Why Is Offshore Development Centre Important For UAE Companies?

Updated On: August 24, 2022

Updated By: AppsRhino

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Introduction

What do you think when someone mentions middle east countries? I bet you think of finance and economy, oil and gas. But have you ever thought about how they manage to keep their app development businesses in operation? It is a known fact that UAE companies find hiring good developers and programmers challenging.

However, there is a sigh of relief for them in the form of Offshore development centers! Offshoring is a great software development approach to optimize costs. And one model in offshoring is an offshore development center; it involves creating an offsite team to work on a software development project diligently. This approach is more famous for projects that do not require a collaboration of more than 30 people. If you are still clueless about what an offshore software development center is and its significance for UAE companies, read the blog to find it out!

Summary

Are you a UAE company but do not know what an offshore development center is? Today, around 53% of UAE companies are interested in hiring freelancers. However, freelancers cannot resolve all the issues that arise during recruitment. And here comes an offshore software development center to resolve all your challenges.

What does an Offshore Development Centre/ Company mean?

An offshore development center is a company situated outside your jurisdiction, especially in areas with low or zero tax.

Why do people prefer an offshore software development center?

The reasons why people love to go to an offshore development center are as follows:

  1. Freedom from state regulations
  2. Low or zero taxes
  3. Multi-currency funding of accounts out of the story
  4. Ease of international operations

What are the significant issues faced while hiring programmers in the UAE?

The issues faced by UAE companies while recruiting developers and programmers are as follows:

  1. Issues with freelancers
  2. Lack of software developers
  3. Poor Retention
  4. Slow Hiring
  5. Lack of seasoned and adept developers
  6. Unadaptable education system
  7. Outdated recruiting approaches
  8. The exorbitant cost of software development

How can UAE companies benefit from an offshore development center?

The challenges mentioned above are easy to deal with for any company situated in the UAE. An offshore software development center can solve these problems in the following ways:

  1. Cost reduction
  2. Cheaper Facilities
  3. Expand the market to a foreign country
  4. Large team with a varied set of skills
  5. Access to the Talent pool
  6. Improving confidentiality
  7. Product localization

Working models of an offshore development center

The two working models of an offshore development center are:

Contractor model

The first working model of an offshore development center is the Contractor model, wherein a company hires an offshore development team to work on specific projects. The remote team executes every aspect of the project, from planning to development to testing to implementation.

Customer model

In this model, the team members are still full employees of the concerned corporation. However, the project is still executed from a remote location. Such an arrangement preserves the confidentiality and security of clients' projects.

One can assert that such an offshore software development center works much like a subsidiary of the central organization.

What does an Offshore Development Centre/ Company mean?

Before we delve into the importance of an offshore development center, let us first acquaint ourselves with its meaning.

A company is a legal entity engaged in legal business activities. A company can be private or public and deal with a corporation, partnership, or proprietorship. Also, companies possess numerous rights under the law.

Let us now see what offshore means. The word offshore means situated outside of your jurisdiction. Also, an offshore development center is present in countries with zero or low taxes.

Thus, an offshore development center is a company situated outside your jurisdiction, especially in areas with low or zero tax.

Why do people prefer an offshore software development center?

The reasons why people love to go to an offshore development center are as follows:

  1. Freedom from state regulations
  2. Low or zero taxes
  3. Multi-currency funding of accounts out of the story
  4. Ease of international operations

What are the major issues faced while hiring programmers in the UAE?

UAE companies signify a body corporate established in the UAE (the United Arab Emirates), DIFC, or the Abu Dhabi Global Market.

The major issues UAE companies encounter while recruiting programmers are as follows:

  1. Issues with freelancers
  2. Lack of software developers
  3. Poor Retention
  4. Slow Hiring
  5. Lack of seasoned and adept developers
  6. Unadaptable education system
  7. Outdated recruiting approaches
  8. The exorbitant cost of software development

Lack of software developers

Most businesses in UAE engage in economy and finance, gas and oil, and other related fields. It means such countries lack software developers.

Lack of experienced and skilled developers

UAE countries do not have several seasoned and proficient developers. Thus, they settle for entry-level or middle specialists to get their work done.

High cost of software development

Such companies have only two options: Either invest in the education system of young talents or hire experts at excessive fees.

Recruiting methods

In the USA, recruiters look for employees with hard and soft skills. However, companies in UAE used to look for developers with experience and hard skills until recently, when they started looking for passionate and creative employees who also exhibit analytical thinking.

Education system

Universities should try to teach new courses and train teachers to help students learn crucial concepts required to sustain themselves in the industry.

Slow hiring

Talent Acquisition Benchmarking Report 2017 states that it takes only 30 days to find a new person in the United States of America. However, the situation is different in UAE, as 48 percent of these companies spend a long time hiring one person. They usually take around 1 to 3 months.

