excellent choice in recent years. Vietnam has been a popular destination for IT outsourcing due to its low labor costs compared to other countries, a large pool of IT talent with foreign language proficiency, and the government’s open policies toward foreign companies.

  • Vietnam is ranked first in terms of innovative location and cost environment (Cushman & Wakefield business process outsourcing and shaped service location index, 2016-2017)
  • Top ten countries with the highest number of engineering graduates (Forbes, 2015)
  • According to TopDev’s report, Vietnam has about 400.000 IT Engineers and over 50.000 graduated IT Students from over 153 IT Institutions per year.
  • Vietnam ranks 29th in terms of Skillvalue Worldwide in Developer Skills Chart of Skill Value Report in 2018.
  • Top 06 worldwide in Developer Skills Charts of Topcoder Report in 2016.
  • Rank 23rd worldwide in Developer Skills Charts of Hackerrank’s Report in 2016.

Especially at LTS, we can provide a dedicated team working for you, any changes in requirement and specification can be adapted during the project operation. Moreover, LTS can ensure that, regardless of any updates, working hours are limited to a predetermined level, keeping overall costs stable. This will overcome a drawback of the ODC model: no fixed budget and easy to incur costs compared to the original estimate.

2. Reliable and Experienced partner

LTS’s top global quality has been confirmed by 2 prestigious Sao Khue awards (the biggest award of Vietnam Software Industry) for best testing services and when becoming a silver partner of International Software Testing Qualifications Board (ISTQB).

LTS’s reputation and experience is reflected in the number and variety of projects that LTS has implemented, along with a customer satisfaction index of up to 94%. We proudly satisfy more than 60 clients with 214 projects and the impressive numbers are still counting. We marked our success in varied areas, which namely E-commerce, ERP, Automotive, Insurance, Healthcare, Education, F&B, Banking, etc.

With the experience and achievements accumulated during 5 years of continuous efforts, LTS has become the prestigious choice of many large domestic and foreign enterprises such as LG Electronics, FPT Software, IFINIQ, MB Bank, CJ Entertainment, Golden Gate Group, Toshiba, Panasonic, etc.

3. Tech Landscape/ Field Variety

One of the factors that makes LTS always feel proud is our large Full-stack talent pool. We’ve built a dedicated team of tech engineers, BAs, testers, QA through our extensive recruitment program and partnership with top IT University in Vietnam.

With our landscape of diverse programming languages, LTS is your one-stop destination and can solve all your business problems from Front-end to Backend, Database, Mobile Native, Hybrid, Cloud and Domain, etc.

offshore development center helps access to a large pool of it talents
Offshore Development Center helps access to a large pool of IT talents

4. High-Quality Technical Education

LTS always prioritizes training and this is one of the reasons why businesses can completely trust the quality of LTS’s human resources. Constant learning is one of the 4 core values of LTS. We always motivate and create conditions for our employees to cultivate more knowledge and skills to keep pace with the world’s development in the technology field.

Besides internal training activities, one of the sustainable development strategies of LTS is to constantly nurture the next generation of talent, future technology engineers. We have our own LTS Academy, specializing in providing Information Technology training services. Students who complete our courses can completely become one of the LTS’s members and participate in your future projects.

Over our five years of development, our headcount number has grown 300%, reaching 248 in August 2021, 230 of which are technical staff. We obtain a high level of language proficiency for effective communication with our clients.

As global technology engineers, the LTS team achieves a high level of language proficiency to communicate effectively with its customers around the world. In which, 85% of staff are proficient in English, 25% of staff are fluent in Japanese, 5% of staff are fluent in Korean.

Especially at LTS, quantity always goes hand in hand with quality. Our staff can meet the international standards of both management and technical skills. In which, 52% and 36% of employees are ISTQB and PSM certified respectively.

5. High Security

One of the drawbacks that businesses also consider about outsourcing services is the possibility of leaking confidential information. To fix this, LTS ensures to provide a comprehensive system of security including physical layers, legal confidentiality and network security to protect your intelligence property. Your security is our responsibility.

 

Time To Make The Final Call 

With all of the above information on Offshore Development Center, you can grasp the basic idea of how this works and how it can benefit your business. You can get information, advice, and guidance from others, but the final call has to come from your end. If you’re swamped with too much knowledge of this, you can learn about our Offshore development services or contact our expert for a free consultation.

We, at LTS Group, are just a contact form away: 

Website: https://ltsgroup.tech/

Tel: (+84) 24-6660-7474

Fanpage: https://www.linkedin.com/company/lts-group-vietnam/

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