An offshore development center is an attempt to get the continuity of your own team with the cost structure of a vendor. It is a genuinely different arrangement from project outsourcing, and it works for a specific situation: long running product development where institutional memory is worth more than flexibility of headcount.
What the model actually is
A vendor recruits, employs and houses people who work only for you, usually under your technical direction and your process, billed as a monthly capacity rather than as a deliverable. You get continuity, accumulated domain knowledge and the ability to change priorities without renegotiating scope. The vendor handles employment, facilities and replacement. What you do not get is delivery risk transfer: if the work is late, that is your problem, because you directed it.
When it beats the alternatives
It beats project outsourcing when requirements will keep moving and the same domain knowledge is needed repeatedly, which describes most product companies. It beats hiring locally when you need a scale of engineering the local market cannot supply at a price you can pay. It loses to both when the work is short, genuinely well specified, or so small that the overhead of standing up a team is never repaid. Under roughly a handful of people for under a year, the model rarely pays back.
Offshore staff augmentation is the lighter version, and often the right one
Offshore staff augmentation adds individuals to your existing team rather than standing up a parallel one, which means less setup, easier exit and no separate management layer. It is usually the better answer when you already have a functioning engineering organisation and need more hands. The development center is better when you need a whole capability, including its own leadership, that can own an area. Choosing the heavier model when the lighter one would do is a common and expensive mistake.
The terms that make it survivable
Name the people, with notice periods and paid handover for replacements, because continuity is the entire value proposition. Require your ownership of repository, pipeline and cloud accounts. Get an express written assignment of copyright flowing from each individual through the vendor, since under 17 USC 101 commissioned software is not automatically a work made for hire. And write the transition: what happens to the team, the knowledge and the access if you end the arrangement.
Questions people ask about dedicated offshore development center
How is an offshore dedicated team different from just outsourcing a project?
You direct the work and keep the delivery risk, in exchange for continuity and accumulated domain knowledge. Project outsourcing transfers delivery risk but gives you people who leave when the project ends, taking what they learned with them.
When should we use staff augmentation instead?
When you already have a functioning engineering organisation and simply need more capacity. Augmentation has less setup, easier exit and no parallel management layer. Reserve the development center for when you need a whole capability including its own leadership.
What is the minimum number of offshore dedicated developers worth setting up?
Below roughly a handful of people sustained for at least a year, the setup and management overhead is rarely repaid. Smaller or shorter needs are usually better served by augmentation or a project engagement.