This is part one of our series of articles on this topic - you can read part two here.
The IT industry continues to push the headhunting envelope, since the nature of the industry mean it is particularly susceptible to the remote personnel model. The first response to this demand came with the advent of outsourcing. Among all its varieties, offshoring development is increasingly becoming a widely practiced approach in software manufacturing.
What is an offshore development center?
A remote offshore development center is a software company or office that is located in a country different from where the central office is situated. Properly speaking, an offshore company is the one that is separated from a headquarters by several time zones (otherwise it is a nearshore enterprise), but today any outsourcer hailing from another country is broadly termed offshore.
Offshore development centers (ODCs) can handle a variety of IT-related assignments as their teams consist of experts with diverse skills, including programmers, designers, project managers, copywriters, and testers. Typically, they can develop a software product on a turnkey basis, starting with the concept and going down to UI design. In addition, an ODC may provide accounting, taxing, HR management, and other services functioning as an extension of the in-house staff.
In the event, the hiring company gets a number of important perks:
- No collateral expenditures. If you keep an in-house team geared to dealing with software development, especially in areas such as the Bay Area, New York City, or London, the cost of adequately training, resourcing, and remunerating that team can be prohibitive to growth.
- Easy staff scalability. The chief problem with an in-house team is that you never know for certain how big it will need to be. If you go lean, the odds are that the team might have an onerous stask managing its workflow. If you man the software department with too many employees, that can cause motivation issues for the whole team. By hiring an ODC you can be sure you have the right number of people for the job you have in mind.
Still, it might seem a shot in the dark to go to a “galaxy far, far away” in search of employees instead of seeking somewhere closer to the home base. Why do employers do that, and how can they feel secure about doing it?
Offshore development center benefits
Today, many businesses from North America and Western Europe are experiencing a lack of local IT workers and facing high development costs which makes them turn their gaze elsewhere, in part due to a tech talent shortage in certain countries. Ukraine can be a great choice when it comes to hiring an offshore development team.
Cutting down on expenditure
This is the chief reason that makes companies think 'offshore'. Ukraine has a comparatively low cost of living so companies located there can afford to pay their staff lower hourly rates than would be the case in somewhere like the Bay Area, and even provide some complementary services (typically, consulting ones) free of charge. Even having said this, the quality of the output remains as high as you would expect from a local team.
Access to a pool of savvy specialists
Approximately 15,000 young specialists graduate from Ukrainian technical universities annually. First-rate graduates and experienced employees with a desire for constant self-improvement has earned Ukrainian IT workers top scores in the field, so utilising an offshore development center from this country will result in a final product that is of a high quality, for a competitive outlay.
Located in the Eastern European Time zone, Ukraine borders Poland, Slovakia, and Hungary to the west, and has only a 7-hour difference with New York, allowing for several working hours’ overlap. Industrious and assiduous by nature, Ukrainian specialists are open for contact almost around the clock.
The Ukrainian authorities have made a point of supporting the IT industry through a favorable tax regime. The tax related companies have to pay is only 5% and - what's more - no Value Added Tax (VAT) is charged. This benign business climate encourages and facilitates the appearance of ODCs in Ukraine on a large scale.
In part two of our investigation into offshore development centres, coming soon, we look at some of the facts and figures around ODCs.