The Ultimate Guide to Offshore Development Centers: Setup, Benefits and Challenges 

Building tech talent locally is slow and expensive. That’s why top companies create Offshore Development Centers (ODCs): Fully integrated engineering hubs in talent-rich regions, with full project control, lower cost, and faster hiring.

It’s a model that quietly powers many North American and European tech companies thanks to greater talent availability, specialized skills, and lower operational costs compared to hiring locally.

If you’ve landed here, chances are you’re exploring how to build your own ODC – or looking for the right partner for offshore development center services. In this post, we’ll define what an offshore development center (ODC) is, explore its strategic advantages, and highlight common pitfalls and how to avoid them. Let’s dive in.

What is an Offshore Development Center?

An Offshore Development Center (ODC) is a software development team dedicated to your project(s) located in a country outside your company’s headquarters, strategically chosen for its talent availability and cost-effectiveness.

How it works

1. Define your goals: What do you need: Faster delivery? Specialized roles? Long-term stability?
2. We assemble the team: Based on your tech stack and culture fit, we select vetted engineers.
3. You interview and approve: Full control over who joins your team.
4. We handle the setup: Office, hardware, contracts, HR, payroll.
5. You manage delivery: The team works your hours, in your tools, with your cadence.

A dedicated offshore development center is fully integrated into your in-house operations but runs from an offshore location like Central & Eastern Europe, Latin America, or Asia, with the help of a local provider who handles staffing, office setup, team administration, talent retention, and other services.

The offshore development center model typically includes:

• A full-time tech team of software engineers, UX/UI designers, QA specialists, DevOps experts, PM/PO, and other IT talent required for your project;
• Office space, hardware, and all the operational IT infrastructure;
• Managerial support, such as HR, legal, and financial teams covered by the vendor.

Project control and in-depth team integration are the major characteristics of an offshore development center. The team works only for you long-term, follows your company’s processes, and integrates into your organization on a cultural level.

Key steps to building an Offshore Development Center

Define objectives and business needs

What do you want to achieve with your ODC (offshore development center)? Typically, companies dive into offshore development to build software, expand existing solutions with new features, modernize legacy systems, build MVPs or prototypes, or shore up long-term software development goals with a stable team.

Depending on your situation, you’ll need to make decisions around the types of expertise required as well as team size, budget, and KPIs to measure success.

At this stage, you should outline the following:

• Deliverables: Break your project into clear milestones;
• Timeframes: Set deadlines for each milestone to keep the project on track;
• Skills and team roles: Define what expertise is needed for your offshore development center based on your goals, like front-end, back-end, DevOps, UX, QA, etc.;
• Budget: Budgeting helps the vendor select talent that meets your financial expectations.

Once these elements are clearly defined, your vendor of offshore development center services can tailor a team of specialists who align with both your technical and financial requirements.

Select the right offshore location

Different regions offer different advantages when it comes to talent availability, pricing, and business infrastructure. Here’s what to consider when picking a location for your offshore team:

Compare top offshore regions: Review offshore software development rates by country in Central & Eastern Europe (CEE), Latin America (LATAM), and Asia.

Consider time zone alignment: Countries with extra overlapping hours can be helpful for real-time collaboration with your home-based squad.

Look at cultural compatibility: Shared communication styles, work ethics, and language are important for seamless offshore software development.

For your convenience, we’ve put together the most favorable locations to launch an offshore software development center based on recent data.

	Software development rates (per hour)	Time zone	Benefits	Suitable for (type of project)	Savings (compared to onshore staffing)
Central & Eastern Europe (Ukraine, Poland, Romania, Czech Republic)	$37–$101	GMT+1 to GMT+3	Solid offshoring reputation; Strong STEM education; High English proficiency; Cultural alignment; Innovation hub	European & UK businesses looking for sustainable offshore software centers	Up to 60% (vs. EU teams)
Latin America (Mexico, Brazil, Argentina, Colombia)	$38–$92	GMT-3 to GMT-7	Real-time collaboration with US; Growing tech talent; Cultural compatibility	North American companies prioritizing real-time collaboration	Up to 45% (vs. US teams)
South Asia (India, the Philippines)	$16–$70	GMT+5 to GMT+8	Massive talent pool; Low cost; Quick scaling potential	Companies looking for budget efficiency and large-scale offshore software development	Up to 70%

Research ODC partners in your chosen location

Choosing the right offshore development company is crucial, as talent retention and team integration depend on your provider. Here’s what to evaluate at the early stages:

