Offshore Development Center (ODC) in India | 2026 Guide

Setting up offshore development center in India? An ODC in India can cut your development costs by 60-70% while giving you access to 3+ million skilled engineers. In 2026, US companies are increasingly choosing India for dedicated tech teams over traditional outsourcing because of better control, quality, and long-term scalability.

This guide walks you through everything: what an ODC actually is, exactly how much it costs, the top Indian cities to set up in, a proven 7-step setup process, and how to avoid the mistakes that derail most companies.

Everything you need to scale your engineering on your own terms.

What is an Offshore Development Center (ODC)?[toc=What is an ODC]

An offshore development center (ODC) is a dedicated remote facility in another country where you build and manage your own software development team. Unlike traditional outsourcing where you hire a vendor for projects, an ODC gives you a fully integrated offshore team that works exclusively for your company.

Think of it as your own tech office in India, just without the hassle of setting up a legal entity or managing local compliance yourself.

Key characteristics of an Offshore Development Center in India:

• Dedicated team works exclusively on your projects and integrates with your in-house team seamlessly.
• You have full operational control over workflows, priorities, and the complete development process.
• Access specialized technical expertise in AI, cloud computing, DevOps, and emerging technologies that are hard to find locally.
• Teams use your project management software and communication tools so there's no learning curve on new systems.
• Intellectual property stays protected through strong NDAs, data security measures, and legal safeguards for your code.
• Scalable infrastructure with office space, IT systems, and support staff ready to grow with your team size.

Why Choose ODC Over Traditional Outsourcing?

Traditional outsourcing means sharing vendors with other clients and limited control. ODC means your dedicated team, your priorities, your timeline. That's why thousands of US companies are making the switch.

Now let's look at the actual cost benefits and what you really save.

If you're considering hiring employees in India through any model, our complete guide to hiring in India covers legal requirements and best practices.

What are the key benefits of an offshore development center in India?[toc=Key Benefits]

From our experience in helping 300+ companies build ODCs in India. Here's what actually works and delivers real value.

Key benefits of setting up an ODC in India:

1. Cost savings of 60-70%: Reduce operational costs and development costs compared to hiring in the US or Europe.
2. Access to vast talent pool: India graduates 1.5 million engineers annually with specialized expertise in AI, cloud, DevOps, and emerging technologies.
3. Scalability without delays: Scale your dedicated team up or down in weeks, not months, without long-term hiring commitments.
4. 24/7 development cycle: Time zone differences enable round-the-clock progress with your offshore teams working while your in-house team rests.
5. Focus on core business: ODC providers handle recruitment, payroll, compliance, and infrastructure so you can focus on product development.
6. Stronger IP protection: Robust security measures including NDAs, data encryption, and ISO 27001 compliance protect your intellectual property.
7. Better quality assurance: Dedicated offshore developers follow your coding standards and integrate with your quality assurance processes.

Why This Matters

Traditional outsourcing shares vendors with other companies and limits your control. ODC gives you exclusive access, predictable costs, and strategic capability building. That's why US companies are switching.

Ready to see what this actually costs? Let's break down the real numbers.

How much does an offshore development center in India cost?[toc=ODC Costs in India]

In our experience managing $20M+ in monthly payroll for offshore teams, companies typically achieve 40-70% cost savings compared to US or UK hiring while maintaining the same code quality and productivity levels.

What drives ODC costs in India:

• Developer seniority: Entry-level costs less than senior developers, architects, and technical leads.
• Technology specialization: AI/ML engineers, cybersecurity experts, and blockchain developers command premium rates over general full-stack developers.
• Location within India: Major tech hubs like Bangalore and Hyderabad typically have higher rates than smaller cities due to concentrated demand and competition for talent.
• Engagement model: Using an Employer of Record like Wisemonk ($99/month per employee) eliminates entity setup costs and ongoing compliance management.
• Team size: Larger teams get economies of scale on infrastructure, recruitment, and operational costs.

2026 developer rates in India:

Average offshore developer rates in India range from $22-45 per hour depending on seniority and technical expertise. Specialized skills in emerging technologies command rates at the higher end of this range.

