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Cost Factors to Consider for Offshore Development Center (ODC) Set-Up

What benefits can ODC bring to your business

Ok, let’s face it: the face of software development has changed drastically. Previously, the companies had to invest hundreds of thousands or millions of dollars to build their own in-house development teams. Today, endless nearshore and offshore development possibilities are right at their fingertips.

With this in mind, most companies realize that paying in-house software developers can be quite costly. This is especially true if the app or product only complements your main product, or if there is minimal need to keep dozens of staff after the product is rolled out. Since technology is changing at an ever-increasing speed, it is ok to not wish to digress your attention to software development or app building only.

“When it comes to the success of your business, efficiency is key”

Offshore software development presents an opportunity for clients looking for software building solutions away from their domicile countries. Some regions offer specialized development teams and a vast pool of talent at a surprisingly inexpensive rate. This effectively reduces the amount to be spent on keeping in-house teams, compared to more affordable yet specialized offshore teams.

“Offshore development reduces bottlenecks of keeping extra staff in your own office, eliminating factors such as payroll, bookkeeping and health benefit costs”

When Does ODC Become the Best Alternative?

The world has all but adopted an agile methodology to software and application development. The rollout of a product begins at the client brief, research & development phases, and beta testing, with code forming only part of the byproduct. This means that software development cost can get extremely high and unfeasible, especially if the plan is to rely on in-house development teams.

Granted, medium to large scale companies and enterprises can maintain a dedicated development team for product testing, delivery, and maintenance. However, this is usually the case when the company is itself development-based, such as Facebook, Twitter, Uber, or Apple.

For those companies that are not looking to focus on software development as a core mandate, it becomes quite practical to outsource their services. Such companies can benefit from the lower contractual costs for ODCs.

“Since ODCs are specialized in a specific application development framework, they don’t need any extra training to start out”

Usually, ODCs are experts in a specific runtime environment, like Swift or JavaScript. That’s why they can tackle jobs where only these skills are demanded.

An offshore development center can also offer a variety of other essential services:

  • UX/UI development and testing
  • SEO content creation
  • project management
  • design development

Having a multidisciplinary team brings you additional cost savings, offering a wide range of services to be delivered in a centralized and timely fashion. You can also train these developers to use your tools and adjust to your hours or company culture. Having these ODCs understand your product or brand can help build a healthy and long-term working relationship. It would be of great assistance to your business, especially in the long run.

Choosing an ODC | Tackling the Cost Perspective

With the massive rise of Eastern and Central Europe, India, and Southeast Asia as regional hubs where even the most specialized tech problems can be solved remotely, having a successful rollout of your product boils down to choosing the right offshore software company. When it comes to the final selection, the cost is ultimately the determining factor. However, there are other considerations that should be given to the company, such as:

  • expertise in a particular development language
  • project portfolio
  • working mobility between your own office team and the offshore staff

Ideally, you’ll also want a team that you can communicate with at any time, without any language barriers.

Depending on the agreed-upon contract, you may need to cater for other expenses, such as:

  • travel
  • testing
  • office space
  • taxes

As already mentioned, Eastern Europe is playing a pivotal role in the promotion of ODC as a viable software development alternative. Below, we explore three countries in this region which are at the forefront of popularizing ODC and the relative costs of setting up teams here.

Ukraine

While Ukraine has suffered considerable political unrest in the last two decades since the collapse of the Soviet Union, this hasn’t stopped it from becoming the number one outsourcing destination in Eastern Europe.

Today, there are over 1,000 global IT brands and hundreds of R&D testing centers operating in Ukraine, with hundreds more new software-based startups being founded each year. The education system emphasizes math, engineering, and the sciences which means a gross pool of IT specialists is entering the job market each year, larger than anywhere else in Europe.

“Ukraine is one of the most affordable ODC destinations in the world, with hourly rates for a software developer starting at $25-$50”

This figure can go up to 200$/hour depending on the expertise of the developer, and the exact location (for example, the rates between Kharkiv and Kyiv may differ). Ukrainians are known to be agile and enterprising as opposed to some of their Asian counterparts, who therefore expect a picture-perfect product.

YouTeam is a prime example of a Ukrainian company that facilitates easy set-up of an offshore development team focusing on a host of developer toolkits such as Java, front-end and back-end, blockchain, cloud-computing, C#, etc.   

Poland

Its population is highly specialized in math, IT and engineering functions, with software developers favoring JavaScript, Swift, and other front-end and back-end development platforms such as Angular and React.

“Consistently ranked among the best countries in the world for outsourcing software developer functions, Poland is suitable for clients looking for specific coding expertise and experience”

It will cost you about $30 to $120 hourly to hire an experienced software developer in Poland, although this cost may not include such items as taxes and payroll processing.

Russia

C, C++ and C# coding may not be what regular SMEs that are looking for simple mobile and web applications are in the market for.

“Having probably the most specialized and advanced project teams of the entire region, Russia has distinguished itself as the home of good old-fashioned C, C++ and C# coding, for enterprise-grade applications and gaming”

This makes Russia quite costly to hire a development team, as you may be charged $70-$300 hourly for an experienced software specialist. Moreover, you may not get comprehensive services beyond raw code, say in such a scenario where you also need UI/UX specialists or product managers.

Unparalleled Benefits of Choosing an ODC

Working with offshore (dev/tech) teams has been proven to drastically reduce the cost of designing, testing, and launching. Companies including Dell, Samsung, Microsoft, and Amazon have launched ODCs in countries such as Israel and India because of their specialization in such IT niches as cybersecurity, back-end and database design. Limited testing or automation budgets, expensive DevOps and legacy systems, and inability to scale and port/convert between different developer platforms all make companies choose to have an offshore development office rather than maintaining in-house teams.

Eastern Europe is rapidly becoming the popular offshore development centre. Below you can find the list of top-3 ODC destinations with detailed development costs for each:

  • Ukraine ($25-50/hour)
  • Poland ($30-120/hour)
  • Russia ($70-300/hour)

As you can see, the development costs between these ODC hubs differ. Luckily, the expertise and the quality of development remain consistently high there. If you want to optimise your expenses, you may choose the ODC destination based on the development cost structure that works best for you. But remember that cost-efficiency is not the only factor to rely on.

With this knowledge in mind, your company too should explore the option of ODC as a provider of both affordable and quality development solutions.

Perfert team, we verify skills

YouTeam Editorial Team

YouTeam Editorial Team

We love featuring verified solutions to outsourcing problems and coverage of remote work trends. We want our blog to be a source of inspiration for tech entrepreneurs and product people who are looking to build distributed development teams across continents.

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