IT outsourcing is the norm these days it’s no longer an exception.
Before one decide that outsourcing is the right way to go for your project, one needs to familiarise oneself with the different type or models of outsourcing to make an informed decision about the type that best fits your needs.
The basic questions one might have about outsourcing:
- Outsourcing: What exactly is it?
- Is outsourcing really a good idea?
- Should you outsource your project or get IT Staff on contract?
- Different types of IT outsourcing models?
- What type of outsourcing would be ideal for your organization?
What is IT Outsourcing?
The practice of delegating work to an entity outside one’s core team is Outsourcing. In IT outsourcing, one engages external entities to work on and deliver digital products for its business.
One can opt to outsource for several reasons including lack of skilled resources, trimming budgets, and necessity of skilled expertise.
When is it ideal to Consider Outsourcing?
So, when to outsource? One should consider outsourcing when one do not have the required in-house expertise, or when running low on resources.
When IT staff is busy From handling software upgrades, hardware issues and mobile device integration to managing new technology initiatives, they’re always working — and often looking for more hands to help lighten the workload. The challenge? Many businesses can’t afford large IT departments, let alone spend more on hiring new personnel. The solution? IT outsourcing that lets your team tap the knowledge of industry-certified experts and tackle your toughest technology problems.
It is a great way to get high quality services from a global pool of talent. And it’s cost effective, to boot!
What Are the Types of IT Outsourcing Models?
The types of outsourcing models can be broadly divided into two categories:
- Location-Based Types of Outsourcing
- Relationship-Based IT Outsourcing Models
The names are self-explanatory, so let’s analyze both these models in detail.
Location-Based Types of Outsourcing
In location-based types of outsourcing, the main deciding factor is how far away your outsourcing team will reside from you. It can be further classified into three:
A. Onshore Outsourcing
When your outsourced team resides in the same country as yours, it is called onshore outsourcing.
Your developers may reside in another region of your country, but there won’t be a noticeable difference in the time zones. Your team will also be able to communicate well with an onshore team as there won’t be any cultural differences or language barriers.
B. Near-shore Outsourcing
If you hire a nearshore outsourcing development team, it means that you are outsourcing your work to countries that are in your geographical vicinity.
Near-shoring is often considered a good balance between profitability, quality, and the physical proximity to your outsourcing partner.
In such cases, the time zones won’t differ by more than a few hours. Compared to onshore outsourcing, nearshore outsourcing may be more cost-effective. You might, however, face language barriers in communication, depending on your locality.
C. Offshore Outsourcing
When you outsource your project development work to an entity that lives in another country that is not your immediate neighbour, it is called offshore outsourcing.
Offshoring is the process of outsourcing IT services to a company based abroad. Hiring offshore developers is generally the most cost-effective option. The benefits of offshore development are vast. But It can be more challenging to sustain because of time zone differences and language constraints. But, if you have an experienced project manager, you probably not going to have any of those drawbacks as an experienced project manager will devise a communication plan to keep in touch when it’s convenient for you.
Do not get confused between offshore outsourcing and offshoring. While offshore outsourcing means you delegate your work to another entity in another country, offshoring means you build your own developer team in another country.
Relationship-Based IT Outsourcing Models
A. Staff Augmentation Model
This model enables you to add expert developers to your internal team. This will maximize the productivity and competencies of your in-house development team. These outsourced experts become part of your in-house team and collaborate with your employees. With this outsourcing model, you can keep full control over the project.
When your development process is too slow, you are short of skilled resources, or when you only need only a few experts or experts for a short duration or not the entire team to support the project then the staff augmentation model can be the best choice.
- Full control over the project development
- Best talent pool
- Quick access to developers
- Full responsibility
- Possibility of communication gaps
- Collaboration difficulties
- Integration and management outsourced professionals
You can simply contact GIPFEL HR SOLUTIONS, and they will assign an expert professional to you for the tenure that you require. The specialist will work with you as part of your team. This is called the staff augmentation model.
