The dearth of skilled professionals within the United States alone forces local businesses to delay their plans until they can find the appropriate expertise and qualifications. The number of vacancies for software developer positions on LinkedIn is growing to 200k. If we go through the data, we will see 10 percent of the vacancies require remote engagement.
|dedicated offshore developers|
Technical skills are not as strong throughout the United States
195,000+ Software Developer Job Openings on LinkedIn
45,000+ Software Developer Job Openings on Glassdoor
Jobs for Software Developers up to 90,000. open on Indid.com
It’s not a surprise that businesses are turning on outsourcing to handle these challenges and create new opportunities.08
A dedicated team for software development model as well as the offshore development centre are both examples of outsourcing. Both of them help you avoid costly hiring procedures and address the issues of retention and training when working with local employees. You can also use it to find the best talent in the moment you require it.
Find out the differences between the two kinds of outsourcing, and then determine which one is the best option for your particular project. The article begins with the basic guidelines of offshore development centers and then move on to compare it with the model of a dedicated team. When you finish this report, you’ll be aware of the advantages of the dedicated team and offshore development center and also its main dangers and challenges.
What is ODC – Offshore Development Center?
A software development center offshore is a kind that works in conjunction with an service company outside the customer’s country of residence. This business has physical offices that are comprised of specialists from across the spectrum comprising software engineers, developers, QA experts, administrative personnel, etc. The head office is responsible for defining the team size and their responsibilities.
If you establish the ODC group office located in a different country You create an entity legal that operates under your brand’s name, and represents your business rights in the market. The local partner is responsible for the legal requirements, accounting and human resource related issues and many other tasks. This is why you don’t have to transfer operational resources abroad to deal with issues such as repairs to your office, payroll taxes or even study a foreign language in order to get up to speed with local regulations.
How can you establish an offshore development center?
1. Find the ideal area. In fact, there are many countries that are not to be equal when it comes to providing the best conditions to set up an offshore center for software development. Consider the possibility of setting up your office in a small city with limited access to experts. Similar to selecting the right location. It is possible to get lower costs and not have to face bureaucracy, but in the end you’ll run into a shortage of skilled workers. This can put an enormous burden on timelines for projects. So, it is essential to narrow down the outsourcing destinations based on specific requirements:
Affordable development costs; low office rent, maintenance, and internet costs;
access to the huge collection of experts in technical fields;
an economic environment that is favorable;
Cultural connection and English proficiency
the absence of bureaucratic and legal obstacles to the creation of an entirely new legal entity.
A perfect price-quality balance.
2. Choose the best provider. The right ODC firm is one that has reliability and credibility, and also has track record of delivering successful projects. Other things to take into consideration are the following:
reviews of previous customers;
conformity to the law;
the capacity to adhere to the rules you have set;
English capabilities of each employee
3. Choose the right model. You can avail offshore development center services by using different collaboration models with the selected vendor. These include BOT (build-operate-transfer) and managed ODC business practice. It is important to understand the different characteristics of each one to determine the best option and select the best option for your specific project. Let’s have a look at two alternatives.
The customer of BOT connects with the local vendor in the destination of outsourcing chosen. The vendor takes responsibility for the organization aspect of creating the development center. They take care of recruiting employees, constructing the infrastructure needed, and resolving legal issues that affect the client’s business. In the last step, the vendor transfers the entire process over to their client.
Managed ODC. The model requires the third party to establish an development center and manage it for the client. The vendor’s responsibility is to handle administrative and organizational aspects as well as manage the accounting and payroll. Therefore, we can discuss the possibility of a client opening an office branch in a different location, and having an offshore development center managed by the vendor.
4. Start recruiting. To begin the recruitment process it is necessary to prepare job descriptions for every vacancy and then transfer those details over to the company that will provide the services. The information provided by the service provider allows researchers to look over the labor market and pinpoint potential candidates. If recruiters locate the top potential employees for your company then the subsequent step will be to conduct an interview and select the best candidates. Then, you must evaluate the hard and soft skills of your potential employees. Local administrative staff to oversee regular tasks, finances and taxation, legal, and other aspects related to the efficient operation within the ODC.
5. To organize the space. If you want to work from an office that is separate from the rest it is essential to lease it out and provide it with the right infrastructure. It is essential to work on a local level with real estate experts to identify the best places for your team. If you locate a the perfect office space you will need to purchase and maintain office hardware and equipment, as well as install security systems, and handle various administrative duties.
6. Find the right staff. Once you have completed the process of selecting candidates Send job opportunities to the most talented talent, and let the employees start working first. When you join your business, ensure that you have a smooth onboarding procedure for all new employees.
7. The project should be started. Everyone in the team must understand their areas of responsibility as well as their roles on the team. Be aware that every developer, accountant, or HR manager should know what they can inquire about and get suggestions from.
What happens if the project is either completed or fails? If the project is terminated then the business must remove every member of the team and take away the legal entity and end legal contracts with local authorities without breaking local laws. It is imperative for the buyer and all other parties interested in the project to comply with all obligations.
We’ll go into detail in a bit about the potential risks involved in creating your own overseas development facility. It is important to note that the likelihood of failure is significantly higher in the present conditions. The rise in the popularization of restrictions and remote-first policies due to the coronavirus virus forces businesses to look for ventures that are low risk. One example is the choice to purchase a team model that is dedicated to the business that is similar to ODC’s service however it allows you to avoid certain issues.
What is a dedicated group?
