How to Set Up a Software Center of Excellence?

How to Set Up Software Centre of Excellence

Imagine a hub of software genius within your company. A place where innovation isn’t just a buzzword – it’s a daily reality. Welcome to the world of the Software Center of Excellence (CoE).

Setting up a CoE is more than just gathering experts. It’s about strategy, location, collaboration, and measuring success. Where should you establish it? Who’s in the team? How do you measure results?

From mission definition to performance evaluation, this guide breaks down the steps for you and moves beyond a high-level glimpse. I’ll share a comprehensive exploration of each stage –to help you wade through the complexities along the way. Plus, I’ll share essential insights so you can make an informed decision about setting up a CoE. 

Let’s start at the beginning.

Table of Contents

The Essence and Purpose of a Software Center of Excellence

At its heart, a Center of Excellence (CoE) is not just a title but a testament to expertise and innovation. Envision a dynamic team of software aficionados, from product owners to software engineers and QA experts, all converging with a singular focus. In the software realm, such hubs are dubbed Software Development Centers of Excellence (SDCoE). 

A typical SDCoE hub structure that TurnKey builds for our clients looks like this:

Center of Excellence

Now that I’ve laid out the foundation and purpose of an SDCoE and given you a glimpse into the kind of structure you could adopt, it’s understandable if you have several of these pressing questions percolating in your mind.

Why Build a Center of Excellence?

The motive behind building a Center of Excellence is multifaceted. By centralizing software development, companies tap into synergies that save both time and money. But it’s not merely about the consolidation; they also help in eliminating inefficient practices. An SDCoE isn’t just another division; it’s an autonomous unit pulsating with innovation.

Where to Establish a CoE?

When pondering how to set up a Center of Excellence, location matters. With the twofold aim of cost-efficiency and high technical expertise, many firms are turning their gaze offshore. Regions like Eastern Europe and Latin America emerge as prime choices, offering both affordability and unparalleled technical prowess.

Where to Establish a CoE?

When pondering how to set up a Center of Excellence, location matters. With the twofold aim of cost-efficiency and high technical expertise, many firms are turning their gaze offshore. Regions like Eastern Europe and Latin America emerge as prime choices, offering both affordability and unparalleled technical prowess.

More than Just Coding

Building a Center of Excellence is not just about coding. An SDCoE’s role extends to encompass planning, designing, and thorough testing of software applications. Moreover, they become the umbrella for guiding other developers, ensuring that the broader community benefits from the latest best practices. In essence, they ensure that software is not just functional but reliable, user-friendly, and top-tier.

Key Components of a Software Development Center of Excellence

The Ultimate Goal

Regardless of an organization’s unique specifications or operations, the CoE’s purpose remains unwavering: to champion software development excellence and innovation. Whether you’re an industry leader or a budding startup, understanding how to create a Center of Excellence could be your pathway to software supremacy.

7 Steps to Set Up a Software Center of Excellence (CoE)

Establishing a CoE, however, can be daunting without the right guidance. Thankfully, the journey to set up your own hub can be smoother than you think, especially when you have the right partner, like TurnKey, by your side. Here’s my insider’s tips on how you can kickstart your journey:

Start with Clarity

Define the mission, strategy, and specific software development focus for the CoE. What are your core objectives? Clearly outline the responsibilities and skills required for each CoE team member. A steering committee consisting key stakeholders, combining members from within the CoE and the broader product development team, can be instrumental in setting the direction and resource allocation.

Skipping this step or being unclear about the roles of a Center of Excellence (CoE) can jeopardize a company’s strategic endeavors, transforming what should be a nucleus of expertise into a source of inefficiency and misalignment. If roles aren’t tailored to meet the CoE’s objectives, there can be overlaps in responsibilities, gaps in crucial functions, or even misallocation of resources. Such missteps can not only hinder the advancement of innovative practices but can also lead to friction within teams, causing discontent and potential turnover. 

Typically, the responsibility lies with the top leadership along with the HR departments, who play a pivotal role. They’re tasked with ensuring that the CoE is structured correctly and that each role is precisely delineated to support the broader organizational goals. 

“We can facilitate your role-defining process by sharing our expertise in building Centers of Excellence for companies like R1, and Headspace”, shares Yuliia Andreieva, Head of Recruitment at TurnKey. “This will minimize your risk of choosing a less efficient structure.”

Functionality and Structure

Identify the specific services the CoE will offer, be it training, research, or support for particular software tools. There are multiple ways to optimize an offshore software development center. 