These companies do not abide by strict rules, and it causes them to lose money and time.

Retention

The problem with retention is that employees migrate from one company to another in search of better remuneration and attitude. Such a tendency of workers poses an issue to companies as they need to teach new talents from scratch. Thus, a recruitment process looks like this to them:

Hiring, teaching, losing employees and hiring again.

Issues with freelancers

Around 53% of UAE companies are interested in hiring freelancers. However, freelancers can not resolve all the issues that arise during recruitment. Moreover, some organizations prefer the "in-house only" policy as it is a more traditional approach to employment. One thing to focus on is that if a freelancer's income is lower than $102110, they cannot register VAT. As a consequence, UAE companies refuse to work with them.

How can UAE companies benefit from an offshore development center?

The challenges mentioned above are easy to deal with for any company situated in the UAE. An offshore software development center can solve these problems in the following ways:

Cost reduction

Offshore development centers are present in countries with lower living costs. This arrangement lets them use the cost dissimilarity to minimize expenses on the things such as Labor and Material while incrementing their sales or shifting the primary focus to other stuff.

Cheaper Facilities

Establishing an offshore development center in a low-tax economy benefits enterprises in terms of sales and reputation. Besides this perk, having an offshore development software center in such areas also reduces interest, office rent, and maintenance. Since these centers have low expenses, they will not charge much from their clients.

Expand the market to a foreign country

An offshore development center often finds itself closer to customers as they are present in another country's marketplace. Besides getting to know their clients better, they also increase their sales volume and reputation and better understand their clients' needs. Also, when entrepreneurs open an offshore development center, they reduce their logistics costs. Since they have fewer expenditures, UAE companies can expect reasonable rates while recruiting programmers and developers.

Large team with a varied set of skills

An offshore development center owner can easily set up a team of over 50 members with the help of Vendors. Vendors can help supply a separate office where all your PMs, QAs, developers, and marketing specialists can work for the owner's employee branding. Thus, you get every required professional when you go for an offshore development center.

Access to the Talent pool

Another benefit of opting for an offshore development center is getting your hands on the best talent pool. Many competent job seekers say yes to working at an offshore development center, which is equivalent to working in a foreign company's office. Thus, it gives the clients of offshore development centers a chance to hire the best talents of that specific country.

Improving confidentiality

Working on clients' projects is easier in the case of an offshore development center as offshore development centers have teams that work on numerous projects side by side. And generally, one asks their offshore development center to have a separate office for one's team.

Thus, you can rest assured that your project is in safe hands.

Product localization

Also, offshore development centers have more knowledge regarding the local environment of your country as many developers working for an offshore development center are locals. Thus, they can help your selected offshore development center know what a local person would expect from the product they have been entrusted with.

Reading these perks of working with an offshore software development center might have made you give it a try. Since you might go for them in the future, it will be better to be aware of the existing offshore development centers' working models.

Working models of an offshore development center

We describe the working models of an offshore development center below. It will help people set up offshore development centers and educate those who want to hire one for their project.

Contractor model

The first working model of an offshore development center is the Contractor model, wherein a company hires an offshore development team to work on specific projects. The remote team executes every aspect of the project, from planning to development to testing to implementation.

Startups like this model; however, their onsite IT teams focus on core business processes. Various instances of businesses using this model to attract and harness young talents exist. Another perk of this model is that it is more affordable as there is less overhead cost from salaries, and offshore development employees do not seek high salaries because they are not full company employees.

An outstaffing agency supplies these members to various offshore software development centers worldwide.

Customer model

Big corporations adopt this offshore development center model more. This model is similar to General Electric's opening of one of India's first offshore development center services in 1996.

In this model, the team members are still full employees of the concerned corporation. However, the project is still executed from a remote location. Such an arrangement preserves the confidentiality and security of clients' projects. Here an onsite group of senior employees give the management and direction of the project and make all the required critical decisions. However, the actual development, execution, and testing are in the hands of an offshore team.

Thus, one can assert that such an offshore software development center works much like a subsidiary of the central organization.

Conclusion

Offshore companies are generally situated in countries having low or zero taxes. Such countries are also called tax havens because they do not have taxes. Also, the world has become smaller in terms of communication and travel. And with an online presence galore, offshore incorporation has become quicker, easier, and more affordable.

If you are one of the UAE companies, opting for an offshore development center is advisable since they help fight the challenges UAE companies face while hiring developers and programmers.

Also, reaching out to AppsRhino is profitable since our pricing model is tempting, and we have a team of thorough professionals who sprinkle their magic everywhere! Contact appsrhino today to get started!