How to Set Up an Offshore Development Center in India?

India has been a favorite place for many multinational companies. Basically, MNCs established themselves in India after the 1991 globalization policies. The Indian government relaxed rules and regulations so that companies from other countries could build their offshore development centers (ODCs). 

So, let’s explore what are the key steps through which companies can open their offshore branch in India.

Why is India a Preferred Destination?

Companies are coming to India to build their ODCs, so there might be some reasons for it. Let’s explore what are those factors:

1. Skilled People: India is one of the best places for organizations to find expert IT engineers, software developers, and many more.
2. Affordable Cost: Indian soil is a hub of expert people, and with this, all those come at an affordable price when compared with Western countries.
3. Proper Infrastructure: There are many cities in India that have proper infrastructure. The list consists of Delhi, Gurugram, Bengaluru, Hyderabad, Pune, and Chennai.
4. No Language Issue: People in India are affluent in speaking English, which is a global language. This virtue makes it a preferred place for Western companies.

A Detailed Guide on Formulating an ODC Base in India

We have briefly described the reasons behind why companies are taking the path to come to India. Now, let’s focus on how to develop an ODC center in India.

Step 1: What are the Project Requirements?

It is more important that you know what your project is because on the basis of it, you have to decide on the below attributes:

1. An Ideal Team Size: You need to know how many people are required and which team to use so that your project operates smoothly. 
2. Type of Skills: Keep an eye on which type of technology requirements there are.
3. Project Scope: When you know your project thoroughly, there is a better chance that you will be able to hire a better talent for the project.
4. Budget: There should be clear thoughts on your budget because, on the basis of this, you will have to look for office space, hiring talent, and other factors.

Step 2: Select the Optimum Location to Develop an ODC

India is full of cities where top-notch infrastructure is built to assist organizations with their ODC requirements. However, companies have to determine which area they want to operate in.

Let’s view some of the Indian cities below:

1. Bengaluru (Bangalore): Undoubtedly, Bengaluru has acclaimed the title of “Silicon Valley of India.” But what is the reason behind this title? This city is filled with a vast amount of IT professionals who are working in high profile or have their start-ups. 
2. Hyderabad: This city caters to various global brands. They have built their ODC base here due to the robust infrastructure available. 
3. Pune: Pune is a city that has many educational institutions and is also a center for IT and software development companies.
4. Gurugram: This place comes under the umbrella of Delhi-NCR and has a powerful business infrastructure to support the ODCs of many multinational companies.

Step 3: Legal Paperwork

Building an ODC in India requires an understanding of legal and regulatory laws so that there is a smooth process. Let’s see what companies have to look for:

1. Company Registration: MNCs need to register their offshore entity in India in the form of a subsidiary, joint venture, branch office, or any other entity so that the company can start working.
2. Labor Laws: There are various labor laws that offshore companies need to go through. These laws consist of employee rights, working hours, salary/wages, and other important factors.
3. Taxation Benefits: India has developed several regions under the Software Technology Parks of India (STPIs) and special economic zones (SEZs). The offshore companies are given tax exemption benefits when they have offices in these areas.

Step 4: Infrastructure Setup

After all the paperwork, it’s time to focus on the infrastructure.

1. Office Space: This factor depends on your team size; if you have a large team, you can rent an office space; otherwise, co-working spaces sound better when the team size is small.
2. Technology: There should be high-speed internet, secure servers, and secured check-in and check-out areas. Additionally, you have to see that proper communication tools are being used to send the information from one team to another.

Step 5: Looking for the Best Talent

The next step is to hire talented people for your ODC project. Below are the steps that companies can follow:

1. Collaborate with a Recruitment Agency: The Indian job market is diverse, where organizations can find freshers, mid-experience, and high-experience people. Join hands with a recruitment agency to find the best talent for the project.
2. Use the Power of Job Portals: There are several job portals available where ODC companies can search for new talent. Additionally, they can post new job positions that people can view and apply for.

Step 6: Setting Up the Work

Once the team is hired, the Offshore Development Center should provide them with their working space and working hours. There are other components, which are:

1. Time Zone Management: India’s time zone (IST) is different from countries in European and American regions. Therefore, the ODC working hours should match the headquarters working time so that both teams (onshore and offshore) remain on the same page.
2. Regular Updates and Reports: Proper reporting parameters should be used so that onshore and offshore offices can go through meetings and reviews (weekly and monthly). 

Step 7: Focus on Company Culture

Company culture is an important factor through which employees and companies prosper at a faster rate.

1. Onboarding and Training: When hiring new employees, ODC centers should provide proper training so that they can perform better in their jobs. Furthermore, there should be plans to train old employees to make them more knowledgeable and promote them.
2. Employee Well-being: India is a country that is filled with diversity. Therefore, it becomes pertinent to build a work environment that embraces everyone with open arms.

Step 8: Examine ODC’s Performance Regularly

In the last phase, it is important to measure the ODC’s performance to know if the center is making a profit or not. You should keep certain parameters in mind, which are mentioned below:

1. Key Performance Indicators (KPIs): Through this attribute, ODC companies can know if their operations are successful or not. This can include project completion time, bug resolution rate, and response to the client.
2. Powerful Work Processes: No place should be left blank; therefore, always look for places where ODC companies can increase their workflows and bring in more clients.

Final Words

Many companies from outside India are making Indian soil their base. They know that this country provides expert people at an affordable price with great infrastructure. Furthermore, the Indian government is working towards bringing more Western countries to India so that the country’s GDP can also increase. 

Moreover, after going through each step mentioned in our blog, you can easily open an ODC center and start working on it.

About Author:
Harikrishna Kundariya, a marketer, developer, IoT, Cloud & AWS savvy, co-founder, Director of eSparkBiz Technologies. His 14+ years of experience enables him to provide digital solutions to new start-ups based on IoT and SaaS applications.