The global value of the business process outsourcing market is estimated at around $0,37 trillion in 2024, with a projected CAGR of 4,43% in the following years. The growing popularity of offshore software development has made many businesses build a remote dream team to carry out a whole range of research and development initiatives. 

An offshore research and development center (R&D) operates as a dedicated remote team strategically established to expand a company’s capabilities, typically in a different geographical location. R&D enables companies to harness global talent pools, improve operational efficiency, access specialized skills, and expedite product development, thus securing a competitive edge in the ever-evolving tech sector.

In this article, we offer a checklist for businesses interested in setting up offshore R&D and building a true remote dream team. Whether you’re grappling with legal aspects of offshore talent acquisition, evaluating technology infrastructure, or fostering cultural integration, this checklist provides the essential components necessary to navigate the complexities of establishing an offshore software development center tailored to your specific requirements and objectives.

Understanding your requirements

First and foremost, assess your business requirements. What works for your competitors might not necessarily work for you. Here are a couple of steps that will make the process assessment easier.

  • Define your project goals

Start by articulating the overarching goals and objectives of your project. Outline the purpose and desired outcomes, ensuring they synchronize with your overall business strategy. This foundational step lays the groundwork for subsequent decisions throughout the R&D setup process.

  • Assess the scope and scale of your needs

Opening an offshore development center is recommended if your company aims to expand its workforce by dozens of new developers. Moreover, if your business requires frequent technological support and ongoing tech-product development, establishing and nurturing an offshore R&D facility becomes imperative.

The ideal size of your offshore team also depends on a company’s experience in managing a branch remotely. Organizations with existing remote teams in other countries typically enjoy smoother operations when forming larger offshore development teams. Regarding talent acquisition and the growth of an offshore R&D facility, outstaffing proves to be a valuable strategy. 

  • Identify required technologies and skills 

What technologies and skills are crucial for the successful execution of your project? Whether it involves expertise in a particular programming language, familiarity with specific frameworks, or proficiency in emerging technologies, clearly defining the technical skill set required for your R&D dream team is essential to align with your project’s unique demands.

  • Determining the desired timeline for project completion

Establish a realistic and strategic timeline for project completion. Take into account the complexity of tasks, the learning curve for new technologies, and any external dependencies or collaboration enablers. A well-defined timeline serves as a critical benchmark, facilitating efficient project management and resource allocation within the R&D.

  • Selection of development office location

Collaborating with an offshore partner typically involves them providing a list of recommendations based on the required number of experts from a particular region and corresponding salary expectations. Additional factors to consider include rental costs and cultural fit.

Legal considerations

Apart from cultural fit, when establishing an offshore development center ensure legal compliance is paramount. Let’s take a look at the essential steps in navigating legal and compliance matters:

  • Understanding the legal frameworks in the chosen location

Conduct a thorough examination of the legal landscape in the chosen offshore location. Research the employment laws, tax regulations, and any specific laws related to foreign businesses.

  • Establishing legal entities and contracts

Collaborate with local legal professionals to establish the requisite legal entities for your offshore development center. Formulate comprehensive contracts that clearly outline the terms of engagement, encompassing roles, responsibilities, and mechanisms for dispute resolution.

  • Adhering to intellectual property laws

Ensure that your legal agreements explicitly address IP ownership and protection. Implement measures to prevent unauthorized use or disclosure of information.

  • Addressing data protection and privacy regulations

Given the escalating emphasis on data privacy, comprehending and adhering to local data protection regulations is indispensable. Establish protocols for managing sensitive data and ensure alignment with global data privacy standards within your offshore center. These measures lay the groundwork for establishing a legally robust R&D, mitigating risks, and fostering a secure operational milieu.

Infrastructure and technology

A reliable technological infrastructure is vital for the success of your remote R&D. Let us elaborate on crucial aspects of infrastructure and technology. By addressing the infrastructure and technology considerations below, you will reinforce the technical backbone of your offshore development center, enhancing the efficiency and resilience of your operations.

  • Assessing the technology infrastructure of the chosen location

Conduct a comprehensive assessment of the technological landscape in your selected offshore location. Evaluate the availability and sophistication of IT infrastructure, ensuring alignment with the technical requisites of your projects. Remember that technological cross-pollination is also a thing, and your remote R&D will be able to learn from your business and vice-versa.

  • Ensuring compatibility with your existing systems

Seamless integration is paramount. Verify that the technology stack and infrastructure in the offshore center harmonize with your current systems. This compatibility facilitates smooth workflow, technological cross-pollination, and collaboration between onshore and offshore teams.

  • Implementing necessary security measures

Prioritizing cybersecurity is essential. Deploy reliable security measures to safeguard sensitive data and intellectual property. This entails the implementation of firewalls, encryption protocols, and access controls to mitigate potential threats.

Cost analysis and budgeting

When you establish and manage an Offshore Development Center (ODC), conducting a thorough cost analysis and devising a well-defined budget strategy is essential. Crafting an exhaustive budget entails not only accounting for direct expenses but also a nuanced understanding of various factors influencing financial dynamics:

  • Salary structures and benefits: Financial planning involves outlining salary structures and associated benefits for the offshore team. This includes market benchmarks, skill levels, and any supplementary incentives aimed at talent acquisition and retention.
  • Overheads and operational costs: In addition to direct compensation, it’s crucial to factor in overheads and operational expenses. This includes expenses related to office space, utilities, software licenses, hardware infrastructure, and other necessities essential for seamless project execution.
  • Contingency funds: Preparing for unforeseen circumstances requires extra funds for unexpected expenses that may arise during the setup and ongoing operations of the R&D. 

Establishing reporting and monitoring mechanisms:

Identifying and monitoring pertinent KPIs to gauge project success and team effectiveness is essential for the ultimate success of your R&D. Metrics like sprint velocity, cycle time, and defect density offer valuable insights for ongoing enhancement. You should also establish regular progress reporting mechanisms to keep stakeholders abreast of developments. Transparent and comprehensive updates highlight accomplishments, blockers, and future strategies, nurturing a collaborative and well-informed decision-making process.

Conclusion

Establishing remote R&D is a strategic move for companies pursuing innovation, efficiency, and competitive advantage. As we navigate the complexities of building a remote dream team, it becomes apparent that success relies not only on technical expertise but also on expert management of various components.

Setting up a remote R&D is no small feat. We at nCube are here to help you in this journey. We serve as the gateway to the talent pools of Central & Eastern Europe and Latin America. As experts in these robust tech hubs, we’ll help you source skilled developers for your R&D team – and build a comfortable workspace for them. We’ll also handle all legal aspects, accounting, payroll, and IT infrastructure. With us as your partner, you don’t have to walk the minefield of local regulations, taxes, and compliance issues – we’ve got your back. Let’s connect and discuss your needs for an offshore or nearshore R&D center.

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