A Guide For Establishing A Vietnam-Based Offshore Development Center

Relia Software

Relia Software

Duc Le

Relia Software

development

Guide for Setting Up An ODC in Vietnam: 1. Conducting Research and Analyze; 2. Choosing Location; 3. Finding a Partner; 4. Kicking Off The Recruitment Process; etc.

How To Set Up An Offshore Development Center In Vietnam? | Relia Software

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An offshore development center (ODC) is becoming increasingly important as the popularity of outsourcing software development to foreign countries grows. The word "ODC" is no longer foreign to many IT firms. Cost-effectiveness and easy access to a wide pool of skilled tech workers contribute to its rise in popularity as a software development solution. Let’s discover further details about ODC via this article!

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What is Offshore Development Center (ODC)? 

An offshore development center (ODC) is a remote office where a company sends its software development, project management, and human resources (HR) teams to work. It's the equivalent of a full-fledged outpost of the parent company in a new place.

In other words, an offshore software development cent ner is a branch office that handles all of a company's technical needs. This means it operates under the same name and follows the same business practices as the parent company. Teams in the ODC essentially serve the same purpose as in-house teams, adding value to the business and supporting its primary goals.

The cost of living in the country where the ODC is situated is typically substantially cheaper than that in the country where the parent firm is situated. The superior technology and infrastructure often found in ODCs also helps keep overhead costs down. However, while establishing an ODC, resources for the company's integration must be made available. Offshore development firms typically employ expertise in all areas of management and technology, not only programmers and testers, to lighten the load on the main office. 

The following responsibilities are typical of ODCs:

  • Account Manager 
  • Project Manager
  • Designers and Developers
  • Test Engineers
  • Usability Engineers
  • Graphic Designers
  • Content and Technical Writers
  • The HR team 
  • Other office departments such as recruiting, marketing, etc. (optional)
What is Offshore Development Center (ODC)? 
What is Offshore Development Center (ODC)? (Source: Internet)

ODC Models

Product Engineering Model 

In this ODC model, you'll work with a team of programmers who are solely focused on your project. This group will be responsible for overseeing all phases of product development, from initial concept to final release. A larger investment is needed than with other ODC models because of the requirement for a more varied staff, more intricate infrastructure, and more research.

An ODC provides leaders who aren't familiar with software development with access to a team of professionals who can help them create high-quality digital products. The agile development procedures used by the team also make it possible for the product to quickly adapt to new requirements or shifting market conditions.

Contractor Model 

In the contractor model, a third party is contracted to supply the necessary resources and assume control of the project. The contractor may also be responsible for delivering the necessary infrastructure, for which they may charge a flat fee or a rate per hour.

This technique shortens the duration of the project's inception while cutting costs often associated with recruiting permanent staff. During this type of collaboration, the on-site product or engineering manager coordinates with the Offshore Software Development Center's project manager. The offshore team does everything and reports back to the main office.

The ODC will handle a portion of the product development process, allowing you to concentrate on marketing your product or working with your in-house teams.

Customer Model

In this model, the client sets up and manages their own ODC. The Offshore Development Center team is comprised of both newly hired members and those who have been transferred from other departments. So the client has complete say over the project and may still make adjustments as needed.

To rephrase, the ODC functions as a wholly owned subsidiary of its parent corporation. The only significant distinction between the onshore and offshore teams is the location of the client's operations for the business unit in question. As with other ODC models, there is a premium placed on infrastructure, resources, and management.

ODC Payment Models 

Time and Material 

When the project's parameters are flexible, this model is the best option. Clients have the option to add or remove personnel from a project as needs change. They will be billed in accordance with the amount of time and effort put in by the programmers.

Fix Expenses

This approach works best for small to medium-sized projects with clear goals and parameters. Timelines and budgets are established up front, and clients are billed appropriately.

Recruitment of Dedicated Personnel 

Long-term projects with undefined parameters and requirements are ideal candidates for this method. In this framework, customers have access to a whole staff and pay based on a straightforward sliding scale. The outsourcing provider's administrative and infrastructural costs, as well as the salaries of all team members, will be covered by the monthly fee charged to the client.

When Do You Need An Offshore Development Center?

The project scope is large 

You can simply use different outsourcing methods for a small project like making a basic mobile app. However, the ODC method may be preferable for constructing something enormous that necessitates constant support and updates, such as an enterprise application for a market leader in the Fintech sector. Establish a specialized offshore development center after defining the project's scope, timeline, and budget through careful analysis of its needs, and press forward toward your objectives.

