How To Setup an Offshore Development Center in India?

In recent times, there has been a surge in demand for offshore development centers (ODCs). Among the top choices for establishing ODCs is India, known for its abundant pool of skilled professionals. Global companies place their trust in India for fulfilling their software development requirements. This article delves into the process of establishing an offshore development center in India.

The global skill gap continues to widen, exacerbated by ongoing economic turmoil. Consequently, an increasing number of companies are opting to outsource their software development needs.

businesses are constantly seeking ways to optimize their operations and stay competitive. One strategy that has gained popularity in recent years is setting up an offshore development center (ODC) in countries like India. With its abundant pool of skilled talent, cost-effective solutions, and favorable business environment, India has emerged as a top destination for outsourcing software development projects.

IT Outsourcing in India Market Size

Source: statista

• Revenue in the IT Outsourcing market is projected to reach US$10.51bn in 2024.
• Revenue is expected to show an annual growth rate (CAGR 2024-2028) of 17.58%, resulting in a market volume of US$20.09bn by 2028.
• The average Spend per Employee in the IT Outsourcing market is projected to reach US$19.98 in 2024.
• In global comparison, most revenue will be generated in the United States (US$185.50bn in 2024).

Why set up an ODC for your software project in India?

Setting up an Offshore Development Center (ODC) for your software project in India offers a multitude of benefits and advantages that make it a compelling choice for businesses looking to streamline operations, access top talent, and drive cost efficiencies. Here are several reasons why setting up an ODC in India can be advantageous for your software project:

• India is known for its large population of highly skilled and experienced IT professionals, providing businesses with access to diverse expertise in various technologies and domains.
• software developer costs in India are significantly lower compared to developed countries, allowing businesses to achieve cost efficiencies without compromising on quality.
• Major cities in India are equipped with world-class IT parks, technology incubators, and state-of-the-art facilities conducive to software development operations.
• India has a proven track record as a global outsourcing destination, with many multinational companies successfully operating ODCs in the country for decades.
• India’s flexible developers market allows businesses to quickly scale their teams up or down based on project requirements, enabling them to respond swiftly to market opportunities and challenges.
• Outsourcing software development activities to an ODC in India allows businesses to focus on their core competencies and strategic initiatives, enhancing productivity and driving innovation.

10 Key Steps to Set Up an Offshore Development Center in India:

Setting up an offshore development center (ODC) in India can be a strategic move for companies looking to leverage skilled talent, reduce costs, and expand their global footprint. Here are 10 key steps to successfully establish an offshore development center in India:

Step 1: Define Your Objectives

Before starting into the setup process, clearly define your objectives for establishing an offshore development center in India. Whether you want to save cost, access to specialized talent, or expansion of your global footprint, having a clear understanding of your goals will guide your decisions throughout the setup process.

Step 2: Conduct Market Research

To understand the Indian market scenario, including legal and regulatory requirements, business practices, cultural nuances, and competitive landscape, conduct thorough market research. You need to identify the best location for your offshore development center based on factors such as talent availability, infrastructure, cost of living, and proximity to major cities.

Step 3: Choose the Right Location

India offers a variety of options for setting up an offshore development center, including major IT hubs such as Bangalore, Hyderabad, Pune, and Chennai, as well as emerging tech cities like Kochi, Jaipur, and Ahmedabad. Evaluate each location based on your specific requirements, such as access to talent, infrastructure, connectivity, and cost-effectiveness.

Step 4: Legal and Regulatory Compliance

You need to ensure compliance with Indian laws and regulations related to setting up a business entity, foreign investment, taxation, employment, and intellectual property rights. You can find guidance from legal experts or consultants familiar with Indian corporate laws to navigate the regulatory landscape smoothly.

Step 5: Establish a Legal Entity

It is necessary to choose the appropriate legal structure for your offshore development center, such as a wholly-owned subsidiary, joint venture, or liaison office, based on your business objectives and regulatory requirements. Register your company with the Ministry of Corporate Affairs and obtain necessary licenses and permits to operate legally in India.

Step 6: Infrastructure Setup

When selecting office space for your offshore software development center, secure a location with necessary infrastructure, including IT infrastructure, internet connectivity, power backup, and security systems. Consider factors such as proximity to talent pools, accessibility, scalability, and cost.

Step 7: Recruit and Onboard Talent

Hire skilled software developers for your offshore development center to tap into India’s vast talent pool. Attract top talent in areas such as software development, engineering, design, and project management by leveraging various recruitment channels, including job portals. You can develop a robust onboarding process to integrate new hires seamlessly into your organization’s culture and workflows.

Step 8: Establish Communication and Collaboration Channels

Implement reliable communication channels and collaboration tools to facilitate seamless communication and collaboration between your offshore development center and headquarters. You should invest in technologies such as video conferencing, project management software, and collaboration platforms to bridge the geographical gap and foster teamwork across distributed teams.

Step 9: Implement Robust Security Measures

Implement robust security measures at your offshore development center to protect your intellectual property, data, and confidential information. Ensure compliance with data protection regulations and industry standards for information security. Mitigate risks and safeguard sensitive assets by implementing encryption, access controls, data loss prevention, and conducting regular security audits.

Step 10: Build a Strong Organizational Culture

Promote collaboration, innovation, and employee engagement across your offshore development center and headquarters to foster a strong organizational culture. You should create a cohesive work environment and retain top talent in the long term by investing in employee training and development programs, cultural integration initiatives, and team-building activities.

Conclusion

Setting up an offshore development center in India requires careful planning, meticulous execution, and a deep understanding of local regulations and business practices. By following the steps outlined in this guide, you can establish a successful offshore presence in India and utilize its vast talent pool and cost advantages to drive business growth and innovation on a global scale. With the right strategy and execution, an offshore development center in India can become a key asset in your company’s expansion journey.