Want to calculate exact costs for your team size? Use our employee cost calculator / in-hand salary calculator to estimate total employer costs including salaries, benefits, and taxes in India.

The cost structure varies significantly based on your specific needs and location choices. Now let's look at how an offshore development center differs from traditional outsourcing models.

How is an ODC different from traditional outsourcing? [toc=Offshoring vs. Outsourcing]

An offshore development center gives you a dedicated team that works exclusively for your company with full control, while traditional outsourcing is hiring a vendor to complete specific projects with limited oversight.

Here's how they compare on the factors that matter most:

ODCs work best when you need long-term technical capacity and want full control. Traditional outsourcing suits one-off projects where you just need execution without ongoing involvement.

If you want to explore more about outsourcing, check out our complete guide on "Outsourcing to India: A 2026 Guide for US Companies" & "How to Outsource Work to India from the USA?"

Is an Offshore Development Center Right for Your Company?[toc=Decision Framework]

Not every company should build an ODC. Some need staff augmentation. Some need nearshore. Some aren't ready yet. Let's be honest about whether ODC is actually right for you.

You're a Good Fit If

• You need long-term dedicated capacity (6+ months) with consistent work lined up.
• You have clear, documented requirements and can articulate your tech stack upfront.
• You can manage async communication with 3-4 hour timezone overlap with India.
• You want to test the India model before committing to full GCC ownership.

You Should Consider Alternatives If

• Your project is <3 months (setup friction doesn't justify the ROI).
• You need real-time 8-hour daily overlap (use nearshore vendors instead).
• Your requirements change daily (staff augmentation gives you more flexibility).
• Your team is experimental or R&D focused (hire contractors for exploration phase).

Quick Self-Assessment

• Do you have 6+ months of consistent work lined up? Yes / No
• Can you document your tech stack and requirements clearly? Yes / No
• Is your team in US/Europe timezone (can you handle async communication)? Yes / No
• Do you want to avoid building your own legal entity? Yes / No

If you answered YES to all four, ODC is your move. You've got the foundation for success.

If you're fuzzy on any of these, spend 2-3 weeks clarifying before committing. Most companies that struggle with ODC skip this step. The ones that win spend time upfront getting clear on what they need.

So where should you actually set up your offshore development center in India? Let's look at the top locations and what makes each city different.

Where are the Top ODC Locations in India?[toc=Top ODC Locations]

India’s leading tech hubs provide a vibrant ecosystem for establishing an offshore development center. Over the years, we’ve helped companies set up dedicated offshore teams in cities known for their deep talent pool, operational efficiency, and specialized expertise in software development.

Major ODC Locations in India:

1. Bangalore (Bengaluru): India's "Silicon Valley" offers the largest tech talent pool, world-class infrastructure, and access to emerging technologies like AI and cloud computing for complex business operations.
2. Hyderabad: Rapid tech growth, competitive operational costs, and strong government incentives make Hyderabad ideal for software development, data security, and quality assurance teams.
3. Pune: Known for affordability and proximity to technical institutions, Pune delivers cost savings while maintaining high-quality development centers and smooth project management.
4. Chennai: India's SaaS capital excels in engineering talent, specialized technical skills, and a culture focused on delivering high-quality software development services.
5. Chandigarh: Emerging tech hub offering significant tax benefits, government incentives, and lower operational costs compared to Tier 1 cities while maintaining quality talent access.
6. Gurgaon & Noida (NCR): Proximity to India's capital, strong startup ecosystem, and modern infrastructure make NCR cities ideal for offshore development centers requiring agility and scalability.

Having guided several organizations through location selection, we’ve seen that choosing the right city in India can have a significant impact on reducing development costs, accessing core competencies, and ensuring seamless collaboration between your in-house team and offshore team in India.

