Building Global Tech Hubs: A Deep Dive into Offshore Development Centers

An offshore development center (ODC) is a branch of a company that is established in a different country. It typically hosts a team of developers who work on various aspects of the company’s operations. Corporations like Google and Samsung are already benefiting from their established offshore development centers (ODCs) in Eastern European countries, provided an abundance of skilled software developers and lower developer salaries and taxes than in the US.

When setting up an offshore development center or team in foreign locations, tech companies usually partner up with reliable vendors that offer professional recruiting services. Alcor is an international IT recruitment provider that specializes in filling senior and lead-level roles for product IT businesses.

We offer access to 600,000 skilled candidates from Poland, Romania, Bulgaria, and other Eastern European countries, where we have extensive first-hand expertise. Now let’s dive into the reasons and steps of establishing, benefits, risks, and alternatives to an ODC!

Reasons to Establish an ODC

ODCs are typically established in the following scenarios:

1. When there’s a need to expand a development team or reinforce it with professionals who possess a unique technical skill set.
2. When there’s a desire to enter a specific market, having local experts who understand the business culture of that region can simplify the process.
3. When a business needs to free up the company’s main team to focus on primary objectives.
4. When a company wants to save considerable costs on programmer compensation, corporate, income & social taxes, office lease, and other operational costs.

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Benefits of ODC 

Establishing an offshore development center has several advantages:

1. Rapid scaling opportunities.
2. Access to a wider pool of software developers.
3. Reduced overhead and personnel costs.
4. The potential to build robust infrastructure with a smaller investment.

It’s also worth noting that this approach can offer fresh solutions and streamline the development process when the in-house team is struggling.

Risks of an ODC 

Establishing an ODC does come with potential risks. 

• Location and cultural differences: While many countries offer attractive rates for software developers, it doesn’t guarantee that the local workforce will be a suitable fit for your remote team.
• Legal conflicts: These could be related to paperwork or taxes. Hence, countries like Poland, where the system is accommodating to international investors, are worth considering.
• Security risks: These are particularly important when dealing with confidential company information. Strong cooperation agreements and the implementation of advanced security measures can mitigate these issues.

Alternative Models to an ODC

Apart from an offshore development center, there are other popular engagement models:

IT Outsourcing

In this case, a client company delegates software development to a third-party provider, pays a fee to an outsourcing vendor, and receives the result. This model entails almost no control over product development from the client’s side and unexpected product quality.

IT Outstaffing

This cooperation model allows the client to hire software developers from a provider for a certain period, meaning better control over software development and enhanced communication with a team. However, in this case, a client must invest time and finances into onboarding and training a temporary team and buy them out from the vendor to hire them permanently.

Build-Operate-Transfer (BOT) 

In this model, the company contracts a development services provider to set up the necessary infrastructure and handle all the other steps required to launch the offshore center. Nevertheless, the last step could be problematic because of the risky knowledge and staff transfer.

If none of the above mentioned models meets your requirements, then…

Opt for an Offshore Development Team in Eastern Europe!

There are more than 1 million skilled programmers living in Eastern Europe. Besides, the specialists from the area boast profound expertise, a Western-oriented mindset, and robust data security. The countries are conveniently located and offer a business-friendly environment. Moreover, the salaries of developers are 2-4 times lower than in the US. And the three countries with the most-developed IT industries in Europe are Poland, Bulgaria, and Romania. 

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Poland

Poland is home to more than 500,000 software developers, making it the largest concentration of developers in Eastern Europe. Every year, over 12,000 information and communications technology (ICT) professionals graduate from one of the country’s 20 top institutions. Programmers in Poland are well-versed in Java, JavaScript, and Python, as well as proficient in English.

Romania

Romania has more than 190,000 ICT professionals, 50% of whom are software developers. This puts Romania among the top three Eastern European countries with the largest concentration of IT specialists. There are about 26 universities in Romania that specialize in computer science, and each year they produce over 8,200 engineers and computer science experts. Romanian coders are experts in C#, React, and Python, whereas Romania ranks 16th in the world on the EF English Proficiency Index.

Bulgaria

Bulgaria is a popular offshoring destination that boasts more than 110,000 IT professionals. Many worldwide talent assessment lists consistently rank the country’s experts near the top. There are around 50 STEM higher education institutions that produce 3K graduates every year. The majority of local engineers are known for their JavaScript, Python, and PHP knowledge and are fluent in English because Bulgaria is in the top 25 countries for English proficiency.

What Makes Alcor the Best Option for Establishing an Offshore Development Team?

Alcor offers IT recruitment services and assigns a dedicated account manager to assist clients when setting up their software development teams in Eastern Europe. Our team of 40+ IT recruiters begins from searching through all the qualified IT professionals and bringing in the resumes of verified programmers interested in the openings of our clients.

Each week, we provide reports on the hiring progress that include the reviewed CVs, conducted interviews, and further suggestions to streamline IT staffing.

We vow to hire 5 qualified software developers in just 1 month and offer a 3-month candidate substitution guarantee. However, the latter is rarely used by our clients since 98% of all our candidates pass the probation period.

Conclusion

The process of establishing an offshore development crew could be fraught with difficulties unless you choose to work with a reputable IT recruitment agency. This way, you will complement your team with talented software engineers and save up to 70% on costs, leaving your competitors behind the curve.