1. Proven experience and expertise: Look at their past projects and assess if they have worked with companies in your industry.
2. Industry reputation: Check success stories, client testimonials, and third-party reviews like Clutch. For instance, we at nCube have worked with 120+ businesses worldwide in such domains as e-Commerce, Healthcare, Fintech, and more. For example, you can review our client feedback on Clutch.
3. Security and compliance standards: Make sure your provider of offshore development services follows strict data protection practices as well as local regulations. Ask about their approach to data and IP protection.
4. Scalable infrastructure: A well-established offshore software development company should already have the tools, office space, and operational workflows in place to support your ODC growth.
5. Flexible engagement models: There are various options for an offshore development center setting. You can consider such options as:

• BOT (Build-Operate-Transfer): Start with a small team of offshore developers managed by the vendor, then take full ownership when it grows into a full-fledged offshore development center.
• Dedicated teams: Your own team of dedicated offshore software developers working on your project full-time.
• Managed services: The vendor takes care of project execution, without bringing you into the loop.

Consider legal and compliance considerations

Before your offshore development center opens its doors, make sure to lay the groundwork for legal and compliance aspects. We at nCube always help our clients in this journey – from researching the local legal landscape to preparing paperwork and ensuring regulatory alignment.

Here’s what to cover:

Data protection: Your offshore software development center should operate in line with the regulations that apply to your industry and chosen country. For instance:

• GDPR for businesses handling EU data;
• HIPAA for healthcare projects;
• SOC 2 for SaaS and cloud platforms.

Contracts: Establish clear agreements that regulate your relationship with offshore software developers, including:

• Non-disclosure agreements (NDAs) to protect sensitive information;
• IP ownership to retain your product and know-how;
• Service Level Agreements (SLAs) define responsibilities, timelines, and KPIs of your offshore software development team.

Set up infrastructure and IT support

To function properly, an offshore development center needs to have the right tools, systems, and environment in place. Consider the following:

Secure development environments: Protection of your codebase and sensitive data should be your top priority. Together with your offshore development partner, set up secure VPN access, firewalls, and encrypted communication channels, as well as strict permissions.

Cloud-based collaboration tools: When managing offshore development teams, use Slack, Jira, Confluence, GitHub, or Azure DevOps to keep your teams connected, organized, and synchronized across time zones.

Scalable IT infrastructure: Your offshore development center’s tech capabilities should correspond to your project needs. A vendor like nCube guarantees a stable internet connection, powerful hardware, and flexible systems that can support software development of any scale.

Manage your offshore team

In the offshore development model, the client is responsible for aligning the team with business goals and consistently delivering high-quality work. Below are a few considerations for setting up an offshore management process:

Build a talent sourcing process that fits the chosen market: Together with your vendor, create a talent pipeline that reflects local realities like salary expectations and skills availability.

Create a structured onboarding process: Ensure dedicated offshore developers get up to speed with your company’s tools, culture, and daily workflows from the start. This leads to a faster ramp-up of your offshore development center.

Establish continuous training: Whether it’s product knowledge, soft skills, or competence upskilling, regular training keeps your team motivated to grow together with your business.

At nCube, we make sure your offshore developers become a part of your core team. That includes long-term retention, regular check-ins, and taking care of their general comfort.

As an example, read how we helped Life360 build a strong dedicated offshore development center in Eastern Europe, with 70% of nCube engineers becoming key decision-makers, playing a critical role in the success of the application.

Create communication and collaboration strategies

With the right offshore development center setup, your teams will stay as connected and synchronized as if they were working under one roof.

Below is how to achieve that:

• Use standardized project management tools: Platforms like Jira, Trello, or Asana will help you keep your project on track, assign tasks, and manage deadlines.
• Build clear workflows: Define the process from idea to delivery and outline responsibilities for each team member.
• Schedule regular check-ins: Daily or weekly standups, sprint reviews, and one-on-ones help your offshore dedicated team stay aligned with your business goals and feel a part of your company.

At nCube, we help our clients build collaboration and communication channels that work across time zones.

Benefits of an offshore software development center

A broad pool of tech talent

In 2025, the lack of qualified candidates is the main problem tech leaders face when building their tech teams. Thus, addressing the talent shortage is one of the biggest challenges for companies, especially in North America and Western Europe.

One of the key offshore software development benefits is that this model lets you expand your talent pool and source developers from the most skilled tech hubs in the world while speeding up your team formation process.

Streamlined team launch

Building an in-house team, especially when the labor market is tight, takes plenty of extra resources. You have to create a separate budget and build additional teams, such as finance, HR, legal and other departments.

An offshore software development center lets you cut through the difficulties of creating an in-house unit. You only need to define the team size and structure and delegate the team formation process to the provider.

The vendor of an offshore development center aims to match you with skilled software developers who fit your candidate requirements in the best way. Such an approach allows you to add specialists who will be dedicated to your project, working alongside your team as if they were your local team members.

