Laboratory-type development is a way to develop software, the form of development in an Offshore development center (ODC), and is also known as “a lab-type contract. Because it is a contract with a work element & time, in terms of form, the contract is an almost authorized contract. In other words, it is possible to guarantee a certain period of time with a dedicated development team in an overseas development company.

So, in lab-type development, no matter if there is a job or not make sure in advance that excellent human resource has been exclusively prepared for the company and flexibly evolving requirements and continuously ensuring that human resources are experts.

So far, in lab-type development, it’s common to secure an engineer for about half a year or one year. Recently, more and more ODCs are offering agile lab-type development, such as monthly lab contracts, variable number of people monthly, and minimum one-person laboratory contracts,…

For example, this type of development is a promising option for companies with the following needs: 

  • Have regular projects and want to ensure excellent human resources dedicated to the company
  • Want to effectively grow by accumulating technical specifications and know-how in overseas contractors.
  • Have a project where the specifications are expected to change and not be fixed.
  • Want to flexibly consolidate the development roadmap if the company’s resources are not sufficient
  • In the long term, we want to have an overseas software development team, but currently, we only want offshore development know-how.

What are the advantages of lab-type development?

I would like to highlight three main advantages of lab-type development

Getting excellent engineers on your team for a certain time.

The reason why lab development in Japan is so popular is the shortage of IT human resources. Developing countries in Asia, such as Vietnam and the Philippines, which supply offshore development services, are full of talented young engineers. By conducting lab-type development, you can ensure you have skilled engineers as your company’s resource.

Lab-type development doesn’t use foreign engineers so you don’t have to bear the costs and risks associated with visa and employment.

In other types of contracts, the engineer is assigned to a fixed project, so he cannot be responsible for another project. However, in the case of lab-type contracts, engineers can be assigned to other projects as needed.

It is difficult to hire engineers for short periods of time, such as when you want to temporarily increase the development line, but the advantage of lab-style development is that you have the flexibility to increase resources only as needed.

Respond flexibly to changes in specifications

Lab-type development is not only getting the job done, so you are not tied to a deadline. The biggest advantage is that even if the specifications change during the project, we can still respond to them flexibly.

Contract development, on the other hand, is fundamentally unable to accommodate changes in specifications. Once the project has started, the work must be completed according to the contract. When changing specifications must sign a separate contract and incur additional costs. However, in the case of laboratory contracts, there are no restrictions on changing specifications during the contract period.

Lab-type development is able to make changes during development without forcing to fix the specifications in the start project. Therefore, it is very convenient to develop applications such as AI, and applications are developed while repeating the tests. When developing with Agile, it is possible to release, improve, and fix bugs earlier while seeing user reactions.

Ability to accumulate know-how

In the case of contract development, a new team is formed for each project. So when the product is delivered, the team will disband and the know-how will not be accumulated.

With lab-type development, even if a project ends, we will continue to work as a team for the duration of the completed time of contract.

What are the disadvantages of lab-type development?

With so many advantages, let’s discuss the disadvantages of a lab-type contract.

Taking time to build a team

In the case of a laboratory-type contract, the Japanese company that is the ordering party will mainly manage the team. For a team with different cultures and languages to work as well as ours, it took about 1 to 3 months to build the team before starting the project.

In the case of companies that are not used to developing overseas, The rate of project failure is so high because the resource cannot be put to good use. Development in the form of a laboratory is a medium and long-term development project, so it is necessary to carefully determine the number of personnel and build the team from the beginning.

Costs incurred if resources are not well-controlled

Lab-type development is also a one-time contract. If the contract period remains after the end of the project, costs will be incurred even if there is no work. Therefore, it is necessary to have a plan to avoid wasting resources during the contract period. On the contrary, costs can be incurred for companies that do not have regular projects or projects that are implemented only once.

Less responsibility for quality and timeline

In other types of contracts, the contractor (foreign supplier) is responsible for quality and deadline. However, in the case of a contract with a laboratory, the quality and deadline are not strictly guaranteed. Contractual development is more appropriate in the case of “specifically defined requirements” or “clear deadlines”.


Offshore lab-type development is a suitable development method for agile and continuous projects as it allows you to secure your own resources with low labor costs.

On the other hand, there is also the disadvantage that it takes time to recruit locally, build a team, and reconcile quality standards.

In order to be successful in developing this type of laboratory, there is a lot of know-how in recruiting and managing local labs. So finding a partner company that understands how to deal with disadvantages becomes essential.

NAL has more than 10 years of experience in overseas lab-type development, is based in Vietnam, and has a Japan branch office. All NAL offices work together to support the development of the customer’s lab.

Please contact NAL if you have any concerns about the development needs.