This is an example of a development center with roughly 50 people:

Identify the specific services the CoE will offer, be it training, research, or support for particular software tools. There are multiple ways to optimize an offshore software development center. This is an example of a development center with roughly 50 people

Assembling the Experts

The core of your CoE is its development team. Seek individuals with diverse skills and experiences. Remember, perspectives from both customer and developer viewpoints are crucial. 

“With our extensive network and recruitment prowess, we fetch the industry’s top minds for you. And guess what? We’re swift”, says Sterling Lanier, CEO and Founder of TurnKey. “The first set of hires for your hub can be on-boarded in as little as a month. Moreover, cultural compatibility is paramount, so we ensure that the recruits vibe with your company’s ethos.”

Setting up a Hub

There’s paperwork, legalities, and a whole lot of administrative tasks:

  • Contracting
  • Payroll
  • Device management and logistics
  • Workspace organization
  • Taxation, etc.

“Why dive into that quagmire when we can handle it for you? From payroll and benefits to tech setups like computers, we manage it all”, says Irina Fesenko, Legal Counsel at TurnKey.  “And if a legal hiccup arises? Don’t sweat it; we shoulder the responsibility, ensuring your company remains hassle-free.”

Defining Processes

A CoE needs well-structured processes and procedures. Engage all stakeholders in their creation, prioritize simplicity for easy adoption, and ensure flexibility for adaptability. 

When setting up a CoE, it’s essential to implement specific processes to ensure its effectiveness. Here are some key processes to consider:

  • Knowledge Management: Create a centralized repository to collect, organize, and disseminate expertise. This should include best practices, lessons learned, templates, and any other pertinent information.
  • Training & Skill Development: Set up regular training sessions, workshops, and certification programs to ensure team members are always up to date with the latest methodologies and tools in their area of expertise.
  • Standardization: Develop standardized tools, methodologies, and frameworks to ensure consistency across the board. This helps in producing predictable outcomes and reduces variability in the processes.
  • Innovation & Research: Dedicate resources to explore new techniques, tools, or practices in the domain, allowing the organization to stay ahead of the curve.
  • Performance Measurement: Implement metrics and KPIs to evaluate the performance of the CoE. Regularly review and recalibrate based on feedback and evolving objectives.
  • Stakeholder Engagement: Ensure regular communication with key stakeholders, both within and outside the CoE, to gather feedback, understand requirements, and maintain alignment with business objectives.
  • Resource Allocation: Establish clear processes for how resources, both human and financial, are allocated and used within the CoE. This includes hiring, onboarding, and resource assignment processes.
  • Governance & Compliance: Establish clear governance structures to oversee the CoE’s activities and ensure they align with organizational goals and policies. Ensure compliance with internal and external regulations and standards.
  • Change Management: As the CoE will often be introducing new practices or technologies, a structured change management process is essential to ensure smooth transitions and stakeholder buy-in.
  • Collaboration & Communication: Foster a collaborative environment by setting up regular meetings, forums, or communities of practice where team members can discuss challenges, share ideas, and collaborate on projects.
  • Risk Management: Identify potential risks associated with the CoE’s operations and establish mitigation and contingency plans.
  • Continuous Improvement: Periodically review all processes and methodologies to identify areas of improvement. This can be achieved through regular feedback loops, performance reviews, and external benchmarking.

Setting up these processes and ensuring their regular review and iteration will provide the structure a CoE needs to be a genuine asset to an organization.

HR and Talent Retention

While bringing in the talent is crucial, retaining them is equally significant. Developer churn can be a real pain. So, you should evaluate the CoE’s performance consistently.

 “Our specialized HR processes at the hub, coupled with formal talent retention programs, ensure that you not only have the best team but also that they stick around for the long haul,” shares, Kateryna Kurochka, Head of HR at TurnKey.

A little later in the article, I’ll share the details, so keep reading so you don’t miss out.

Let the Creation Begin!

With everything in place, it’s showtime! Dive into what you do best: building top-tier software. With a team of outstanding developers by your side, you’re poised to craft and release software that is nothing short of amazing.

RD on Steroids

Elevate Your Software Team's Performance with a CoE. Reach Out to TurnKey Now!

In summary, creating a Center of Excellence might seem like a colossal task, but by following these steps and the right guidance, it becomes an exhilarating journey. 

Now, let’s dive deeper into the advantages that come with establishing a CoE. I’ve pulled together the five most notable for you:

Advantages of Software Development Center of Excellence

#1. Enhancing Expertise and Best Practices

To maintain a competitive edge, companies are increasingly adopting best business practices. One such method that stands out is the Center of Excellence model, a beacon for performance enhancement.