How to Decide on Location

• What tech do you need? Bangalore = AI/ML. Pune = DevOps. Hyderabad = full-stack. Chennai = SaaS. Pick the city that matches.
• Infrastructure solid? Tier 1 cities have backup power and connectivity. Tier 2 cities work fine. Test the office space first.
• What's your budget? Bangalore $2,800-4,500/month. Hyderabad $2,200-3,500. Pune $2,000-3,200. Chandigarh $1,800-3,000.
• Government support? Special Economic Zones offer tax breaks. India's 2026-27 budget funds IT/telecom heavily.
• Timezone work? India UTC+5:30 gives you 3-4 hours with US East Coast. Most teams handle async fine.
• Will they speak English? Major hubs = high English proficiency and global experience. Always test with a trial hire.

Thinking About GCC Later?

Planning a GCC transition in 24+ months? Location matters for infrastructure and government relationships. Bangalore and Hyderabad have mature GCC paths. Smaller cities don't yet.

Pick the city that matches YOUR tech needs, budget, and timeline. Most companies choose Hyderabad or Pune. But your needs might be different.

Next let's see what ODC models can you actually use in India?

What ODC models can you use in India?[toc=ODC Models in India]

An offshore development center in India can be structured in different ways depending on how much control you want, your budget, and the complexity of your business operations. These models give companies flexibility to scale, reduce costs, and access specialized skills.

From our experience helping several global businesses set up an offshore development center, here are the most common models companies choose in India:

5 Offshore Development Center Models in India.

1. Managed Service

The offshore development partner handles everything including infrastructure, hiring, and offshore software development services. This ensures cost efficiency and smooth delivery, though you have less control over day-to-day management.

2. Managed Team

You get a dedicated team of offshore developers who work only for your company, while the offshore partner manages payroll, compliance, and office space. This model allows seamless integration with your in house team and supports long term project development.

3. Project Outsource

Best suited for short-term or non core projects, this model involves outsourcing a specific task to an offshore development company. It helps reduce costs quickly but may create cultural and communication barriers if used for critical business operations.

4. Employer of Record (EOR)

With an Employer of Record (EOR), you can hire offshore team members in India legally without establishing a local entity, you can hire offshore team members in India legally without establishing a local entity. The EOR becomes the legal employer managing payroll, benefits, and compliance while you focus on managing project development. It is ideal for testing new markets or scaling with reduced operational expenses.

5. Set up a Team (Build Your Own ODC)

This is the full-scale model where you establish your own offshore development center in India with office space, project managers, and a complete development team. It gives maximum control and robust security measures but requires higher upfront investment and strong management systems.

Which Model to Pick?

• Managed Service: Partner handles everything. You just manage project outcomes.
• Managed Team: You manage developers. Partner handles payroll and compliance.
• Project Outsource: Vendor owns the project delivery. Good for specific tasks.
• EOR: You hire directly, EOR handles legal/payroll. Fastest path to dedicated team.
• Build Your Own: Full control and ownership. Only for long-term (3+ years) commitment.

"Many global companies start with an EOR or Managed Team model to reduce risks and operational expenses, then move to a full-scale ODC once they are ready for long term growth in India."

- Aditya Nagpal
‍Founder & CEO, Wisemonk
‍LinkedIn Profile →

Now here's the thing: that full-scale model isn't your end game. It's actually just a stepping stone.

Building Your Global Capability Center: What Comes After ODC?[toc=GCC vs. ODC in India]

ODC is your stepping stone to owning a full center in India. Here's the difference and why most companies start with ODC.

ODC vs Global Capability Center

Offshore Development Center in India (ODC): We manage the legal entity, hiring, and compliance. You manage the team and projects. Fast setup (2-4 weeks), costs $25-150k/month depending on team size. You own the people but not the company. Perfect for testing and scaling. Easy exit if needed.

Global Capability Center in India (GCC): You own everything, the legal entity, hiring, management, compliance. You're responsible for all operations. Slower setup (12-20 weeks), costs $150-250k/month for equivalent team. Full ownership and control. Better for long-term strategic presence in India.

Most companies graduate from ODC to GCC. You start ODC in months 1-6 (5-10 people, $25-50k/month). Scale in months 6-24 (15-30 people, $75-150k/month). Move to GCC at 24+ months when you're ready for full ownership.

