Today, the most common type of work in IT is outsourcing. Its popularity is dictated by availability and benefits. Developers on outsource or outstaff often only require a small fee. They are even more willing to fulfill single orders (which is why they become more profitable).
But outsourcing models are also different. So today we will look at the most popular options and answer “what and when to choose”!
Location-Based Types of Outsourcing
The first criterion for separation is locational. It is divided into three types, and all are determined by distance. For example, your company is located in San Francisco. Still, you order services from an outsourcing company in New York – this will be onshore development. We will start with it!
Onshore development
Suppose you ordered development from another company registered in your country. In that case, you are subject to local market laws and pay the amount specified in the contract. Usually, this kind of service is costly (e.g., in the US, from $150/h). Still, you will definitely not have language or cultural differences. Also, you should remember the time – being in one-time zone, making it easier to make changes and simply control the work.
As we said earlier, onshore development is often the most expensive option because small companies usually prefer to entrust initial projects to companies from other countries. If this is near abroad, then such activity is called nearshore development.
Nearshore development
Nearshore outsourcing is software development in neighboring countries. For example, your company operates in Sweden, and you must integrate the system into your business. In this case, concluding a deal with a company in Finland or Estonia is beneficial.
Naturally, the costs will be less. In Estonia, for example, the average IT consulting rate is around $38-40/h. This system can be called the “golden mean” to some extent. Most countries whose companies offer outsourcing development are located in several adjacent time zones. At the same time, they set average price tag for their services.
Offshore development
This is one of the most common types of development in the world. Increasingly, American and European IT companies are ordering the development or refinement of their applications from companies registered in the Philippines, Malaysia, the Caribbean, and other remote corners of the planet. Of the minuses, one can immediately note the quality. Although it is only sometimes low, it can often fall short of the level of American or European ones. But the prices are also much lower.
Offshore development differs in distance and price. But sometimes communication and time issues can also arise – you have a morning, and your team has an evening. Naturally, you may have problems with the control of work. Differences in culture or language can cause misunderstandings between the teams. But nevertheless, offshore development is popular today, but naturally, its prevalence depends on the field of activity of companies. From the company location, move on to relationship outsourcing!
Relationship-Based IT Outsourcing Models
As with the location-based option, relationship outsourcing models depend on the number of employees fulfilling your task and the specifics of their work. Let’s get started!
Staff augmentation
The first type of outsourcing is the temporary integration of several employees of another company into your workflow. Usually, this involves a manageable amount of work. It is relevant when faced with a task requiring experienced personnel, but there needs to be more time to solve it. In typical situations, without an accelerated pace of work, you will simply begin to expand your team, look for new employees, and conduct interviews with them. But sometimes, there is no way to find suitable shots in a measured manner. In this case, it makes sense to pay attention to staff augmentation back office outsourcing.
Everything works simply. You contact the company, and some of its specialists become your in-house employers. They will communicate with your team, perform assigned tasks, etc. Think of it as extra employees. You hire them for a fixed time (often determined by the time spent on the job).
Hiring such specialists if you have a huge task ahead of you may not make sense, as they are best suited for quick revision or urgent completion of the department.
Managed Team model
The second on the list is already full-fledged hiring of the team. The managed team model remains in-house, but you are not hiring individual employees but full-fledged teams this time. They can be entrusted with particular tasks, but their rates will be much higher. Also, keep in mind that when hiring a team, you are required to competently organize work. Simply put, your business should work without serious errors or force majeure.
A team of third-party developers can develop separate functionality for your resource, take responsibility for the technical condition of the site, or perform other stages of the project. Since the help and opportunities are more significant, they still do part of the work, but on a larger scale than a few employees. In addition, the team’s expertise may go beyond the technical side – for example, it may be business analysts.
Actual if you have a large project and need more hands to complete it. Often they require high payment, but if deadlines are about to end, they can come in handy for you.
Project-Based Model
We will single out the last type of outsourced development separately. It differs in scale. De facto, you are hiring another company to take over the project (maybe more than one). However, they are not integrated into your company. Instead, they carry out the tasks assigned to them (often large-scale) projects.
Often, these companies are ordered to develop or fully finalize complex tasks. For example, they can request full-fledged game development from a Malaysian company in the gaming industry. Fulfillment firms do not become part of your business – they are just contractors who can either help or simply implement your ideas. At the same time, your team is busy achieving other goals. The cost of services of such companies, although it depends on the region, usually is high. Also, remember to review their CVs and testimonials in detail.
Indeed you already want to turn to the outsource developers’ teams. But until you have done this, we recommend that you pay attention to their search methods.
How to Choose Between Outsourcing Models
We have already said above when to pay attention, but we did it in passing.
Let’s talk about everything in more detail!
Speaking about the staff augmentation model, it is advisable to look for it in the case of a not very large amount of work and until you have any difficulties with the deadline. Employees should be located in your region or at least in your preferred time zone. Otherwise, you may need help with the organization of work.
As we said earlier, the managed team model is the interaction with another development team. They can perform more complex tasks, but simultaneously, the requirements for management increase. You must establish interaction between your employees and people with outsourcing. It is relevant to hire if you need help finalizing some element of the project or have problems in other areas of development (up to management or business plan). It is also advisable to search in approximately your time zone. Although you will be in dialogue with the manager of the mercenary team, you may need help if the team works from the other side of the planet.
The project-based model is the most expensive development model. It will allow you to delegate part of the responsibilities. Still, at the same time, it will require both resources and care when choosing. When working with such companies, be especially careful – you must understand in time that offshore developers cannot meet your requirements. It will be challenging to control them. Therefore, you will evaluate the work done in stages. It is advisable to contact European companies.
Always remember that programming outsourcing is a particular phenomenon. It is always relevant, but it is advisable not to “dump” all the work on unverified but to effectively integrate their work into your system and, of course, carefully check everything. Unfortunately, there have often been failed starts in the IT industry due to indigestible, technical conditions. Therefore, contact only professionals!