Dedicated Offshore Development Centers: a popular trend in outsourcing

Offshore Dedicated Centers www.softheme.com a popular trend in outsourcing

ODC features
Benefits, flip sides and challenges
Set up steps
Budget components, estimate
Sample cost dynamics
Operational models
ODC service levels
Table of Contents www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers

Offshore Software Development Centers (ODCs):
are good for both startups and existing businesses
can run one or several software engineering projects simultaneously
can include one or several software development and QA teams with different skills
www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers Why an Offshore Development Center
are set up and supported by an outsourcing service provider usually at their premises and with the vendor’s experience and existing infrastructure

serves as a technology and software engineering extension of customer’s main facility
allows the customer focus on business specifics while the admin routines are being resolved by the outsourcing services vendor in parallel
ODC features www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers
possibility to effectively keep, reduce or increase ODC staff when the customer merges with another company or sells the business
customer’s 100% ownership
staff replacements within from a week to a month, no special costs

recommended contract term : from 6 months to several years
upfront payments are not requested unless a large volume of equipment is required to be purchased
ownership : the outsourcing services provider may or may not participate
security measures :
ODC features www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers
workflow is adjusted in order to meet the one hosted by the customer; a replication of existing customer environment at the vendor’s side is suggested. Otherwise the vendor sets up the environment and workflows.
maintained by vendor security disaster recovery data backup no additional costs

For the customer:
quick set up and quick cancellation
reduced costs as compared to onshore labor costs
reduced costs as compared to offshore full time development team
transparent (“aquarium” vs. a “black box”)
simplified accounting
no problems to visit
Benefits www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers
For the vendor:
additional jobs
additional income
possible % in ownership (negotiated and is not mandatory, though)
new experience in customer’s business domain

requires an intensive communication due to large geographic distances; poor communication makes ODC use its resources inefficiently and increase overall costs
requires regular assessment of the team to perform necessary HR adjustments
ODC members are not native English speakers in the most cases; lack of other European language speakers
may require additional trainings in customer’s business domain
time difference
Flip sides and challenges www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers
may need mutual adjustment of processes , e.g. work out identical views, accepted by the customer and the outsourcing services vendor, on:
team management
motivation
quality control, etc.

the customer may need to get familiar with local HR markets, their specifics, levels of salaries and professionalism to make effective HR decisions if he wants to
startups often don’t have solid development processes : the outsourcing services vendor has to analyze, recommend and implement
average time to hire talents **:
** An advantage of dealing with an outsourcing team provider who already has an existing infrastructure and works with multiple clients is the vendor’s obviously having a pool of talents that might be used in ODC temporarily or permanently, hence, cutting down the time for hiring. Flip sides and challenges www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers
business requirements are always on customer’s side : ODC only delivers software, meets deadlines and quality. The customer extends it to the market.

create and discuss an estimation for the monthly budget
consider a particular model of building the team :
based on existing vendor’s employees or hiring new ones or a mixed model
www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers Steps of ODC creation
figure out requirements to the talents expertise , identify the needs of:
plan infrastructure :
permanent long-term employees contractors for shorter periods of time vs.

budget sign off
build a team : hiring processes
set up knowledge transfer, requirements gathering process, training
set up communication process :
www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers Steps of ODC creation (continued)
set up workflows, management systems
achieve success
meeting schedule reporting personal communications

Typical regular budget expenses are:
salaries, bonuses
office space costs
collective taxes
telecommunication costs
bank expenses
a fee to the vendor
www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers Budget components, estimate

Monthly budget **:
10 ... 30 engineers, no equipment purchase needed $23k … $70k
10 … 30 engineers, equipment purchase $40k … $110k
** details available upon request www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers Budget components, estimate
Timing:
build a 10 … 30 engineers ODC 1 … 3 months

Sample cost dynamics of a startup based on one of the existing ODCs months normalized costs, % Initial cost of infrastructure, purchase, no employees Infrastructure is ready, a small number of employees, started hiring process Full staff, a number of short-term sub-contractors. Pre-release efforts. High costs Production final release. Support started Support with the same staff who started the initial development The product is stable. Support costs are lower www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers

regular model:
www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers Operational models In any case the process is overviewed by the outsourcing service provider’s representatives.
independent engineers model:
mixed
intensive communication TL senior developers developers + QA manager testers

www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers Typical ODC model structure customer it consultant vendor senior developers team leaders developers testers

What the customer can do:
review all and any costs , cost analysis, suggestions and negotiations for cost reductions or additional expenses
HR activities such as:
conduct interviews
make hire decisions
make firing decisions
motivate – bonuses
www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers ODC service levels
project management : yes, if the customer wishes, and may be hidden if the customer wants so
visits to ODC : yes, any time

What is hidden from the customer:
local accounting reports, tax and legal fee payments, vacation and holiday management
micro cash flow management, payroll
initial resume screening, HR, replacements, training
sys admin support, office equipment
disaster recovery support and data management
physical, network and data security steps

Types of activities supported by ODCs:
box software development
custom application development
gathering requirements:
system design
QA and testing
tech writing
marketing research, content and data management, SEO
remote system administration
independent partially independent vs. dependent on customer vs.

Level of ODC professionalism and success:
highest level capabilities (desirable level): gather functional requirements, do system design, coding, QA planning, design and run test cases, final delivery, acceptance testing. ODC strives to take a leadership role in as large area of responsibilities as possible. It is typical for Ukraine and Russia.
middle level capabilities (ok level): system design, coding, test cases creation, testing, final deliveries
lower level capabilities (ok only for particular cases): coding, test case execution or either of them. It is typical for India and China.
www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers ODC service levels Business analysis and business requirements are always done on customer side.

Thank you! 2010 | Softheme Team | Kyiv, Ukraine | Software Outsourcing Solutions www.softheme.com » Outsourcing to Softheme™ Questions? -> [email_address]

http://www.softheme.com	189
http://blog.softheme.com	119
http://redesign.softheme.com	48
http://new.hi-tech.org.ua	22
http://softheme.com	18
http://www.squidoo.com	13
http://www.slideshare.net	12
http://www.lmodules.com	1
http://strikead.softheme.com	1
http://fo.softheme.com	1
http://www.softheme.comwww.softheme.com	1
http://cohnreznik.softheme.com	1
http://www.linkedin.com	1

Dedicated Offshore Development Centers: a popular trend in outsourcing

by Softheme

Accessibility

Categories

Upload Details

Usage Rights

13 Embeds 427

Statistics

Dedicated Offshore Development Centers: a popular trend in outsourcing Presentation Transcript