Building an Offshore Development Center in Poland

Offshore Development Center

An Offshore Development Center, also known as an ODC, is a dedicated development office with a software development team in a foreign offshore or nearshore country. In other words, this is a firm’s subsidiary in another location with a large pool of talents and relatively lower costs. The ODC has proved to be a very effective business model for dedicated IT projects for companies from any industry around the world. Let’s now analyze this interesting topic in the next paragraphs.

The genesis of offshore development centers

In recent years, software engineers and programmers have been in greater demand all around the world. Rapid technological growth, digital transformation of modern companies requires more technical competencies than ever. According to the US Bureau of Labor Statistics, employment in the software development industry is expected to increase by 22% between 2020 and 2030. Each year on average, there will be about 189,200 openings for software engineers (in US only).

The supply of technology IT talent has not kept pace with the growth in investment in technology throughout all organizations in recent years. The Covid-19 pandemic may have put investments on ice initially, but now that the epidemic is over, a significant number of businesses are looking to further reallocate technology spending. The tech industry has also experienced a solid boost in venture capital, which has led to an influx of new companies looking for engineers. At the same time, the established tech companies are still hiring at a high rate. As a result, the demand for software engineers is projected to be greater than ever.

All these coinciding factors are the major reasons why companies are struggling to find adequately skilled computer science and engineering professionals. This dangerous trend isn’t only happening in the United States, of course, as similar demand has been seen in Europe, Australia, and many other parts of the world.

The failure of traditional software developers outsourcing (and the rise of offshore software development).

Traditional outsourcing was the first wave of solutions to handle (or to tame) the problem for many years. Companies have tried to outsource projects, hire temporary experts locally, or based on travel contracts. The solution has worked for small or temporary projects but has failed when it comes to building stable, long-lasting, quality centers of competence inside the companies. There was a need to find a solution comparable to the local, internal teams when employees can feel the real bond with the brand and its values.

The success of nearshore and offshore development centers.

A nearshore and offshore development center (ODC) became a backbone of software development expertise behind many successful North American and West European companies. This approach to handling a project lets organizations’ leaders scale their local teams with skilled engineers, trim expenses, and for the most secure the future company growth. The ODC have presented much more stability and strategical planning to the industry by: 

1) focusing on creating the real, operational software development teams (remote teams) not only providing HR headhunting services

2) focusing on client goals and success with respect to the company brand identity and values

3) improving security, standardization, and core IP protection

4) providing resources and local know-how to software development projects in a faster and more efficient way

Who Needs an Offshore Software Development Center (ODC)?

The first companies that applied this new concept were of course those from the big tech and tech startup industry. However, in recent years this trend started spreading to other non-tech industries. They are no limitations here. Every company can own a software development center or at least set up a nearshore development team to secure future growth.

Nearshore vs offshore development centers

The main distinction between those two is location. Nearshore refers to close countries to the mother company headquarters. The Nearshore development center is an alternative to the classical offshore office and internal teams (almost between both of them). It shares the same advantages and disadvantages as a standard ODC, but there are some significant differences:

1) A nearshore development center is usually more expensive than its offshore counterpart. The main reason is closer proximity to the US or Europe. For example, a UK company will be much eager to set up its software hub somewhere in Poland or Romania rather than in China. For US organizations nearshore location would be Mexico.

2) Nearshore development centers typically offer better project management, given that managers can situate themselves right in their clients’ offices to better oversee the project.

3) A nearshore development center is a good choice for developing permanent, long-term projects. Companies prefer to invest more resources to build a subsidiary or IT department serving the organization for many years.

4) You benefit from being able to visit your nearshoring development center in person to discuss all issues and build stronger relationships with employees.

5) Offshore development centers are often considered riskier when it comes to IP security and cultural alignment (however this is not always the case).

6) Offshore development team is considered more often in terms of cost-saving initiative, where the nearshore remote team is deemed as an extension of the internal team.