We build your ODC designed for GCC transition from day one. Most companies rebuilding for GCC waste months redesigning processes. We don't. Your transition is seamless. Same team, same setup, just different ownership.

Bottom Line: Start with ODC. Graduate to GCC when you're ready to own it completely. Most companies choose Hyderabad or Pune for ODC because they work. But think long-term: which city supports your GCC goals?

Now let's set up your ODC.

How to set up an offshore development center in India?[toc=How to Set Up ODC]

Setting up an ODC takes 2-4 weeks using an Employer of Record model, or 12-20 weeks if establishing your own legal entity.

After helping hundreds of global companies establish offshore teams in India, we've identified seven essential steps that determine your ODC's success.

7 Steps to Set Up Your ODC in India:

Step 1: Define Your Requirements (Week 1-2)

Identify the technical expertise, dedicated team size, business objectives, and key performance indicators needed for your offshore development center.

Step 2: Choose Location and Model (Week 2-4)

Select the right Indian city based on vast talent pool and operational costs, then decide between EOR partnership or establishing your own legal entity.

Step 3: Handle Legal Setup (Week 5-12)

Register your entity and ensure compliance with local labor laws, tax implications, and intellectual property protection, or partner with an EOR to handle all requirements.

Step 4: Recruit Your Team (Week 8-14)

Source tech talent through local networks, assess specialized expertise and cultural fit, and complete background verification before hiring your offshore teams.

Step 5: Set Up Infrastructure (Week 13-16)

Establish office space or remote setup, equip your remote employees with necessary hardware, deploy project management software and collaboration tools, and implement data security measures with secure system access.

Step 6: Onboard and Train (Week 15-18)

Train your offshore developers on your development process, coding standards, and communication protocols to ensure seamless integration with your in-house team and business operations.

Step 7: Launch and Scale (Week 19-20)

Run pilot sprints to validate workflows and software development services delivery, monitor team performance, and scale your dedicated offshore development center based on proven results and cost efficiency.

Fast-Track Option: Using an EOR like Wisemonk reduces total offshore development center setup time to 2-4 weeks by handling entity registration, compliance management, and infrastructure costs.

Follow our step-by-step setup guide to build your offshore team in India for a deeper understanding.

How is security handled in ODCs?[toc=Security Measures]

Protecting sensitive data and maintaining operational integrity are top priorities for any offshore development center in India.

Based on our experience guiding clients through ODC setup and management, well-designed security protocols not only build trust but also ensure business continuity and compliance.

Core Security Measures in ODCs:

1. Network Security and Data Protection Laws Enterprise VPNs, monitored firewalls, and compliance with data protection laws prevent unauthorized system access.
2. Secure Development Process Regular code reviews, vulnerability assessments, and adherence to cutting edge technologies security standards protect your software.
3. Intellectual Property and Legal Safeguards Strict NDAs, IP clauses in contracts, and nondisclosure agreements ensure complete operational control over your proprietary technology.
4. Physical Access Controls Controlled entry, surveillance systems, and restricted zones protect office space and critical business systems.
5. Compliance and Continuous Improvement ISO 27001 certification, DPDP Act compliance, and regular security audits ensure ongoing data security.

Strong security protocols are table stakes for any offshore development model. So how do you actually manage your offshore team day-to-day?

How to manage your offshore team in India?[toc=Manage Offshore Team in India]

Successfully managing your offshore development center in India requires a blend of clear protocols, cultural awareness, agile processes, and transparent performance tracking.

Having supported global businesses through every stage of offshore team integration, we've seen firsthand how the right approach boosts operational efficiency and drives lasting results:

1. Set Clear Communication Protocols

Define communication channels, meeting schedules, and documentation standards using project management tools like Jira, Slack, or Teams to ensure alignment.

2. Provide Cultural Awareness Training

Invest in cross-cultural training and team building activities for both teams to bridge cultural differences and build a unified company culture.

3. Implement Agile Development Methods

Use Scrum or Kanban frameworks for iterative development, continuous improvement, and quick adaptation to changing market demands with your offshore developers.

4. Track Performance with KPIs

Monitor key performance indicators like velocity, defect density, on-time delivery, and code quality to maintain accountability and guide improvements.

