While setting an offshore development center (ODC) in India many Multi-national Companies run into a number of problems. In the last few years many multinational companies who started their Development Centers in India have reconsidered their decision because of cost control and Human Resource Problems. These companies face problems mainly because of:
Lack of Understanding different cost components and inaccurate budgeting.
The commitment and relations required with different departments like Finance, Human Resource, and Legal etc.
Inability to understand the complexities involved with Human Resource Policies and Human Resource Hiring of Development Center.
Not taking Legal and Statutory requirements in India seriously.
Underestimating the execution phase requirements including Hardware/Software acquisitions, Real Estate and IT setups etc.
So taking these problems into consideration we have formulated a model as how easily and quickly a multinational company can set up its Software Development Center in India without Running into any problems.
Market Size and Growth Projections
Global Offshore Development
- The overall offshore software development market was valued at USD 122 billion in 2024, with projections rising to USD 283 billion by 2031 (CAGR ~10.1%).
- Another estimate places the 2024 figure at USD 160.9 billion, with growth to USD 413 billion by 2033 at ~11% CAGR.
- By 2029, some forecasts show the market expanding to USD 307.9 billion, driven by business process optimization and global diversification.
India-Specific Software Market
- India’s software product market reached USD 16.7 billion in 2024, expected to nearly triple to USD 47.6 billion by 2030, growing at ~18.8% CAGR.
- Custom software development in India earned USD 2.34 billion in 2024, with a steep forecast up to USD 10.55 billion by 2030 (CAGR 28.5%).
Global Capability Centres (GCCs)
- India hosts ~1,700 GCCs—shared services and innovation hubs—supporting global operations.
Forecasts predict growth to 2,100–2,200 GCCs by 2030, with cumulative revenues of USD 99–105 billion, employing 2.5–2.8 million people.
Why Choose India for an ODC?
Talent Pool and Expertise
- India is home to over 3 million IT professionals, with engineering graduates emerging constantly.
- English fluency, domain knowledge in enterprise and cloud systems, and robust coding skills make Indian teams suitable for global tech requirements .
- Regional clusters: Bengaluru (India’s “Silicon Valley”) generated USD 53 billion in IT exports FY21–22; Hyderabad and Chennai also host significant talent centers.
Cost Advantage
- ODCs in India offer up to 70% cost savings compared to in-country operations.
- Hourly development rates in India remain significantly lower than North America or Western Europe (₹1,200–₹3,600/hour vs. €60–€120) .
24×7 Productivity
- Time zone differences enable round‑the‑clock development and support cycles, increasing responsiveness and accelerating delivery .
Strong Ecosystem and Infrastructure
- India has advanced IT parks and data centers; the Data Center market will reach 3.31 GW power capacity in 2025, growing to 6.69 GW by 2030 (~15% CAGR).
- Supportive structures such as STPI (Software Technology Parks of India) offer favorable telecom infrastructure and regulatory benefits.
Government Support
Federal and state incentives include tax breaks, export hubs, subsidies for digital infrastructure, and policy frameworks promoting GCC expansion.
How to set up offshore development center
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Registration:
A corporate Entity in India is required to be Incorporated and Registered under Companies Act 1956 and this process is expected to take two or three weeks. This involves a number of legal and other issues because multinational companies are required to comply with Companies Act 1956 Specifications so that they can establish their Operations in India. Companies are required to submit certain forms and documents to the Registrar of Companies (ROC) and to take the approval as well. Also they can get a Software Technology Park of India (STPI) registration that is on their own discretion because it is not mandatory although it provides a lot of benefits like Tax relaxations including Fringe Benefit Tax (TAX).
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Infrastructure Selection:
Multinational Companies planning to set up their subsidiaries or Development Centers should give due attention to setup infrastructure. This Includes Identifying the Geographical location or place of their operations and the properties needed for such operations, also the Information technology equipment and other machineries required for the smooth running of business in India. Designing of the business structures offshore should also be taken into consideration.
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Process:
This is the step where you have to consider your Organizational Structure and applying it overseas to your Development Center. The Organizational Structure for offshore operations should be in line with your Company’s Organizational Structure. Business Processes should be defined and there should be a common understanding of them. The security and Business Continuity is also of key importance here as they cannot be compromised at any cost.
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Human Resource Setup:
Last but not the least because this step requires most attention and time. There should be a thorough analysis of Human Resource Requirements and how they can be full filled. Policies and Processes should be formulated to achieve smooth and effective hiring of Human Resource. Also there should be a model of Performance analysis with clearly defined guidelines and Rewards.
India is one of the best location for outsourcing and setting up subsidiaries and other departments like Development Centers but it is important to plan such venture carefully taking all aspects into consideration in order to ensure its success.
Also read: How to start a software development company
Conclusion
India offers a compelling proposition for offshore software development centers—combining market scale, technical expertise, cost effectivity, supportive infrastructure, and policy incentives. For startups to enterprises, a thoughtfully constructed ODC can enhance productivity, expand capacity, and serve as a strategic innovation center. By following a structured roadmap—covering model selection, legal setup, culture alignment, governance, and continuous improvement—leaders can confidently build a high-performing offshore presence in India that delivers long-term business value.
If your company is looking to setup dedicated offshore development center in India or simply Hire Developers, then please connect with Aalpha and we will be glad to offer free consulting cum proposals for your projects.
Also check: software developer India