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Offshore Dedicated Centers www.softheme.com a popular trend in outsourcing
<ul><li>ODC features </li></ul><ul><li>Benefits, flip sides and challenges </li></ul><ul><li>Set up steps </li></ul><ul><l...
<ul><li>Offshore Software Development Centers (ODCs): </li></ul><ul><li>are good for both startups and existing businesses...
<ul><li>serves as a  technology and software engineering extension  of customer’s main facility </li></ul><ul><li>allows t...
<ul><li>recommended contract term : from 6 months to several years </li></ul><ul><li>upfront payments   are not requested ...
<ul><li>For the customer: </li></ul><ul><li>quick set up and quick cancellation </li></ul><ul><li>reduced costs as compare...
<ul><li>requires an  intensive communication  due to large geographic distances; poor communication makes ODC use its reso...
<ul><li>the customer may need  to get familiar  with local HR markets, their specifics, levels of salaries and professiona...
<ul><li>create and discuss an  estimation for the monthly budget </li></ul><ul><li>consider a particular  model of buildin...
<ul><li>budget sign off </li></ul><ul><li>build a team : hiring processes </li></ul><ul><li>set up  knowledge transfer, re...
<ul><li>Typical regular budget expenses are: </li></ul><ul><li>salaries, bonuses </li></ul><ul><li>office space costs </li...
<ul><li>Monthly budget  **: </li></ul><ul><li>10 ... 30 engineers, no equipment purchase needed $23k … $70k  </li></ul><ul...
Sample cost dynamics of a startup based on one of the existing ODCs months normalized costs, % Initial cost of infrastruct...
<ul><li>regular model: </li></ul>www.softheme.com   Outsourcing to Softheme™  Software Offshore Dedicated Centers Operatio...
www.softheme.com   Outsourcing to Softheme™  Software Offshore Dedicated Centers Typical ODC model structure customer it c...
<ul><li>What the customer can do: </li></ul><ul><li>review all and any costs , cost analysis, suggestions and negotiations...
<ul><li>What is hidden from the customer: </li></ul><ul><li>local accounting reports, tax and legal fee payments, vacation...
<ul><li>Types of activities supported by ODCs: </li></ul><ul><li>box software development </li></ul><ul><li>custom applica...
<ul><li>Level of ODC professionalism and success: </li></ul><ul><li>highest  level capabilities (desirable level): gather ...
Thank you! 2010 | Softheme Team | Kyiv, Ukraine | Software Outsourcing Solutions www.softheme.com   »   Outsourcing to Sof...
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Dedicated Offshore Development Centers: a popular trend in outsourcing

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Presentation giving more insight into setting up an offshore dedicated development center: main features, benefits and flip sides, core setup steps, budget components, operational models, and many more.

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Transcript of "Dedicated Offshore Development Centers: a popular trend in outsourcing"

