Key Considerations to Choose the Right Location For Setting Up ODC

Introduction

Setting up an Offshore Development Center (ODC) is a critical strategy for businesses looking to expand operations while optimizing costs. 

Yet, many enterprises underestimate the importance of choosing the right location for their ODC. This often leads to significant challenges. 

In fact, 74% of companies report that poor location choices have impacted their ability to scale and manage teams efficiently. 

The wrong location selection for setting up your Offshore Development Center can result in language barriers, time zone differences, or a lack of skilled talent. And ultimately turning what should be a seamless growth solution into a nightmare.

However, to avoid such issues and make your Offshore development center a true asset to your business, it is essential to evaluate the right factors before setting up an ODC. 

In this blog, we have outlined key considerations to help you make the best decision for your ODC’s location. Read on to learn more!

Understanding Your Unique Business Requirements

When planning to set up an offshore development center, the initial step is to identify your unique business requirements. This can be a huge contributing factor in determining the right location for your project. 

1. Business Goals

What exactly are your business goals? For instance, is it to increase your market share, improve customer satisfaction, or reduce operational costs?

• How do you think setting up an ODC can help you meet these business goals? 
• How can your ODC team align with your business objectives? 
• What tasks do you think the ODC can resolve for you?

It's essential to analyze all these questions beforehand.

2. Project Requirements

What are your unique project requirements? It can be about the specialized skills required, the experience and expertise needed to execute the project, and even the challenges you want to address by setting up an ODC.

The scope and complexity of your project can significantly affect the selection of the location to set up our offshore development center. 

3. Importance Of Proximity To Clients

Evaluate the requirement for proximity to clients and stakeholders. So, if this is the case, you must select a location with timezone overlaps. This can help you respond to the clients immediately, which leads to greater client satisfaction. 

Once you have analyzed all this, you need to take care of a few factors. Let's dive in!

Factors to consider while choosing the location for ODC

Deciding where to locate your Offshore Development Center (ODC) is important. The right location can affect your ODC's costs, access to talent, and overall operations. Here are the main factors to consider when making this important decision.

1. Economic considerations

The economic aspect is one of the first things that come to mind when looking to set up an ODC or even when outsourcing. So, it is crucial to take a look at the economic considerations. Below are some factors that you must consider:

• Labor costs

Many companies want to save money by outsourcing work or creating a special center in another country. When deciding where to put this center, it's important to choose a country with low labor costs. Places like India and the Philippines are good options because labor is cheaper. However, Indian developers are often the top choice because of the low labor costs and skilled workers.

• Tax implications and incentives

Many regions offer attractive tax incentives to foreign companies to encourage investment in their area. This could bring tax benefits to the organization. So, considering the tax implications, incentives could be a good parameter.

• Labor availability

When considering the location, the availability of skilled software developers is essential. Several countries like India have a high availability of experienced developers who can be the best fit for your dedicated offshore development centers.

2. Talent pool

Many countries offer a vast talent pool. From this talent pool, you can have access to a wide range of qualified professionals. By choosing a location with a diverse range of top-notch talent, you can create an Offshore Development Center (ODC) that propels your projects to success.

3. Infrastructure and connectivity

Infrastructure and connectivity impact the efficiency and ease of running the ODC. However, when considering the infrastructural and connectivity aspects, you need to examine the following:

• Quality of local infrastructure and transportation

Check the quality of the infrastructure provided by the ODC company, as it can significantly impact business operations.

• Proximity to essential facilities

When choosing the location for your ODC, analyze how easy it is to access it and consider the proximity to important facilities.

4. Cultural compatibility and work environment

Cultural compatibility and the work environment of the offshore software development center can make or break the entire game.

While your business has its own work culture and values, when setting up an ODC, ensure that the region's cultural compatibility is checked to ensure that it aligns with your company's work culture. Also, engage your ODC employees with your in-house team. This can foster a collaborative work environment. 

In addition, the company should consider a location with good English proficiency so that there will be no language barriers while communicating with the offshore team.

5. Time zone and geographic factors

It is always an excellent idea to choose locations with the same time zone or overlapping hours to promote effective communication. With this time zone compatibility, you can easily set you up meetings with your dedicated offshore software development team. This can fuel and maintain a cohesive workflow. 

6. Legal and regulatory environment

When setting up an ODC, the location's laws and regulatory requirements play a crucial role. That is why you must be aware of the rules, regulations, and policies of a specific region. For this, you must

• Study regulatory compliance requirements and legal frameworks of the ODC region. 
• Evaluate the intellectual property laws in the potential location to secure your IP. 
• Verify the country's data protection laws and security measures to protect your sensitive data and digital assets. 

Top Countries to set up your ODC

When choosing where to set up an Offshore Development Center (ODC), several countries stand out. India, Poland, Ukraine, the Philippines, and China are among the popular countries for establishing ODCs.

However, India has outperformed in providing technical expertise along with high-quality project outcomes and greater cultural compatibility. According to Statista research, India was the leading country in the Global Services Location Index (GSLI) rankings in 2023. The GSLI is compiled by Kearney, a U.S.-based management consulting firm, and is based on digital resonance, business environment, people skills and availability, and financial attractiveness.

Conclusion

While wondering how to set up an offshore development center, you first need to choose the best location. Factors like talent pool, economy, infrastructure, legal system, tax policies, and cultural compatibility affect your decision. 

So consider all the factors mentioned in this blog and make an informed decision today. YTII can be your strategic partner in setting up your own offshore development center in India.

Get in touch now and build your ODC today.