Why businesses are choosing offshore software development centers in India

Updated On: August 24, 2022

Updated By: AppsRhino

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Introduction

Imagine a situation in which you own a business. You spend your resources on the team and development costs to satisfy your clients and customers.

One day you get a business idea about investing comparatively fewer resources and gaining additional profits. Will you be open to taking the above offer?

Companies prefer investing in Offshore Software Development to get maximum results in exchange for minimum input. The initial cost while setting up the Development Center and going through legal formalities may seem high.

But, after the business goes running, notable returns become a surety.

If you want to know why companies find it best to establish Offshore Development Centers in India, you have to understand the meaning and advantages of ODCs.

Further, you should know the difference between Offshore centers and outsourcing companies for projects.

After reading this blog, you will become familiar with why India is the go-to option for big companies and businesses!

Summary

Are you curious about why major companies are setting up their Offshore Development Centers in India?

According to vgoshinfo, there has been an increase of 45 to 60 percent in Offshore Software Development in India.

Let us go through this blog to understand why India is the best country for Offshore Development Centers.

What is an Offshore Software Development Center?

Offshore Software Development Center is a development office or center with developers and employees. Companies set up these offices and hire employees from other countries.

For example, a company in UAE establishing an Offshore Development Center in India and hiring developers and programmers to work and cooperate from the same is an example of ODC.

Difference Between Offshore Software Development Center and Outsourcing

  1. Offshore Development Centers are established in another country while outsourcing doesn't involve the country specification.
  2. The parent company has additional control over the project, employees, and resources in the ODC setup. Outsourcing does not allow equal control.

Reasons why businesses are choosing Offshore Development Centers in India

  1. Skillset and abilities of the Workforce
  2. Money savings and cost benefits
  3. Communication Skills of workers and employees in India
  4. Exceptional support from the Indian Government

Challenges while having an Offshore Development Center

  1. Cultural Differences
  2. Time-zone changes
  3. Legal procedures
  4. Security and Resource Management
  5. Management and Control

What is an Offshore Software Development Center?

As the name suggests, Offshore Software Development Centers or ODCs are development offices or centers with developers and employees. These offices are located Offshore, which is in a different country. The employees working in these Development Centers are from the same country as the ODC.

Companies set up their Offshore Software Development Centers in countries like India to receive highly skilled developers and employees at lower costs to achieve maximum efficiency.

One crucial factor of the Offshore Development Centers is confidentiality. The offices in another country dedicate themselves to the core company and its profits. In the process, the workers and systems do not share information outside the ODC or misuse the resources of the Parent business.

To understand the meaning of an Offshore Software Development Center properly, let's take an example!

Imagine that there is a company in the USA. Name this company ABC. ABC is an established company that takes clients in the country and overseas.

This company wishes to expand and save resources at the same time. What will ABC do?

ABC will set up an Offshore Software Development Center! Suppose they set up an ODC in India and name it XYZ.

The main office of ABC in the USA will handle the clients primarily. The company will have Project Managers, Management, Business Analysts, and a Technical Team.

At the same time, the ODC in India will collaborate with ABC. XYZ will have teams of On-site Managers, Offshore Management, Technical teams, and Developers.

ABC gets employees and developers at a low cost and achieves better efficiency. Therefore, ABC will be able to focus on expansion, new ideas, and business development!

Difference between Offshore Software Development and Outsourcing

You know about an Offshore Software Development Center from the previous section of this blog. Briefly, ODCs are third-party setups in another country. These offices are responsible for internal work like development and client communication.

The difference between Offshore Software Development Center and Outsourcing is that an ODC is international.

The core company hands over its work and resources to the international office for numerable reasons.

Outsourcing does not involve locational description. A company can outsource developers from a local or international company and have them develop their application, website, etc.

In Offshore Software Development, the core company gives their work and trusts the Offshore team to complete the task. At the same time, the company can ensure control over the development center and evaluate the development process and resource management.

But, in the outsourcing model, the parent company supervises the outsourcing team from a distance. This particular setup is like employing developers on a contract basis.

The parent company gives the project and deadline. They have little control over the process and employees.

What do most businesses choose? The choice of an Offshore Development Center and Outsourcing model depends upon the company and client requirements.

Reasons, why businesses are choosing Offshore Development Centers in India

Let us now understand why companies prefer India as their go-to option for Offshore Software Development Centers.

According to vgoshinfo, there has been a 40-60% growth annually in the Offshore Development Centers in India in the past two years.

There must be a reason why a growing and established business will want India to have their Offshore Software Development Center.

Workforce Skillset

As per a report by universityworldnews, India is a part of the maximum engineer-producing countries in the world. India has more than 1.5 million engineering students graduating from colleges every year.

Moreover, India is home to some of the best engineering, science, mathematics, and technology institutes like IITs, NITs, IIITs, etc.

The graduates and tech employees any parent company will hire for their Offshore Development Center in India will benefit from the skillset Indians have.

The workers are dedicated and are willing to go the extra mile for the company.

Savings and Cost benefits

One of the primary reasons why companies wish to set up an Offshore Development Center in India is money savings.

To set up any company in urban cities of any country, the companies have to take care of the following costs.

  1. Rent
  2. Electricity
  3. Employees
  4. Customers Therefore, the procedure becomes expensive and affects the mean profits.

Moreover, according to PayScale, the average salary of developers in the USA is $76,800. It is the most expensive place to hire developers and engineers.

Countries like Germany, the UK, Poland, and more follow these income rates in the decreasing order. If the parent company is established in the UK, the USA, or UAE and hires developers and programmers from India (with an average salary of $6700 per year), imagine their cost savings!

Additionally, setting up an Offshore Development Center in India would help you save on infrastructure and rent costs.

Communication Skills

According to BBC news, India is the second largest English-speaking country. 10% (125 million) people speak English in this country. Moreover, India's 25% (314.9 million) population is multilingual.

You will have to deal with clients from different regions as a business owner. Therefore, your workers should be able to cooperate and attract maximum customers.

Suppose you partner with an Offshore Software Development Center in India. In that case, your company can satisfy its clients with the product, service, and communication.

Support from the Indian Government

The Indian Government is keen on developing its IT Sector. The Government is willing to produce jobs in the country. It provides benefits to businesses that set up Offshore Development Centers in India.

India invites outsourcing from foreign companies and provides them with the following benefits of establishing their centers in India.

  1. Tax benefits
  2. Special Economic zones and investment incentives
  3. Exceptional development grounds at low costs
  4. 100% foreign equity

And many more.

Challenging while having an Offshore Development Center

Let's look at some challenges and difficulties that may arise while and after establishing Offshore Development Centers in India. These challenges can evolve in any country. But, Indian centers allow themselves to adjust and give their best despite such challenges.

  1. Cultural Differences
  2. Time-zone changes
  3. Legal procedures
  4. Security and Resource Management
  5. Management and Control

Conclusion

Establishing an Offshore Development Center is not a swift decision. A company has to consider numerable parameters before setting up an Offshore Software Development Center.

As mentioned in the blog, companies choose India for Offshore Development because of its savings and diverse skillset.

People brought the concept of Offshore Software Development into existence to acquire maximum benefits from the existing resources. Companies find Outsourcing and Offshoring beneficial to their business.

According to a study by Deloitte, more than 59% of participating countries had their Offshore Development Centers or were using outsourcing services from Indian Developers.

Moreover, 22% of companies planned to invest resources in IT Development in India.

If you want to establish an Offshore Software Development Center in India and are confused about where to start, contact appsRhino! We have an excellent technical and management team to help you set up your ODC in India.

Connect with us today to know more!