Offshore Dedicated Centers www.softheme.com a popular trend in outsourcing

ODC features Benefits, flip sides and challenges Set up steps Budget components, estimate Sample cost dynamics Operational models ODC service levels Table of Contents www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers

Offshore Software Development Centers (ODCs): are good for both startups and existing businesses can run one or several software engineering projects simultaneously can include one or several software development and QA teams with different skills www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers Why an Offshore Development Center are set up and supported by an outsourcing service provider usually at their premises and with the vendor’s experience and existing infrastructure

serves as a technology and software engineering extension of customer’s main facility allows the customer focus on business specifics while the admin routines are being resolved by the outsourcing services vendor in parallel ODC features www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers possibility to effectively keep, reduce or increase ODC staff when the customer merges with another company or sells the business customer’s 100% ownership staff replacements within from a week to a month, no special costs

recommended contract term: from 6 months to several years upfront payments are not requested unless a large volume of equipment is required to be purchased ownership: the outsourcing services provider may or may not participate security measures: ODC features www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers workflow is adjusted in order to meet the one hosted by the customer; a replication of existing customer environment at the vendor’s side is suggested. Otherwise the vendor sets up the environment and workflows.

For the customer: quick set up and quick cancellation reduced costs as compared to onshore labor costs reduced costs as compared to offshore full time development team transparent (“aquarium” vs. a “black box”) simplified accounting no problems to visit Benefits www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers For the vendor: additional jobs additional income possible % in ownership (negotiated and is not mandatory, though) new experience in customer’s business domain

requires an intensive communication due to large geographic distances; poor communication makes ODC use its resources inefficiently and increase overall costs requires regular assessment of the team to perform necessary HR adjustments ODC members are not native English speakers in the most cases; lack of other European language speakers may require additional trainings in customer’s business domain time difference Flip sides and challenges www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers may need mutual adjustment of processes, e.g. work out identical views, accepted by the customer and the outsourcing services vendor, on: team management motivation quality control, etc.

the customer may need to get familiar with local HR markets, their specifics, levels of salaries and professionalism to make effective HR decisions if he wants to startups often don’t have solid development processes: the outsourcing services vendor has to analyze, recommend and implement average time to hire talents **: ** An advantage of dealing with an outsourcing team provider who already has an existing infrastructure and works with multiple clients is the vendor’s obviously having a pool of talents that might be used in ODC temporarily or permanently, hence, cutting down the time for hiring. Flip sides and challenges www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers business requirements are always on customer’s side: ODC only delivers software, meets deadlines and quality. The customer extends it to the market.

create and discuss an estimation for the monthly budget consider a particular model of building the team: based on existing vendor’s employees or hiring new ones or a mixed model www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers Steps of ODC creation figure out requirements to the talents expertise, identify the needs of: plan infrastructure: permanent long-term employees contractors for shorter periods of time vs.

budget sign off build a team: hiring processes set up knowledge transfer, requirements gathering process, training set up communication process: www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers Steps of ODC creation (continued) set up workflows, management systems collaborate

Typical regular budget expenses are: salaries, bonuses office space costs collective taxes telecommunication costs bank expenses a fee to the vendor www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers Budget components, estimate

Monthly budget **: 10 ... 30 engineers, no equipment purchase needed $23k … $70k 10 … 30 engineers, equipment purchase $40k … $110k ** details available upon request www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers Budget components, estimate Timing: build a 10 … 30 engineers ODC 1 … 3 months

Sample cost dynamics of a startup based on one of the existing ODCs months normalized costs, % Initial cost of infrastructure, purchase, no employees Infrastructure is ready, a small number of employees, started hiring process Full staff, a number of short-term sub-contractors. Pre-release efforts. High costs Production final release. Support started Support with the same staff who started the initial development The product is stable. Support costs are lower www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers

regular model: www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers Operational models In any case the process is overviewed by the outsourcing service provider’s representatives. independent engineers model: mixed intensive communication

What the customer can do: review all and any costs, cost analysis, suggestions and negotiations for cost reductions or additional expenses HR activities such as: conduct interviews make hire decisions make firing decisions motivate – bonuses www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers ODC service levels project management: yes, if the customer wishes, and may be hidden if the customer wants so visits to ODC: yes, any time

What is hidden from the customer: local accounting reports, tax and legal fee payments, vacation and holiday management micro cash flow management, payroll initial resume screening, HR, replacements, training sys admin support, office equipment disaster recovery support and data management physical, network and data security steps www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers ODC service levels

Types of activities supported by ODCs: box software development custom application development gathering requirements: www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers ODC service levels system design QA and testing tech writing marketing research, content and data management, SEO remote system administration independent partially independent vs. dependent on customer vs.

Level of ODC professionalism and success: highest level capabilities (desirable level): gather functional requirements, do system design, coding, QA planning, design and run test cases, final delivery, acceptance testing. ODC strives to take a leadership role in as large area of responsibilities as possible. It is typical for Ukraine and Russia. middle level capabilities (ok level): system design, coding, test cases creation, testing, final deliveries lower level capabilities (ok only for particular cases): coding, test case execution or either of them. It is typical for India and China. www.softheme.com Outsourcing to Softheme™ Software Offshore Dedicated Centers ODC service levels Business analysis and business requirements are always done on customer side.

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