The service allows customers to connect with a team of software developers in order to satisfy specific requirements of a project for a specified amount of time. This model is an approach to bring experts with the necessary abilities to meet the requirements of a specific project. In this scenario you will receive the required experts, which will increase the size of your internal team and put their attention on specific tasks.
Pros and cons for each choice
ODC Model Professionals
You are hiring the best talent. Instead of putting individual programmers at one of the outsourcing hubs you could set up workplaces for employees, which will increase your odds of attracting top local talent. Also, if you’re planning to create an entire team or even a few groups, having a presence locally in any of the nations from which you intend to find candidates is a smart strategy. This means that you do not have to worry the idea of signing separate agreements with freelancers or developers from different firms. Instead, create your team in one place and assign the tasks.
The brand is promoted. There’s no denying that the headquarters of the company could benefit from the online presence of one of the countries. However, having a physical office in one of the thriving places can boost the possibility of reaching more customers as well as improve the overall experience. Another benefit is the capacity to address logistical issues in the setting up of an off-shore development centre.
There is no need to worry about security. Even if your product is in a highly competitive market the remote team is unable to ensure the security of all data. As a brand owner it is possible to control the flow of data and guarantee its security and integrity. Additionally the seller guarantees that no third parties have the right to access intellectual property.
You cut costs. Office rent in low-cost areas like Kiev is three times less than New York. It’s only a small amount of the overall spending. It is important to consider other expenses including office spaces equipment, developer fees. The snowballing of costs is likely to continue if you decide to establish a development center within the United States.
ODC Model Risks
It is necessary to assist with the process of head hunting. Joining a full-service group of experts can be risky if you’re not familiar with the labor market in your country. It is therefore an excellent idea to study the most suitable offshore destination and seek out insider information to ensure the proper channels of finding talent.
There are administrative and legal hurdles. Setting up offices in certain countries could become a nightmare because there aren’t all friendly foreign companies. In addition, you need to comply with local regulations in order to take minimum one or two steps toward the establishment of an office in a physical location.
It is important to keep in mind the cultural differences. Be sure to are able to communicate the cultural differences:
Personal and professional values;
– paradox management;
In the event that it doesn’t, the entire procedure won’t be easy and efficient for you or your partner.
Dedicated Team Model Professionals
There is no setup cost. Outsourcing companies take care to recruit and integrate new employees and set up their work space. They only require the salary in accordance with the hourly rate that you have agreed to.
You can recruit the best talent with unique skills. This collaboration model offers access to expert technical knowledge in the most prestigious outsourcing centers. It is possible to implement the needed capabilities using dedicated programmers offered by trustworthy service providers.
You will receive total commitment by skilled designers. The outsourcing vendor makes sure that the team is working exclusively on the project you are working on. Many efforts are dedicated to keeping staff members engaged and motivated to deliver top-quality solutions within the agreed deadline.
Dedicated Team Model Risk
It’s not suitable for projects that are short-term. The dedicated team model could not be efficient for projects that last more than one couple of months. This is the same for the scenario where there is a limited list of technical needs.
This is not a good choice for budgets with no-negotiable terms. When a fixed budget, non-negotiable in nature is the most important factor when selecting a growth group the business model you choose will not be able to fulfill your requirements.
It may take a lot of time to find the best candidates. Your dedicated team will have the necessary abilities and skills that meet the needs that the job. Due to this, the process of recruiting could take a considerable amount of time. It is important to factor this time into your initial estimates.
Offshore Development Center vs Dedicated Team: Cost Analysis
Both offer an opportunity to save money on the cost of hiring, growth rates and office maintenance costs when it comes to expenditure. The top outsourcing destinations like Eastern Europe provide cost-efficient and favorable economic conditions for future expansion. Cost of living is affordable and there is a an abundance of tech-savvy employees.
If we take a deep look at the distinctions between ODCs and model teams with dedicated staff, it is possible to determine their costs.
Monthly expenses within Eastern Europe (Ukraine): ODC vs. A dedicated team
|Lines of expense||ODC||Dedicated Team|
|Payroll for HR||$3,500-4,000
|The range is $6,000-8,500.
per developer salary
|In the salary|
(depends on the particular situation)
As the table above demonstrates that the setting up for an off-shore development centre requires significant investment in the administrative and organizational aspects. And , if a brand new office space is required it is important to be aware of the cost of modern furnishings and equipment, renovations, parking areas and other operating costs.
The other distinction in the models are that the developer’s compensation is greater with that model. It is possible to save between $2500 to $4,500 for each developer, and use your budget for other expenses such as administrative tasks. But, the client is not required to handle taxes, pay overheads, and pay for recruitment costs with a an exclusive team model. Instead, they are compensated for the work of developers each month. Furthermore, when the contract ends the client isn’t obliged to deal with any legal concerns or to manage any obligations in conjunction with the partner. The vendor’s side, the HR team will find a different project to its development staff.
This means that you can change the focus of other tasks and remain flexible and even switch service providers. This approach is great for projects that require it. Another benefit is the ability to get access to exclusive or specific knowledge and increase capabilities for development, at least for a brief period.
The article we’ve highlighted the most important aspects of two outsourcing models. The offshore development center as well as the dedicated team offer the advantages of remote collaboration through a reliable and effective service provider. It is nevertheless essential to know the specifics of each method for conducting business internationally.
Geomotiv Geomotiv we’ve gained vast experience in the creation of teams that are distributed for various projects. Now, with all the hype surrounding remote work we are aware of the best option to pick for specific requirements of the business, specific customer needs along with technical specs. So, if you’re planning to bring in remote teams with special or unique skills, and commitment to long-term projects, don’t be afraid to reach out to our experts.