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Stop Outsourcing! Leverage an Offshore Development Center Instead

June 24, 2024

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Outsourcing Vs. Offshore Development Centers

Which model will help you gain the most operational efficiency and cost-effectiveness – outsourcing or offshore development centers? Check it out.

To stay relevant and one step ahead of your competition, you are constantly looking at developing innovative products and services. But this needs to be done with a focus on achieving maximum operational efficiency at minimal cost. Initially, this race to build bigger and better technology solutions gave rise to the traditional outsourcing model. Today, another approach is gaining popularity – collaboration with an offshore development center (ODC). This model has caught the imagination of business to such an extent that the market is forecasted to reach a value of $284.30 billion by 2030, growing at a CAGR of 10.13% from 2023 to 2030.

But before you jump onto the ODC bandwagon, here’s all you need to know to make an informed choice between outsourcing and ODCs.

Outsourcing vs. Offshore Development Centers

Although they might seem very similar at first glance, the operational models are very different. With outsourcing you choose a third-party technology vendor, either in your country or overseas, to manage specific projects or tasks for your business, related to technology, software development, or IT infrastructure. This frees you to focus on your core operations.

And ODC, on the other hand, is like having a dedicated team for your organization that works remotely from another location. This remote team is completely focused on your project and works under your supervision. It’s almost like having an extension of your own IT team.

What Outsourcing Offers

  • Speeds up project initiation: Project initiation is accelerated because you don’t need to hire, train, and set up an in-house team from scratch.
  • Resources freed for core activities: Your in-house teams can focus on adding value to your core competencies while the external experts handle the additional workload.
  • Cost savings: Outsourcing costs less than maintaining an in-house team and IT infrastructure.

Where ODCs Shine

  • Confidentiality and security: Make the most of water-tight confidentiality agreements and security protocols to ensure that your sensitive data stays protected. This can sometimes be a concern with outsourcing.
  • Collaboration and control: A major distinction between outsourcing and ODCs is the degree of control you have over your project. ODCs give you much more control, allowing you to oversee the progress and provide inputs to ensure that your project aligns with your vision.
  • Customization and scalability: Outsourcing optimizes processes for the short term, while you have access to the technology and expertise they offer. ODCs allow long-term scalability, making you more competitive and allowing you to expand at scale. You have complete control over adjusting the team’s composition and size, based on the evolving needs of your project.

The bottom line is that the differences between the two models make each more suited for certain types of projects. Outsourcing proves useful to meet short-term goals with agility, while offshore development centers give you access to expertise for the long term. So, ultimately your project requirements will determine which model works best for you. Having said that, since staying relevant in the finance and FinTech sectors requires constant innovation, ODCs might be the best way to ensure consistent access to expert talent.

Building a Long-Term Partnership with an ODC

Reduced infrastructure, administrative and hiring costs, compliance with your organization’s guidelines and standards, and immense flexibility and scalability are only some of the many benefits of partnering with an offshore development center. However, you play a key role in making this partnership work so that you can harness all these benefits. Here’s a look at how to build and sustain a mutually beneficial relationship.

Identify your business goals and product vision

The first step is to identify what you need the ODC for.

  • What issues need to be solved
  • What is your budget
  • What type of cooperation you need
  • What level of control you prefer
  • What results need to be achieved

A common mistake is assigning the ODC urgent tasks without sharing the bigger picture with the team. Unless they have the entire product vision, they might not be able to deliver as per your needs. Also, share the scope of work (SoW), including milestones, deliverable timelines, reports, etc., expected from them. This will help them create a project roadmap, which you can give inputs to achieve your business goals.

Choose the location of the ODC

Partnering with a remote team brings challenges related to the time zone difference. While working time differences can seem daunting, there are always overlaps in the work schedule that you can capitalize on. For example, if you’re based in California, and you choose an offshore team in India, that’s a 12-hour difference. But there will be an overlap of at least 3-4 hours – which could be early morning for you and late evening for your remote team. Use this overlap to schedule team meetings and any other joint activity that might be required for the project. This way, time difference need not come in the way of meeting your goals.

Choose the right partner

This isn’t rocket science. Check their portfolio, customer reviews, pricing, etc., and have a one-on-one discussion to learn more about the team and whether it is a good fit for your needs.

Establish the rules of the relationship

Once you’ve finalized the ODC you wish to partner with, it’s time to set out the guidelines and rules to be followed to complete the project. This could include an NDA to keep the project details confidential. Establishing a framework of how the relationship will work helps the offshore team understand what you expect from them and the consequences of not following the guidelines. Of course, this also means that the offshore team might have their own set of rules that you might have to accommodate. This is the time to negotiate and finalize how the relationship will function.

Better to overcommunicate than deal with misunderstandings

It’s easy to forget about an offshore team since they are completely self-contained. But the key to any successful relationship is continuous communication. Set up weekly meetings to get updates on project progress, and use a project management tool, such as Asana or Trello, that keeps everyone in the loop and ensures transparency. Urgent requests and tickets can be raised here, and the status of the request can be updated. Just as you want to stay in control of the project, the offshore team might have questions they need answered. A means to immediately communicate one’s needs can work wonders.

Don’t micromanage. Treat them like an extension of your team

The right balance between continuous communication and micromanaging is key. And remember that they are working to achieve your business goals, and an “us vs. them” attitude can prove counterproductive. The offshore team will have a project manager or lead, who can keep you in the loop and whom you can connect with whenever you have a question – just like you would discuss project status with your team leader.

Partner With an Expert to Stay Ahead in the Race

Partnering with an ODC can help you stay a step ahead in responding to customer needs, with the flexibility to scale and adapt according to the changing market landscape. Opus Technologies has over three decades of experience, providing cutting-edge technology solutions for the finance sector. Our highly experienced and skilled team works with you to understand exactly what you need and then deliver according to your parameters. Talk to us TODAY to learn how we can help you stay at the leading edge of innovation.

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