  • Zeroing in on Core Aspects. The CoE model operates on a simple yet profound principle: rather than spreading yourself too thin, focus on a few core aspects and master them. To implement a focus area, startups should begin by identifying the competencies they lag in or areas that hold immense potential for growth.
Feedback Mechanism
  • The Mantra of Continuous Improvement. Beyond focusing on core areas, the CoE model champions the ethos of continuous learning and improvement. It’s not just about adopting the latest technology or following practices, but it’s about evolving with them.
    Instituting a feedback loop is pivotal. Mistakes are inevitable, but in a CoE, they become growth catalysts when organizations learn from them. With a structured feedback mechanism, errors become opportunities, laying a foundation for better practices and ensuring that the technology systems in place are always optimized.

The Role of a CoE in Shaping Best Practices

Role Description
DevelopmentDevelopers there analyze existing processes, single out areas that can be improved, and then conduct in-depth research to find the best strategies and techniques.
ImplementationAcross the organization, teams are trained and continuously supported to ensure that these refined processes are effectively put to use.
StandardizationThe CoE champions continuous improvement by ensuring that these new, superior business practices are not only communicated but also consistently followed across the board.

By integrating best practices and fostering an environment of continuous improvement and learning, the CoE model becomes an indispensable asset for software companies aiming to soar.

#2. Facilitating Collaboration and Communication

Silos slow startups down. Cross-functional collaboration between other departments and other business units elevates the entire organization. It’s this substance that ensures smooth operations in modern companies.

So, how does a CoE ensure this collaboration?

  • Vision and Alignment: By offering guidance, the CoE team paints a shared vision. When the entire organization sees the same destination, all units ensure alignment, moving in sync.
  • Culture of Teamwork: Working closely with other departments, a CoE fosters a collaborative spirit. This spirit isn’t confined to their shared facility; it spreads, breaking barriers and building bridges.
  • Open Communication: Digital channels, managed by the CoE, become the lifelines connecting varied teams. Updates, best practices, insights – everything flows seamlessly.
  • Training: The CoE doesn’t just hoard expertise. They offer guidance, train the troops, and elevate the competency levels across all corners of the organization.
  • Unified Projects: Encouraging projects that require diverse teams to coalesce, the CoE ensures that different units don’t just co-exist but actively collaborate.

By serving as a hub for collaboration, CoEs transform organizational effectiveness.

#3. Fostering Talent Development

Centers of Excellence can play a significant role in talent development and retention in many organizations. CoEs are teams or departments within an organization that have a high level of specialized knowledge and expertise in a specific area. They are typically responsible for developing and implementing best practices, processes, and technologies related to their area of expertise.

  • By creating a culture of learning and development. With their thought leadership, CoEs can help to create a culture of learning and development within the organization. This not only ensures employees acquire specialized knowledge but also fosters an environment where they feel valued and supported, thereby improving their engagement and commitment to the organization.
  • By promoting cross-functional collaboration. CoEs can facilitate collaboration between different departments and teams within the organization, seamlessly integrating project management principles. This initiative helps break down silos, promoting knowledge-sharing and the spread of best practices across the entire establishment.
  • By providing training and development opportunities. CoEs can help to train developers, developing skills and knowledge, particularly when a new skillset is needed. This approach can aid in their professional growth and career development, leading to increased job satisfaction and higher retention rates.
Retention Best Practices

Speaking about retention,at TurnKey we work hard to ensure our clients have the lowest churn rate in the world! Each month our talent retention experts assess your development team based on a range of important retention factors. As a result, our teams have 2-15% of average turnover whereas industry average is about 40%.

  • By providing leadership development opportunities. CoEs play a pivotal role in grooming the next line of leaders offering leadership development opportunities for the team. Such initiatives prepare them for future leadership roles within the organization, ensuring the retention of talented individuals and reinforcing a culture of talent development.

Maximize Potential, Minimize Errors. Let TurnKey be YOUR CoE Partner.

#4. Improving Cost Efficiency

Cost Efficiency Elements

CoEs, even in a temporary setup, can play a significant role in improving software development efficiency and reducing costs by:

  • Standardizing Processes: CoEs can standardize software development and company processes, ensuring that best practices are followed, and quality is maintained throughout the development lifecycle. This results in a reduction in errors, bugs, and rework, ultimately leading to cost savings. The CoE’s governance structure can be instrumental in this standardization.
  • Optimizing Resources: CoEs can optimize the use of resources, including people and technology while performing operational tasks. By identifying areas of inefficiency and waste in operational tasks and implementing solutions, CoEs can reduce the time and effort required for software development, leading to cost savings.
  • Implementing Automation and Digital Transformation: CoEs can implement automation as part of a broader digital transformation strategy, including tools and software solutions, to streamline software development processes and reduce the time and effort required for manual tasks. Automation can help to reduce errors and increase productivity, resulting in cost savings.

