As with any other business, the three most important factors for success are location, location, location. In case you were wondering, Webential prepared a recap of why India is the best place to set up your offshore development center:
The World Bank has identified India as one of two “mature” offshore development center hubs.
Adding to that, the World Bank has also quoted a study by Nasscom-Everest that states that India now controls 46% of the global outsourcing and offshoring industry.
You can read this article to find out more about why India is the best place to set up a dedicated offshore development center.
How Much Will It Cost And How Much Do I Save?
Let’s cut to the chase: you’ll be paying about $110,000 – $130,000 for a full-time, junior to mid-level experienced development team.
That’s just a ballpark figure though: I can’t go into specifics because costs are tailored to individual requirements according to the offshore development center services that you opt for.
Of course, the team makeup for each individual will be different, as will the number and type of professionals you hire so that will also affect your price estimate.
ODC’s in Europe (Ukraine, for example), charge anywhere from $25 – $50 for an hour’s work whereas, in India, developers’ charges range from $3 to $20.
On average, a full-time remote offshore development team will run you about $120,000 per year.
Compare this to the $112,000 that one average in-house software developer makes in the U.S. today. That’s a savings of about 70% right there.
Vendors vs. Individually Owned Odc’s
I’m not going to lie: this point is going to be a bit biased, but for good reason. Opening your own ODC without a vendor involves a lot of hassle, especially in matters of paperwork.
It’s always a good idea to set up your ODC with an established vendor who already has a presence in the market.
Here is a list of the overhead costs that you’ll have to incur for both options:
| Establishing Your Own Office | Using A Vendor To Setup Your ODC |
| Rental Or Property Costs | Covered By Vendor |
| Electricity And Water | Covered By Vendor |
| Internet And Hardware | Covered By Vendor |
| Recruitment Costs | Covered By Vendor |
| Team Salaries (Workforce) | Negotiable/ Varies By Requirement |
| Team Salaries (Management/ HR) | Negotiable/ Varies By Requirement |
| Insurance (Not always required) | Covered By Vendor |
| First-Time Setup Legal Documentation | Covered By Vendor |
| Repairs And Maintenance Of Premises | Covered By Vendor |
Another thing to keep in mind: it’s usually better to opt for a “dedicated team model”, mainly to ensure consistency in deliverables.
There isn’t too much of a cost difference between dedicated team ODCs and fixed engagement ODCs either — analyze your needs before choosing.
I recommend choosing fixed engagement models only if you need the team for a very short period of time.
Remember that a major part of your overall cost will be dictated by the size of your team: read the next point to know more.
How Many Team Members Should I Hire?
In short, however many you want. When setting up your dedicated development center, this is what an average team looks like:
- 1x Project Manager: ensures that the team functions smoothly. Is responsible for meeting deadlines and QC/QT.
- 1x Accounts Manager: manages your sales and relationships with your clientele.
- 3-6x Designers/ Developers: the core of the team, responsible for design and development.
- 1x Graphic Designer: creates visually appealing content to promote your products/ or services.
- 1x Usability Testing Engineer: looks for flaws/ glitches in websites, programs, or software.
- 2-3x Content/ Technical Writers: responsible for creating instructions, manuals, and content that is integrated into your software, program, or website.
Maybe you want to go for a super-specialized offshore software development center, or maybe you want a couple of marketing professionals thrown into the mix as well — the choice is entirely up to you.
What Do I Get In My ODC?
The cost reduction alone is a pretty major plus point, but here is an additional list of things that you should be getting within the budget that I specified above.
This way, you know that you are getting a value-for-money investment:
1. A dedicated workspace. Depending on the size and strength of your team, most vendors equip your ODC with either a bespoke office or their own floor space.
Either way, this ensures that your team can continue operations without constantly being disturbed by other teams that are in the vicinity.
2. Corporate/ professional benefits. Any decent vendor will offer their (well, technically your) employees corporate benefits such as medical insurance and leave allowances.
In addition, most ODCs also engage in frequent team-building workshops and other forms of professional development for your employees.
3. A dedicated point of contact. No serious vendor will fob you off with customer support or a “live chat” link.
Having an actual person that you can call can be the difference in successfully mitigating a crisis or crashing your company.
4. An outreach team. Depending on the size of your ODC workforce, you should either be assigned an outreach team, or an outreach manager.
You can also always choose not to avail of their services, but I’m just letting you know that this is also an option with most vendors.
5. Security and commitment. Offshore development center security is probably one of the most important aspects to consider since a lot of data will be changing hands very frequently.
Please, please vet your vendors’ ISO security certificates before entering into a contract.
Ideally, your team should also be familiar with global data encryption standards such as the AES, DES (somewhat obsolete), or AES 2.
Frequently Asked Questions
What will my final cost be?
As I said, that depends on factors like your team size, expertise level, project type, whether the team is to be employed full-time or part-time, the length of your project, etc.
There are too many variables involved for me to be able to simply state a baseline figure.
However, in my experience, most media to large corporate outfits end up settling for an ODC that costs them around $100,00 per year.
Smaller enterprises such as startups frequently choose to hire only the professionals they need such as developers or marketers. This ends up costing them around $30,000 per year.
Can I get a flat fee?
Yes, you can! Depending on your requirements, it may better suit your needs to go for a flat-fee, fixed-engagement team. The prices for these teams mainly vary by duration.
How am I billed?
When you come on board with a vendor, they will explain their billing cycles to you in detail. However, there are three main types of billing:
1. Dedicated Resource Hiring: For long-duration projects with an unclear scope and requirements. Clients will be required to pay a security deposit and will be charged a monthly sum to cover salaries and overheads.
2. Time And Material Based Billing. For long-duration projects with a fixed scope but unclear requirements. Clients will be charged only for the actual work done and the materials used. Suitable for small outfits.
3. Fixed-Engagement Billing. For short and ultra-short projects, the entire cost is decided beforehand and is usually paid in a 60-40 split, with 60% being paid after the work is done.
The global outsourcing market is worth $92.5 billion as of 2019, according to renowned analytics firm, Statista.
You’ve decided that you want a piece of this action — good. Setting up an offshore development center in India is the best decision you can make for your business.
About Webential
Webential is a Digital Talent Provider Agency that renders Dedicated Offshore Resources, including designers, developers, and marketers to help firms scale up their bandwidth. Webential’s Reliable talent can organically match any firm’s in-house team or they can simply build a custom team from the scratch.
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