  1. 1. Offshore Dedicated Centers www.softheme.com a popular trend in outsourcing
  2. 2. <ul><li>ODC features </li></ul><ul><li>Benefits, flip sides and challenges </li></ul><ul><li>Set up steps </li></ul><ul><li>Budget components, estimate </li></ul><ul><li>Sample cost dynamics </li></ul><ul><li>Operational models </li></ul><ul><li>ODC service levels </li></ul>Table of Contents www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers
  3. 3. <ul><li>Offshore Software Development Centers (ODCs): </li></ul><ul><li>are good for both startups and existing businesses </li></ul><ul><li>can run one or several software engineering projects simultaneously </li></ul><ul><li>can include one or several software development and QA teams with different skills </li></ul>www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers Why an Offshore Development Center <ul><li>are set up and supported by an outsourcing service provider usually at their premises and with the vendor’s experience and existing infrastructure </li></ul>
  4. 4. <ul><li>serves as a technology and software engineering extension of customer’s main facility </li></ul><ul><li>allows the customer focus on business specifics while the admin routines are being resolved by the outsourcing services vendor in parallel </li></ul>ODC features www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers <ul><li>possibility to effectively keep, reduce or increase ODC staff when the customer merges with another company or sells the business </li></ul><ul><li>customer’s 100% ownership </li></ul><ul><li>staff replacements within from a week to a month, no special costs </li></ul>
  5. 5. <ul><li>recommended contract term : from 6 months to several years </li></ul><ul><li>upfront payments are not requested unless a large volume of equipment is required to be purchased </li></ul><ul><li>ownership : the outsourcing services provider may or may not participate </li></ul><ul><li>security measures : </li></ul>ODC features www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers <ul><li>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. </li></ul>maintained by vendor security disaster recovery data backup no additional costs
  6. 6. <ul><li>For the customer: </li></ul><ul><li>quick set up and quick cancellation </li></ul><ul><li>reduced costs as compared to onshore labor costs </li></ul><ul><li>reduced costs as compared to offshore full time development team </li></ul><ul><li>transparent (“aquarium” vs. a “black box”) </li></ul><ul><li>simplified accounting </li></ul><ul><li>no problems to visit </li></ul>Benefits www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers <ul><li>For the vendor: </li></ul><ul><li>additional jobs </li></ul><ul><li>additional income </li></ul><ul><li>possible % in ownership (negotiated and is not mandatory, though) </li></ul><ul><li>new experience in customer’s business domain </li></ul>
  7. 7. <ul><li>requires an intensive communication due to large geographic distances; poor communication makes ODC use its resources inefficiently and increase overall costs </li></ul><ul><li>requires regular assessment of the team to perform necessary HR adjustments </li></ul><ul><li>ODC members are not native English speakers in the most cases; lack of other European language speakers </li></ul><ul><li>may require additional trainings in customer’s business domain </li></ul><ul><li>time difference </li></ul>Flip sides and challenges www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers <ul><li>may need mutual adjustment of processes , e.g. work out identical views, accepted by the customer and the outsourcing services vendor, on: </li></ul><ul><ul><li>team management </li></ul></ul><ul><ul><li>motivation </li></ul></ul><ul><ul><li>quality control, etc. </li></ul></ul>
  8. 8. <ul><li>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 </li></ul><ul><li>startups often don’t have solid development processes : the outsourcing services vendor has to analyze, recommend and implement </li></ul><ul><li>average time to hire talents **: </li></ul>** 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 <ul><li>business requirements are always on customer’s side : ODC only delivers software, meets deadlines and quality. The customer extends it to the market. </li></ul>
  9. 9. <ul><li>create and discuss an estimation for the monthly budget </li></ul><ul><li>consider a particular model of building the team : </li></ul><ul><ul><li>based on existing vendor’s employees or hiring new ones or a mixed model </li></ul></ul>www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers Steps of ODC creation <ul><li>figure out requirements to the talents expertise , identify the needs of: </li></ul><ul><li>plan infrastructure : </li></ul>permanent long-term employees contractors for shorter periods of time vs.
  10. 10. <ul><li>budget sign off </li></ul><ul><li>build a team : hiring processes </li></ul><ul><li>set up knowledge transfer, requirements gathering process, training </li></ul><ul><li>set up communication process : </li></ul>www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers Steps of ODC creation (continued) <ul><li>set up workflows, management systems </li></ul><ul><li>achieve success </li></ul>meeting schedule reporting personal communications
  11. 11. <ul><li>Typical regular budget expenses are: </li></ul><ul><li>salaries, bonuses </li></ul><ul><li>office space costs </li></ul><ul><li>collective taxes </li></ul><ul><li>telecommunication costs </li></ul><ul><li>bank expenses </li></ul><ul><li>a fee to the vendor </li></ul>www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers Budget components, estimate
  12. 12. <ul><li>Monthly budget **: </li></ul><ul><li>10 ... 30 engineers, no equipment purchase needed $23k … $70k </li></ul><ul><li>10 … 30 engineers, equipment purchase $40k … $110k </li></ul>** details available upon request www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers Budget components, estimate <ul><li>Timing: </li></ul><ul><li>build a 10 … 30 engineers ODC 1 … 3 months </li></ul>
  13. 13. 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
  14. 14. <ul><li>regular model: </li></ul>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. <ul><li>independent engineers model: </li></ul><ul><li>mixed </li></ul>intensive communication TL senior developers developers + QA manager testers
  15. 15. www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers Typical ODC model structure customer it consultant vendor senior developers team leaders developers testers
  16. 16. <ul><li>What the customer can do: </li></ul><ul><li>review all and any costs , cost analysis, suggestions and negotiations for cost reductions or additional expenses </li></ul><ul><li>HR activities such as: </li></ul><ul><ul><li>conduct interviews </li></ul></ul><ul><ul><li>make hire decisions </li></ul></ul><ul><ul><li>make firing decisions </li></ul></ul><ul><ul><li>motivate – bonuses </li></ul></ul>www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers ODC service levels <ul><li>project management : yes, if the customer wishes, and may be hidden if the customer wants so </li></ul><ul><li>visits to ODC : yes, any time </li></ul>
  17. 17. <ul><li>What is hidden from the customer: </li></ul><ul><li>local accounting reports, tax and legal fee payments, vacation and holiday management </li></ul><ul><li>micro cash flow management, payroll </li></ul><ul><li>initial resume screening, HR, replacements, training </li></ul><ul><li>sys admin support, office equipment </li></ul><ul><li>disaster recovery support and data management </li></ul><ul><li>physical, network and data security steps </li></ul>www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers ODC service levels
  18. 18. <ul><li>Types of activities supported by ODCs: </li></ul><ul><li>box software development </li></ul><ul><li>custom application development </li></ul><ul><li>gathering requirements: </li></ul>www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers ODC service levels <ul><li>system design </li></ul><ul><li>QA and testing </li></ul><ul><li>tech writing </li></ul><ul><li>marketing research, content and data management, SEO </li></ul><ul><li>remote system administration </li></ul>independent partially independent vs. dependent on customer vs.
  19. 19. <ul><li>Level of ODC professionalism and success: </li></ul><ul><li>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. </li></ul><ul><li>middle level capabilities (ok level): system design, coding, test cases creation, testing, final deliveries </li></ul><ul><li>lower level capabilities (ok only for particular cases): coding, test case execution or either of them. It is typical for India and China. </li></ul>www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers ODC service levels Business analysis and business requirements are always done on customer side.
  20. 20. Thank you! 2010 | Softheme Team | Kyiv, Ukraine | Software Outsourcing Solutions www.softheme.com » Outsourcing to Softheme™ Questions? -> [email_address]
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