#5. Increasing Competitive Advantage

When a CoE is established, it brings together a group of experts who work together to improve processes and procedures, aiming for a successful center within a successful enterprise. This can lead to better use of resources, faster decision-making, and improved overall performance.

  • Improved Efficiency. By having a successful CoE, teams are able to work more efficiently, because they have access to a shared pool of knowledge and business intelligence. This can help to eliminate duplication of effort and ensure that everyone is working towards the same goals. 
  • Collective Knowledge. When a successful CoE is established, it creates a culture of knowledge sharing, driving excellence throughout the organization. By pooling their knowledge, team members can come up with more effective solutions to problems, solidifying the organization’s competitive advantage.
  • Innovation. Innovation is essential for businesses that want to maintain a successful enterprise and improve customer experience. By having a CoE focused on driving excellence, you can create a culture of innovation within your organization.

Case Studies

Recognizing the crucial importance of a CoE in the realm of software development, TurnKey goes above and beyond, optimally allocating resources to ensure that your offshore CoE becomes a triumphant success study.

With TurnKey, you get:

  • A highly experienced HR team to handpick your CoE development staff.
  • Minimized turnover, reinforcing your dev team’s continuity.
  • An agile team structure that responds to your fluctuating needs.
  • Expertise in managing administrative nuances and legal intricacies.
  • Best practices blueprint for assimilating the offshore CoE into your organization’s culture.

But words only go so far. Dive into the success narrative of the R1 (NASDAQ: RCM) company. Faced with surging demand, R1 sought to bolster its engineering brigade while enhancing control over development and security infrastructure. 

TurnKey’s solution?

We helped them hire 40+ full-time staff across:

  • UI/UX design
  • DevOps & Infrastructure
  • Implementation & Integration
  • Customer-facing professional services
  • Customer support


As a result, R1 has dramatically boosted their productivity and currently has 51 releases per year (weekly cadence). Moreover, they enjoyed less than 5% average annual churn over the past 3 years, ensuring minimal disruption to their engineering needs.

TurnKey’s YourShore model allows us to easily integrate developers directly into our organization so that they are truly my team. I honestly forget most of the time that they aren’t working in the same building as me.
Anna AlisovaGeneral Manager at R1

When it comes to selecting a Center of Excellence model for your business, TurnKey is the expert many Silicon Valley-caliber companies trust, driven by the organization’s deep expertise in software development. Clients from diverse industries such as healthcare, finance, and insurance turn to TurnKey not just for innovation but also for its prowess in orchestrating business goals with emerging technologies.

Industry expertise

Serving as a strategic operational partner, TurnKey arms your offshore business unit of 50+ developers with robust infrastructure and best practices to supercharge your research and development activities. And while your control remains undiluted, TurnKey’s operational efficiency ensures your offshore team works at its peak.


Navigating through the talent landscape, our custom recruitment pipeline taps into a pool of talent, cherry-picking those that resonate with your business analyst-defined needs, ensuring integration into your business process automation strategy. This not only saves resources but ensures your offshore project delivery aligns with your high benchmarks.

Bring Out the Best in Your Software Team. Discover CoE Solutions with TurnKey.

And don’t worry, integration doesn’t end with recruitment. TurnKey guarantees your offshore unit aligns with your existing operations. This drives productivity and expedites results.

Plus, we always have your back in this partnership with round-the-clock support.  TurnKey’s representatives are ever-present, ironing out wrinkles and addressing concerns as you sculpt your offshore center of excellence.

The result? Leveraging TurnKey’s expertise, you realize significant savings, get access to top-tier software developer talent, and build a team that mirrors your unique needs.

Summary of Key Points

A Center of Excellence stands as a beacon of innovation, expertise, and continuous improvement. The creation of an effective CoE necessitates strategic vision, robust processes, collaboration, and unwavering commitment to excellence. 

When implemented proficiently, a CoE not only amplifies an organization’s operational efficiency and product quality but also fosters an environment of learning, collaboration, and innovation.

From startups to seasoned industry leaders, the CoE model offers a tangible route to mastering software development nuances and driving industry leadership. Companies like TurnKey exemplify the potential of this model, leveraging expertise to provide partners with unparalleled development solutions. As businesses continue to adapt to emerging technologies and customer needs, the significance of Centers of Excellence will only grow, acting as the North Star in the quest for software superiority.

August 22, 2023

TurnKey Staffing provides information for general guidance only and does not offer legal, tax, or accounting advice. We encourage you to consult with professional advisors before making any decision or taking any action that may affect your business or legal rights.

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