You need a large and diverse team

As was previously indicated, an Offshore Software Development Center should be seriously considered if your team needs 40 or more professionals. In addition, you'll need to collaborate with a wide range of specialists in fields like Machine Learning, Data Science, and Cybersecurity as you build out a complicated solution. Unlike with some of the other outsourcing choices, the ODC model allows for all of the necessary specialists to work in the same place.

You are developing software with high security requirements

A data breach can have irreparable effects on your brand and bottom line if your project stores sensitive data like financial records or patient's sensitive health information. Therefore, the Offshore Development Center model may be preferable to the other forms of outsourcing if you are working on a particularly sensitive project that necessitates the use of a highly skilled cybersecurity team. However, if you like, you may also employ a team of cybersecurity experts in-house.

Benefits and Drawbacks of Offshore Development Center (ODC)

Benefits 

Reduced Expenses

The ability to save money is a major factor in why businesses use ODCs. Companies can save a lot of money on salaries and other expenditures by bringing in programmers from nations with cheaper labor.

Talented Human Resource

Through the use of an ODC, businesses are able to search for and connect with qualified experts from all over the world, regardless of their physical location or the size of their current professional networks.

Faster Time-to-Market

Product development cycles can be shortened and new products released sooner with the help of 24/7/365 dedicated teams.

Rational Resource Allocation

Resources will be distributed in a variety of ways for various initiatives. The number of employees at your main office will need to be regularly adjusted to meet project demands. ODCs can help you in this situation by putting in place internal workgroups, which eliminates the demand for ongoing reallocation. They can help you as you grow your IT division. 

Risk Mitigation

An ODC can help spread your personnel out across various sites, reducing your vulnerability to events like natural catastrophes or political unrest at your main office.

Innovation Boost

Collaboration across groups with varying backgrounds increases the likelihood of coming up with original answers to problems.

Drawbacks

Cultural Differences

Working with offshore teams might increase the likelihood of misunderstandings and communication breakdowns. It's important to put in time and energy into developing trusting connections and learning how to adapt to one another's working methods.

Time Zone Difficulties

Coordinating across many time zones presents logistical obstacles. Establishing regular communication channels and meeting times that work for everyone on the team will help to reduce the impact on productivity.

Data Security 

Worries about data security arise whenever sensitive information must be sent between places. Organizations should have and enforce stringent data protection rules, and make sure their ODC partners do the same.

Law Inconsistencies

One of the things that businesses should be paying close attention to is whether or not the government has open policies towards foreign corporations. A significant obstacle for firms with global expansion plans is the prevalence of legislation in some nations that makes it illegal for foreign enterprises to establish operations within their borders.

Quality Standards Control

When working with remote teams, it can be difficult to ensure that all projects are completed to the same high quality standard. Standardize your procedures, utilize a project management tool like Jira or Asana, and set up a CI/CD pipeline to guarantee the quality of your releases.

Knowledge Transfer 

Moving current product expertise to remote workers can be challenging. A team's existing members may have insights about the product that aren't reflected in the documentation. Due to these differences, it might be difficult to bring distant teams up to speed.

Why Vietnam for Offshore Development Center?

Vietnam is one of the world's top providers of offshore business services. Although Vietnam's economy has been damaged by the Covid 19 outbreak, the country still hopes to become a top destination for those in need of ODC services. As a result, more and more MNCs are looking to Vietnam-based firms as their ODC partners. You can reap the benefits of working with an ODC in Vietnam as listed below. 

Reduced Cost 

Costs for personnel and office space rental are relatively low in Vietnam, making it an attractive location for setting up an Offshore Development Center (ODC). Vietnam has affordable raw materials and human resources, and the quality of its workforce is comparable to that of other countries. As a result, they are able to redirect those savings into other areas, like advertising, software development, etc., rather than outsourcing. 

Skilled Programmers 

>> You may consider: 15 Web Development Tips To Enhance Your Skills

When using ODC services in Vietnam, international companies will have access to competent local staff. When a company is in need of specialized human resources for a difficult project but cannot bring on new employees quickly, ODC is a viable option. In addition, Vietnam is home to thousands of individuals with exceptional hard and soft skill sets. They are versatile, malleable, and able to adjust to any situation. Because of this, Vietnam ODC is able to offer its clientele premium services.

Governmental Supporting Policies

The government of Vietnam has recently instituted regulations meant to entice more outside investors to set up remote offices in the country. In addition, the government has sanctioned the National Digital Transformation Programme, which is aimed at companies that wish to implement digital transformation in order to increase output, productivity, and competitiveness. 