In other words, nearshore outsourcing can reduce your cost base in comparison to the internal team, but it isn’t just about reducing costs. Primarily, it’s about accessing a wider pool of tech talent, without compromising on: – quality software – the quality of the developers in your remote team – cultural fit – your ability to manage the team and the software project your approach to – risk and security in the development process – the value you put on things like innovation and quality assurance

For more information on the advantages of having a nearshore team, check out our article.
The above definitions apply to nearshore software development vs offshore software development.

IT-software-development-outsourcing-Poland

Ready to start your own offshore development center?

Creating a software development center is not an easy task locally, neither in other nearshore or offshore country. It requires great planning, strategy, time, resources, and a little bit of luck. You will have to deal with remote team management all the time.

At NxTide we have created a very transparent, win win offshore strategy to deal with demanding projects for customers from Europe, North America, and the Middle East regions.

Steps to take to set up an offshore development center

Now, when we know the basic characteristic of an ODC we can go deeper into the necessary steps to take to mitigate major risks of a future software development project:

1) Prepare an offshore strategy
This is something every successful Project Manager does. Without this step, you’ll waste a lot of time. The document should contain: goals, time frame, budget, other, resources, expected effects, return on investment. Based on that you’ll be able to filter appropriate offers.

2) Choose a location for a potential offshore software development center
The first step here is to analyze the average software developer hourly rates from the outsourcing market. Choose max 10 locations and compare everything in an excel file. If several of them meet your budget criteria you can go and analyze locations based on several factors: location proximity (the closer the better) software developers poll size country educational system country business infrastructure and safety the development of a local outsourcing market cultural matters In this article, we talk a little bit more about this matter. There are some great locations in trend right now like Mexico, Brazil, and CEE Region. We would kindly recommend taking a closer look at Poland, one of the largest IT talent pools worldwide.

Kraków

Over 0,8M population, 13% of total IT Engineers supply

nearshore software development team

Warsaw

Over 1,8M population, 24% of total IT Engineers supply

Wrocław

Over 0,7M population, 12% of total IT Engineers supply

Katowice

Over 1,8M population, 9% of total IT Engineers supply

Poznań

Over 0,7M population, 8% of total IT Engineers supply

Łódź

Over 0,7M population, 7% of total IT Engineers supply

Gdańsk

Over 0,6M population, 6% of total IT Engineers supply

Bydgoszcz

Over 0,5M population, 4% of total IT Engineers supply

 

3) Find a reputable local IT Partner (ODC, BOT)
There are cases of large companies that decided to establish the local entity and the whole business process by themselves. The only help they needed was during the recruitment process. However this strategy requires resources and time, and as we know in IT time is the most valuable resource. This is why we recommend finding an experienced and dedicated IT Partner that will help you handle operations, mitigate risks, and generally start the project faster.
At NxTide for example we start building a dedicated team (including the Project Manager) for the project the same day we sign the agreement.

Screen the best vendors:
– look at their experience and specialization (HR agency is not a technological partner)
– analyze Management background (look for IT skills, experience)
– analyze current customers and request some testimonials from them analyze the company financial records (make sure that your partner will handle the effort of the large project)
– conduct interviews and discuss KPI’s with the Management of every IT partner (make sure that they will follow the plan)

How can we help you in launching your offshore software development center?

NxTide is a specialized company focusing on building local, remote Software Development Teams or larger Software Development Centers in major cities in Poland. We take care of all recruitment and quality control processes making it faster and more cost-effective for you. Here is some more information about our expertise: – Over 7 years experience in creating a variety of software development teams – Over 60 teams and 300 engineers successfully hired and deployed – Several dedicated HR and IT Project Management Teams acting on your behalf

Please take a closer look at a dedicated and flexible offer we have prepared based on market needs:
1) Software Development Teams
: dedicated to clients looking to expand their software development teams or create small remote teams from scratch.
2) Nearshore / Offshore Development Center: dedicated to larger and permanent projects. We’ve implemented the innovative Build Operate Transfer model to make the whole process faster, more efficient, and transparent. Please read more about us here: https://nxtide.com/about-us/

IT Outsourcing, Offshoring & Nearshoring in Poland

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