Shorter recruitment cycle

When building an in-house team, you may spend months looking for candidates with the right set of skills and competencies. By creating a dedicated offshore development center, you significantly expand the radius of the talent search. You can dive into vast pools of tech talent like Latin America or Central & Eastern Europe, which accelerates the team launch process and reduces the time-to-hire skilled developers by weeks.

Budget optimization

Your own offshore development center is a proven way to combine solid technology expertise with lucrative operational costs. Such a solution lets you add qualified technologists based in affordable offshore tech hubs but at lower rates than your local IT experts.

Another significant offshore development center benefit is that it lets you trim the exorbitant costs of maintaining a local tech unit, including health insurance, vacation, days off, employee bonuses, and more. All of these expenses are typically covered by the provider, like nCube.

24/7 contribution

Offshore software development is typically associated with time zone differences. Despite the common belief, it doesn’t necessarily have to be a weakness. If done right, this approach accelerates the software development process.

Even with several hours of overlap between your local staff and offshore software center, you can achieve the state of continuous service supply: In a 24-hour timeline, two teams will put in 8 hours’ worth of work on your project. Unlike having a single team contributing to your tasks, such an approach can bring a lot of value in terms of meeting deadlines.

Challenges and how to overcome them

Communication and cultural differences

Cross-border collaboration is associated with different time zones, work styles, and communication habits, all of which should be addressed by the tech leader.

Here’s how you can address these challenges:

• Create clear communication protocols: Define how updates are shared, which tools are used, and how often team members check in.
• Hire a local project manager: A team lead on the side of the provider who understands both local culture and your company’s expectations will help you synchronize the teams.
• Welcome cultural awareness: Learn about holidays, communication styles, and behavioral norms to facilitate collaboration with the offshore software center.

Quality control and performance management

To ensure your offshore software development center delivers consistent, high-quality work, you should stay on top of team performance. Consider including the following in your agenda:

• Define KPIs and set measurable goals for your team;
• Conduct regular code reviews and offer feedback;
• Schedule performance evaluations, including one-on-ones or formal reviews;
• Use performance tracking tools like Jira, GitLab, or SonarQube.

Data security and compliance risks

Data protection and compliance with industry regulations should be non-negotiable in an offshore development center setting.

Here’s how to keep your offshore development center secure:

• Use encrypted communication and file-sharing tools;
• Set up secure VPN access for restricted access to internal systems;
• Define access controls and permissions based on roles.

At nCube, we work closely with clients to implement secure development environments and follow the best practices for data protection and regulatory compliance.

Operational and dependency risks

An offshore software center in a foreign country might be susceptible to geopolitical instability, infrastructure issues, or local disruptions. To better protect your operations, consider the following:

• Diversify across regions to reduce risk and improve business continuity;
• Map out backup plans, including knowledge transfer, remote failovers, and dedicated team reallocation;
• Use consistent project management and documentation practices to make it easier to shift operations if needed.

What will your own offshore development unit look like with nCube?

You may wonder how your offshore software development center will function in practice. In our model, it’s a 100% dedicated team that adds value to the client’s company by providing development expertise that the client lacks on-site.

The team will be fully dedicated to your project, working on it full-time Monday through Friday. The engineers will report to you or your tech leaders, and you can hire a team leader on our side to report to you on behalf of all team members in your offshore development center. If you’re against a middleman when it comes to communication, you can stay in touch with each developer individually.

On top of that, the members of your dedicated offshore development center will follow your company’s practices, management, and communication style as well as adapt to your culture. With the right vision, this team may even become the driving force for development within your organization.

One of the most impactful benefits of our model is that you’ll retain full team control, which can be vital in distributed collaboration. In its turn, a trusted provider of offshore development center services like nCube takes care of all possible operational concerns associated with an in-house squad, such as office space, recruiting & HR, taxes, equipment, insurance, staff education, and motivation.

The offshore development centers we build are equipped with all the facilities of modern offices, including:

• Modern PCs or laptops;
• Video conferencing facilities;
• Full-fledged conference rooms;
• Fully functioning dining areas;
• Recreational facilities;
• Ergonomic office furniture.

Our job doesn’t end with equipping your offshore development center with the right tools and infrastructure. Our staff also includes supporting teams like client success managers, HR specialists, and office managers who will make sure your squad has everything needed for comfortable work, motivation, and growth.

Finally, your developers’ retention is our top priority. We are proud to maintain an average employee retention rate of 3.5 years, which can be attributed to the comfortable environment we’ve created for them. We provide benefits ranging from health insurance and tax fee compensations to HR support, English classes, team building events, and more.

If you’re interested to hear more about establishing an offshore development center in CEE or LATAM, let’s connect.