In today's rapidly evolving business landscape, companies are seeking innovative ways to scale their operations while maintaining cost efficiency and staying ahead of the competition. One of the most effective strategies that forward-thinking organizations are adopting is the establishment of delivery centers. But with terms like ODC (Offshore Development Center) and EDC (Extended Delivery Center) being used interchangeably, it's important to understand the distinctions. 

Understanding the delivery center landscape 

The global IT outsourcing market has experienced tremendous growth, with revenues exceeding $500 billion. This surge reflects an increasing recognition of delivery centers as a strategic asset for scaling operations, accessing global talent and driving innovation. 

What is an Offshore Development Center (ODC)? 

An Offshore Development Center represents a dedicated development team located in a different geographical location, typically in countries with lower operational costs and an abundance of skilled talent. Unlike traditional outsourcing arrangements, ODCs provide greater control over offshore operations while maintaining direct oversight of project development and team management. 

Key characteristics of ODCs include: 

• Control and ownership: ODCs function as an extension of your in-house team, allowing you to maintain full control over project direction, team composition and development. This model ensures that an organization’s culture and standards are conserved across geographical boundaries. 
  
  
• Dedicated team structure: Rather than sharing resources with other clients, ODCs provide exclusive access to a dedicated team of talent who work solely on your projects. This exclusivity leads to a more thorough understanding of your organization’s requirements and more consistent output. 
  
  
• Long-term strategic partnership: ODCs are designed for sustained collaboration, making them ideal for those with ongoing development needs and long-term, multi-stage technology initiatives. The relationship extends beyond simple project completion to strategic partnership and growth. 
  
  
• Scalability and flexibility: ODCs can be scaled up or down quickly to meet changing demands. This flexibility eliminates the need to hire permanent employees for short-term projects while providing the stability needed long term. 

What is an Extended Delivery Center (EDC)? 

Extended Delivery Centers represent a broader concept that encompasses both offshore and nearshore development arrangements. EDCs can be established in various locations, including nearshore destinations that operate within similar time zones, making communication and collaboration more seamless. 

EDCs offer several distinct advantages: 

• Geographic diversification: By establishing delivery centers in multiple locations, organizations can mitigate risks associated with dependency on a single location while accessing diverse talent pools and market opportunities. 
  
  
• Enhanced collaboration: EDCs, particularly nearshore, facilitate better communication and collaboration because of time zone and cultural similarities, leading to more efficient project execution. 
  
  
• Risk mitigation: Distributing operations across multiple delivery centers provides natural disaster recovery capabilities and reduces business continuity risks associated with single-location centers. 
  
  
• Market expansion opportunities: EDCs can help organizations entering new markets, providing local presence and understanding of regional market dynamics. 

The strategic advantages of delivery centers 

• Cost reduction: One of the most compelling reasons delivery centers have soared in popularity is the significant cost reduction they offer. By leveraging global talent, organizations can access highly skilled talent at competitive rates, often reducing development costs by 40-60% compared to in-house teams in high-cost markets. Cost reduction doesn't mean compromising on quality. Modern delivery centers employ rigorous quality assurance processes, utilize advanced project management tools and should maintain industry-standard certifications to ensure deliverables exceed client expectations. 
  
  
• Access to global talent communities: The technology industry faces an ongoing talent shortage, with skilled developers and engineers in high demand. Delivery centers provide access to talent in emerging markets where technical education is prioritized and skilled talent is readily available. This access to global talent enables organizations to find specialized skills that may be scarce in their local markets, allowing them to accelerate project timelines by having resources available when needed. 
  
  
• 24x7 development: One of the most significant operational advantages of delivery centers is the ability to maintain development activities across multiple time zones. This "follow-the-sun" model ensures that work continues even when your primary team is offline. 

Which model is right for you? 

Project complexity

For substantial, complex and ongoing projects that require deep domain expertise and long-term commitment, ODCs typically provide the best value proposition. The dedicated team structure and long-term partnership approach ensure continuity and a deep understanding of business requirements. 

For projects with varying complexity levels or those requiring rapid scaling, EDCs offer the flexibility to adjust resources and expertise as needed without the commitment associated with dedicated teams. 

Level of control

If maintaining direct control over development processes, team composition and project direction is critical to your business, ODCs provide the governance structure needed for efficient oversight. 

EDCs offer less direct control but provide greater flexibility in resource allocation and project management approaches, making them suitable for leaders comfortable with managed service arrangements. 

Investment

Finally, ODCs typically require higher initial investment and longer commitment periods but offer better long-term economics for sustained development. The dedicated infrastructure and team costs are offset by improved efficiency and reduced management overhead. 

EDCs often require lower initial investment and offer more flexible cost structures, making them attractive for those with variable development needs or those testing offshore models. 

How we help build your service delivery model 

As organizations navigate the complex landscape of delivery center implementation, partnering with experienced service providers is crucial for success. We offer comprehensive solutions for organizations looking to establish or optimize their delivery center operations. 

We’ve helped leading organizations assess their specific business requirements, evaluate different delivery center models and develop implementation strategies that align with organizational objectives.  

Through our team solutions, organizations gain access to proven talent acquisition strategies and management frameworks that ensure delivery centers are staffed with top talent. Our expertise in global talent markets enables efficient recruitment and retention of talent across various technology domains. 

We also bring deep expertise in modern technology stacks, digital transformation methodologies and industry best practices that can accelerate your delivery center's effectiveness. From initial strategy development through operational optimization, we provide comprehensive support throughout the delivery center lifecycle. That holistic approach ensures that all aspects of delivery center operations, from governance frameworks to performance optimization, are addressed. 

The future of delivery centers 

As organizations continue to embrace digital transformation and global collaboration, delivery centers will play an increasingly strategic role in their success. Emerging trends such as artificial intelligence integration, advanced automation and hybrid work models have fundamentally reshaped how delivery centers operate and deliver value. 

The key to success lies in selecting the right model, implementing best practices and partnering with experienced service providers who can provide the expertise and support needed for sustainable growth. Head to our team solutions to learn more about how Horizontal partners with organizations to build out delivery centers.