5. Maintain Regular Feedback Loops

Schedule daily standups, sprint reviews, and periodic team visits (virtual or physical) to strengthen relationships and ensure continuous learning.

These management practices ensure your offshore teams deliver proven expertise and innovative solutions consistently. But what mistakes should you avoid when working with offshore development partners?

Read more: Build Your Offshore Team in India: Complete 2026 Guide

What mistakes should you avoid with offshore development?[toc=Mistakes to Avoid]

Choosing the right approach for offshore development services in India can transform your software capability, but there are several common pitfalls that can derail even the best-intentioned projects.

Based on our extensive work supporting global clients and reviewing industry best practices, here are the key mistakes to avoid:

• Prioritizing Cost Over Quality: Choosing the cheapest provider often sacrifices technical skills, niche expertise, and long-term reliability, evaluate proven track record and process maturity instead.
• Weak Onboarding and Integration: Treating your offshore development center as an external vendor rather than an extension of your parent company leads to misalignment and poor cultural fit.
• Ignoring Time Zone Coordination: Failing to establish overlapping work hours and clear communication protocols creates project bottlenecks and delays in the development process.
• Unclear Roles and Accountability: Without defined responsibilities for project managers and measurable performance goals, your offshore team loses focus and operational efficiency.
• Neglecting Legal and Compliance Management: Overlooking Indian labor laws, tax regulations, data protection standards, and intellectual property rights exposes you to serious compliance risks and legal issues.

Avoiding these mistakes will help your offshore development team in India operate efficiently, deliver consistent value, and become a true partner in your long-term business growth.

Wisemonk EOR: Your Trusted Partner for Offshore Development Center in India[toc=Wisemonk EOR]

Wisemonk is one of India’s leading Employer of Record (EOR) partners, trusted by 300+ international companies that want to build high-performing Offshore Development Centers in India without drowning in paperwork, compliance headaches, or local bureaucracy. Wisemonk streamlines hiring, payroll, and HR operations so global teams can tap into India’s world-class talent without regulatory friction. Wisemonk brings deep local expertise, strong talent networks, and reliable on-ground support to keep offshore teams running smoothly.

Benefits of using Wisemonk for Building Offshore team in India: Talent Acquisition, Compliance Management, Payroll Services and Setup and Operations

Wisemonk's Services for Offshore Development Center in India:

• Talent Acquisition: Wisemonk handles recruitment, ensuring you find the right talent for your offshore team.
• Compliance Management: We manage employment contracts, statutory benefits, and terminations, ensuring compliance with Indian labor laws.
• Payroll and Contractor Management: Wisemonk handles all payroll and payment services, reducing administrative burdens.
• Setup and Operations: We assist with setting up your offshore team, including equipment procurement and management.

Client review/feedback:

“Wisemonk has successfully hired high-quality candidates, which has impressed the client. The team is responsive to the client's requests and changes via Slack. The team also collaborates through a hiring tracker in Google Sheets. Wisemonk communicates via email and virtual meetings.”

- Dan Sampson
VP of Engineering, Cobu
Read the full review on Clutch →

"Working with the Wisemonk team in India has been a genuinely positive experience from day one. They've been consistently accessible and are building fantastic relationships with our local team. As someone based in the UK, I value the quality of compliance Wisemonk brings, I have full confidence when it comes to financial, legal, and HR matters. They've ensured our team is managed in line with local employment law and have also been flexible when we've wanted to go beyond statutory requirements. Whether it's increasing annual leave or tailoring health insurance, they've offered clear guidance to help us enhance the benefits we provide. It's been a great partnership."

- Lisa Jones
Chief People Officer, Couch Health

In addition to these services, Wisemonk also provides background verification, tax optimization, employee benefits, and GCC setup solutions, making them a one-stop shop for all your offshore needs in India.

Whether you're spinning up a small engineering pod or scaling a full ODC, Wisemonk removes the operational friction so you can tap into India’s world-class talent pool with confidence.

Book a Call Today to explore how Wisemonk can support your offshore operations.