Most Effective Software Outsourcing Models

Software outsourcing is becoming more and more well-known and effective for tech-savvy organizations. Before you decide on any one outsourcing model, you need to know the difference between different software outsourcing models, their benefits, use cases, and success graph.

Once you have chosen an outsourcing model, you can have an approximate idea of when your software project can be ready to use. Make sure that you search and pick the best outsourcing model which suits your business needs.

In this article, we will understand different models and how they will impact your business. Let’s dive in deeper!

Different Software Outsourcing Models

There are a few basics you need to pay attention to before you decide to hire a software outsourcing company for your project. In this article, we will focus on the client and provider relation model. It is because a healthy relationship can drive benefits for both client and provider. The three main relationship software outsourcing models:

1# Project-Based Model 

The software company offering outsourcing services takes most of the control of the project from beginning to end. The service provider will complete your project as per your specifications and needs.

Here, as the provider will take care of all your project requirements, it’s their job to perform research, develop things, and deliver them satisfactorily. You do not need any tech-savvy person as the provider takes over the project completely.

Additionally, you can easily focus on your core business operations rather than how the team is working to develop your project.

2# Staff Augmentation Model

Using the staff augmentation model, you will own your project from beginning to end. The client takes most of the responsibility in such a model. You are hiring talents from a company that will strengthen your team and is responsible for your business app development.

Here are some specific advantages of the staff augmentation model:

–      It is a significantly cost-effective model. It helps with lower HR and staffing costs, lower development costs, and lower operational costs.

–      Speedy innovation helps with hiring the right expertise at the right time

–      This model provides complete flexibility

–      You can get full control over your software development

3# Managed Team Model

While using this outsourcing software development, the ownership and responsibility are shared by the clients and the outsourcing service provider and determining which responsibilities belong to whom.

Now we will discuss some common engagement models:

Dedicated Development Teams

In this type of outsourcing model, clients hire a whole team of software developers from the outsourcing company who will only work on their projects dedicatedly. Being this product owner, you have full control over the team directly, just like they are your in-house employees.

You can define the whole team structure to be specific to your requirements. For instance, you can decide how many developers will be needed, the number of senior developers needed, testers, project managers, architects, etc.

This model is also now part of the easy hire process as you can take interviews, review their performance, and also can decide who can be in your project development team.

Here are the potential advantages of this model:

– More control of the owner over the project development process. A managed team model helps your control the process as compared to a standard project outsourcing model

– Minor time commitment of you and your team. The final decision is taken by the product owner or manager, as they have control of time commitment and their duties.

– Minor efforts of ramp-up and costs. When you are choosing the managed-staff model, they do not require any speed to get up and grow. They have already worked well together on familiar projects and are known to each other’s working process.

– Better communication. In this model, coordination and healthy communication of the outsourced team is good.

– A smaller risk of project failure takes place in this model because the outsourcing service provider will provide you with an expert team only, and their achievements and skills are good.

Time & material model

It is one of the simplest and most traditional outsourcing models. Here, the clients pick different resources like architects, developers, testers, sr. developers, etc., and each of them will have hourly rates.

In many situations, outsourcing providers will suggest the resource based on their experience of working with such projects. At last, the final bill is made based on how many hours each employee has worked on the project.

In conclusion, you pay the provider based on the man-hours required to develop your project. This model is known for being used in situations when the owner wants to decide the expertise of his team by himself.

This model gives the flexibility to scale your team as per the requirements of the project and even end the cooperation if required results are not gained. In the time & material model, you can first start with 3-6 months of short tenure for development. If things are working out, you can gradually extend the tenure and make it a long-term agreement.

Fixed-Price model

The name of this model itself makes it clear about its working. You have to pay a certain fixed amount to the outsourcing service provider.

It is not as simple as it sounds and is also not amongst the most well-known software outsourcing models.

The reason behind the fixed-pay model not being so popular is that there is no flexibility in this model. Even if you know that your project will not require any tech expert, you still cannot preplan your project with 100% accuracy.

There is a high chance that if something changes, like a tech stack, or it may get a new update, or we need to change it as per our project requirements, then it is hard to change in this model. All these updates will lead to timeline changes, a huge conversation, and budget changes.

In this model, if you assume that it will help you to remain on a budget, it is not so in the majority of cases. Still, there are times when this model might fit in. In cases like when owners need a short-term project development and are sure about their requirements.

However, it is also possible that you can completely stay away from the development process and let the service provider handle it completely.

Concluding words

When you pick the most suitable software outsourcing model, it can be a crucial decision to make, as it will impact the success of the project. Each model has its pros and cons, and choosing the best alternative depends on the specific requirements and aims of the business.

The dedicated team model has control, flexibility, and also long-term collaboration, which makes it a good choice for complex and enterprise apps that requires close and transparent communication with the development team.

Vice versa, the fixed price model will provide approximate cost predictability and is also suitable for small-scale, well-defined projects with easy requirements and aims.

Moreover, the outcome-based process aligns the requirements of the outsourcing vendor with the easy upbringing of the software, as the payment is tied to achievement and specific outcomes. This process promotes a result-driven approach and ensures motivation and accountability from the provider.

Finally, the choice of any software outsourcing should be made only after a thorough assessment of the budget, requirements, timeline, etc. After carefully going through these factors, one can select the most suitable outsourcing model and providers and can increase the chances of achieving success by getting cutting-edge outcomes as per the dynamic standards of the current technological world.

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