How the ODC model works
The provider handles local infrastructure, meaning recruitment, employment, office space, equipment and compliance. The client gets a team working only on their products, typically under their own direction and processes.
The pitch is that you get the benefits of your own foreign office without the cost and delay of establishing one.
Two kinds of ODC, and they are not equivalent
A captive centre is owned outright by the client. Maximum control, maximum setup cost, and a multi-year commitment before it pays back. A provider-run ODC is operated by a third party on the client’s behalf, which is faster to stand up and involves a standing fee.
Both usually leave day-to-day management with the client. That is the defining characteristic, and it is where the model differs from managed delivery.
ODC compared with managed delivery
| Compared | Offshore development center | Managed delivery |
|---|---|---|
| Who manages daily | Usually the client | The provider |
| Who answers for output | The client | The provider |
| Typical size | Ten or more people | From one specialist upward |
| Setup time | Months | 4–6 weeks |
| Best fit | Large sustained programmes | Roadmaps of any size |
Who an offshore development center is actually right for
It fits organisations large enough to justify a permanent foreign engineering function and willing to manage it. If you are planning a team of thirty and have an engineering director prepared to run a site abroad, an ODC is a reasonable structure.
It fits poorly when you want the capacity but not the management, or when you need eight people rather than eighty. That is usually the point at which managed delivery is the better structure.
The two models are frequently confused with a third, because a vendor-run ODC and offshore staffing can look identical on a rate card and differ entirely on who answers for the work. Where the answer is a team rather than a site, a dedicated development team is the same capacity without the fixed overhead of a foreign entity.