B. Dedicated Team Model
In a dedicated team model, you get to hire an entire team of developers through an outsourcing agency to work on tasks that you do not want to assign to your internal team.
The difference here is that the outsourced team will be working on independent projects and will not need to collaborate with your in-house staff. They will stay connected to you through a project manager or someone in a similar role.
- Better communications
- Minimal risk
- Complete control
- High transparency
- More flexibility
- Agile development process
- Lengthy recruitment process
- More responsibility
C. Project-Based Model
If you choose a project-based model of relationship-based outsourcing, you won’t have to be involved in the project development process except during the handing over and delivery times.
It is conventionally the most popular model of outsourcing and has been proven effective for projects where stakeholder involvement is low. The main disadvantage of this model is that you won’t get autonomy over the project’s development.
o ensure smooth communication, you’ll need to set the tone and frequency of conversation with the project manager assigned to you by the outsourcing agency.
This model is suitable for companies that have limited software development expertise. Also, software outsourcing is perfect for companies that have a clear idea of the product they want to create.
- No micro-management, complete accountability lies on the project manager
- Time-efficient with clear timeframes and results
- Prompt recruitment process
- The outcome may be good and well planned but does not comply with industry standards or best practices.
- Less control over the project
Which Outsourcing Model Should You Choose for Your Business?
This is one question we can’t answer for you. In fact, no one can give you a cut and dried answer to this question. We can, however, guide you to the right answer.
Consider the following and you will soon arrive at which type of outsourcing model will be apt for your business:
What Are Your Project Requirements?
Before you consider outsourcing, you need to understand your exact project requirements. Knowing your project requirements like the back of your hand will also help you avoid confusion as the project outsourcing and development progresses.
Some questions to be answered are:
- What do you hope to accomplish on project completion?
- What is the scope of your project?
- What is the core features you want for your final product?
- Have you set your project milestones?
- What are the deadlines you have in mind?
Once you get a clearer picture of your project requirements, you will be able to analyze what type of outsourcing works best for you. Once you have found it, you should hire the right team for your product development success. It will also help you avoid costly mistakes in product development.
What Type of Pricing Model Do You Wish to Adopt?
You need to fix a budget first and give some thought to the type of pricing model you want to adopt for the outsourcing services you require.
Would you prefer a fixed price model, a value-based pricing model, or perhaps a competitive pricing model?
Once your budget is fixed, you can narrow down your search to the professional outsourcing agencies that fall in your budget range.
What is Your Outsourced Project’s Dependency on Your Core Team?
Project management is no mean task, especially when it comes to software development projects.
All your teams must come together under one umbrella to work towards the end goal. There must be proper coordination and communication between team members.
If your outsourcing partner and your core team both have a stake in the development process of your project, then it is imperative that everyone’s work hours align. In such a case, you should try to avoid offshore outsourcing, as the time zones will make proper coordination a chore.
On the other hand, if your core team has nothing to do with your outsourced project except perhaps the regular progress tracking, your scope of outsourcing partners increases.
Once you have determined your core team’s role in the project, you will get a clearer idea of what type of outsourcing model will align with your project needs.
What Type of a Relationship Do You Want with Your Outsourcing Entity?
Outsourcing entities hold excellent customer service in high regard, as client satisfaction determines their next source of bread and butter.
You need to set the level of interaction you want with your outsourcing entity.
Do you want to assign your project work and wait till it’s completed before initiating contact? Or do you want to be completely involved with your project development?
The type of relationship you wish to maintain with your outsourcing entity will also help you decide on the type of outsourcing that will prove most feasible for your project management.
It is easy to find reliable IT outsourcing services providers, with access to a global talent pool for you to choose from.
But, first, you need to understand the type of outsourcing that is most beneficial to your company goals. Once you decide on the IT outsourcing services that you believe will help your project succeed, give us a call and we’ll take it from there!