In this article, we explain the different kinds of offshore software development center that can be found in Ukraine. This is part two of our series of articles on the topic - you can read part one here.
Cooperating with offshore developers from Ukraine
There are three basic cooperation models that can be used when collaborating with ODCs from Ukraine, and depending on the ODC, the possibilities may vary.
This is by far the most widespread model offered by Ukrainian companies when they take care of all project-related issues, and are charged with ultimately delivering the finished product.
The client can either pay for the hours the developer spends working on the project (the so-called time and material scheme (T&M)) or pay a fixed price stipulated by the contract. Each option is fraught with potential pitfalls, but may also bring benefits.
- The T&M scheme is valued for its flexibility which explains its dominance in project outsourcing. The client can adjust its requirements by shifting goals and features being eventually free to put a stop on the development process if they see it expedient. However, this approach makes accurate cost calculation difficult, bordering on impossible. Moreover, the customer has to pay for downtime if in a situation where developers are waiting for client signoff or feedback on reaching a project milestone.
- The fixed price model is everything T&M is not. It is an excellent solution for a landing page or corporate website development, and yet it nevertheless lacks flexibility. Any changes introduced after the contract has been signed will lead to an extra charge and deadline rescheduling.
On the flip side, you can always be sure both of the money you will spend and of the time when you receive the completed product. Even if it takes longer than expected, clients don't pay for that extra time – at least overtly – since many developers, anticipating such a course of events, will add up to a third to the project’s actual cost in order to cover these eventualities. On the other hand, this model incentivizes ODCs working on several projects at a time, throwing commitment to your project into question.
This method is suitable for long-term collaboration, with the client supplying everything developers might need, and the ODC focusing on the project full-time. It is cost-effective, since the client pays on a monthly basis, eliminating some of the potential risks inherent in the aforementioned methods.
The downside to this rate-card approach is the absence of direct control over both the choice of personnel and the implementation of the project. Your communication is limited to the project manager who is in charge of the distribution of assignments and seeing to it that they are carried out. If you like to have careful oversight of everything yourself, consider the next method.
Also known as outstaffing, this model is similar to the previous one in terms of payment frequency, but in cost+ contracts, the vendor selects each team member, personally apportioning tasks the way it views as expedient.
Why is it called cost+? Because, besides the employees' salaries, the client has to cover all related expenses including taxes, office infrastructure, workstations, and other costs.
Since it is the client who picks personnel and determines their duties, the full responsibility for success and for possible failure rests on the customer - but then, all work done in the name of a company assumes that company assumes accountability, in the end.
How to set up an offshore development center: a checklist
Hiring a whole ODC may ultimately be a cost-effective solution if you have a large project in mind dealing with security-sensitive softwarefor which you need a team which is entirely focused. If your venture ticks all these boxes, the following are crucial for you to ensure are fully covered.
Remember, Base B offers each of these steps as part of its service to clients withing to set up a remote development team.
- Employ the services of a legal counsel who will assist you in handling administrative issues
- Learn about the local tax system
- Get registration for your company
- Rent and furnish an office (and refurbish it if necessary)
- Hire recruiters and support staff
- Hold a local brand-building campaign to promote yourself as a reliable employer
- Recruit the team
The outstaffing model presupposes a different approach, since in such a case you will deal with ODCs that already operate in the relevant local market. Here the recruiting procedure looks like this (below).
Base B, with lengthy experience of its local markets, is ready and prepared to assist clients with every part of this list.
- Data gathering to ascertain the reputation and portfolios of local ODCs in order to pick the most professional and reliable one
- Interviewing potential developers
- Determining the employees’ responsibilities and the overall organizational structure
- Implementing security measures by issuing permissions to people who work on particular parts of the project
- Choosing a communication scheme
- Starting the development process
Enlisting the services of an offshore development center is a cost-effective business approach widely practiced in the IT industry. If you hire an expert team of software experts from Ukraine they are sure to deliver a product of the highest quality, in a way that is cost-effective for your business.