>> Read more about digital transformation in some fields:

In Vietnam, there is no shortage of ODC providers. 

″ Relia Software is pleased to count itself among the top Vietnam software development firms offering first-rate ODC services. With more than a decade of experience, Relia provides IT consulting services to businesses in need of innovative solutions. We also have an excellent staff of engineers that are also bilingual in English and other languages. Some of the many ODC services that Relia is dedicated to offering for you:

  • Software development;
  • Mobile app development;
  • Web development;
  • User interface and user experience design;
  • Business process management;
  • Quality assurance and testing;
  • etc.

We work hard to satisfy even the most exacting standards and deliver the superior service you deserve."

A Complete Guide for Setting Up An OCD in Vietnam
A Complete Guide for Setting Up An OCD in Vietnam (Source: Internet)

A Complete Guide for Setting Up An ODC in Vietnam

1. Conducting Research and Analyze 

You must determine first and foremost if an ODC is a good fit for your company. Also, think about your other outsourcing choices. If you decide to use the Contractor model, your company's infrastructure must be prepared for collaboration with an outsourcing partner. Last but not least, you should know exactly why it is hard to meet your software development needs locally and what kind of expertise you want before deciding to set up an ODC.

2. Choosing Location 

Many favorable elements impact businesses' decisions to set up ODCs. Lower salaries and operating costs, advanced technical capabilities, convenient time zone and cultural compatibility are all pluses. 

3. Finding a Partner 

Finding a reliable custom software development firm to operate as your company's representative in a foreign nation is essential when using the Contractor ODC Model. The Customer model is similar in that you may need a local partner to assist you establish an office and understand the local regulatory, commercial, and political landscape, or you can use your current staff.

4. Kicking Off The Recruitment Process

Whether your team takes control of hiring in the new location or you work with a local partner, you'll need access to qualified professionals there. For some businesses, expanding into a new market with their own brand name is a top priority. One potential advantage of the Offshore Development Center Model is the ability to employ employees under your brand who will adhere to your company's standards of conduct. In contrast to working for a lesser-known offshore software development partner, professionals are more inclined to join a large, well-known company.

5. Setting Up An Offshore Development Center 

Office space planning should begin while your offshore development team is still being assembled. Location, parking, security, office layout, employee capacity, and technology are all crucial elements of an efficient workplace.

6. Getting Additional Legal Support 

To conform to local regulations and prevent any legal concerns that could result in additional costs, you may require the assistance of local lawyers or perhaps the advice of an agency.

7. Equipping Your ODC Office 

Get the PCs, laptops, software, servers, security systems, and furniture for the new office, as well as the necessary IT infrastructure.

8. Welcoming New Participants 

New staff begin to be welcomed into the company, and the first in-person meetings are held at the headquarters. The launch of your offshore software development team has arrived.

9. Payroll and Accounting Tasks Under HR's Watchful Eye

This is a crucial part of your ODC's operation and deserves special attention. You need to have someone or some group in the workplace handle payroll, benefits, money transfers, sick days, and vacations.

ODC Vs Outsourcing: What are differences?

While both ODCs and outsourcing software development use remote teams, they take very different methods to creating software.

 

ODC

Outsourcing

Control Levels

- Provide for increased management of both teams and operations.

- Directly manage remote teams, including setting and tracking targets, tracking progress, and making big-picture decisions.

The project is sent to a third party to handle independently.

Team Composition

Employ committed individuals to work solely on your initiatives, fostering open lines of communication and cooperation.

Run the risk of getting less individualized service from an outsourced staff because they are juggling numerous clients at once.

Cultural Compatibility

Companies put effort into fostering meaningful connections with remote teams and bringing them into cultural alignment with the rest of the organization.

Communication problems are more likely to arise in outsourcing relationships because of their transactional nature.

Costs and Pricing Structures

While both ODCs and outsourcing can reduce expenses, they do so in different ways:

- ODCs often operate on a monthly retainer or flat-rate basis.

- ODCs can also function on a project-by-project basis.

The fees associated with outsourcing are often calculated on a per-hour or per-project basis.

Long-term vs Short-term Engagements

ODC is more suited to long-term commitments since they facilitate the maintenance of relationships and the uninterrupted flow of knowledge.

Short-term projects or jobs that call for specialized expertise are perfect candidates for outsourcing since they allow for rapid progress without needing a long-term commitment from the business.

Conclusion

In today's digitized environment, the value of offshore development firms becomes increasingly apparent. If this article helped you in any way, Relia would appreciate it very much. Furthermore, we hope that you have a productive and positive experience working with ODC based on the information provided above.

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