The Ins And Outs Of IT Outsourcing Types & Models

The Ins And Outs Of IT Outsourcing Types & Models

Acquiring enough skilled, experienced in-house professionals for every project is an expensive, time-consuming task. For this reason, many IT companies of various sizes are constantly turning to different IT outsourcing models and types that can help them manage a lot of different problems and jobs simultaneously.

Outsourcing implies handing over a certain section of the project (or complete projects) to external, third-party companies. They’re completely responsible for the training of their employees, allocation of individual tasks, and final results. IT outsourcing types are divided based on location, while the models are dependent on your relationship with the outside experts. Choosing the right type and model can make or break your next project, which is why it’s important to understand them well.

– Location Focused Types –

1. Onshore

Simply put, onshore outsourcing means that you’re hiring professionals from a company located in the same country as yours. No language barriers, same time zones, and easy communication are some of the benefits of this type. However, be prepared to break the bank, since onshore outsourcing projects can cost you hundreds of thousands of dollars. If you’re a startup company, this won’t be an option for you.

2. Nearshore

While the distance is not exactly defined, nearshore development usually means outsourcing work to countries that border yours. This approach offers the best balance between costs and overall efficiency. There likely won’t be any large differences between time zones and languages, but it can be a lot cheaper depending on the country that you choose.

3. Offshore

The most commonly used type mainly due to the affordable prices, offshore development usually means hiring in a country overseas. Depending on how you approach it, this can be a complete success or a bust. While offshore development centre usually has a lot of experience, communication and management can be tough obstacles to overcome. It’s important to have a good project manager behind an offshore outsourcing project to ensure that everything is planned and carried out accordingly.

– Relationship Focused Models –

1. Project-Based Model

With practically zero involvement in the development process, this model is ideal for tasks that you and your team have no experience in. Everything is handled by the external company’s project manager, and they report on a previously-agreed time frame. The only thing that the parent company is responsible for is writing the correct specification and requirements for the project.

+ No Additional Efforts Are Required From The In-House Employees

+ Responsibility For Failure Is On The Vendor Company

+ High Success Rate

– Almost No Control Over The Project

– Mistakes Can Be Hard To Fix

2. Team-Based Model

If you want to have an additional, dedicated team for a project alongside your existing in-house ones, this is the model for you. The vendor company handpicks individuals that they consider most suitable for your needs. These teams include everything, from developers to project managers. While they won’t have any interaction with the in-house staff, you’ll still be in frequent contact with the PM.

+ Good Communication, A Much Better Understanding Of The Project

+ All Benefits Of An In-House Team

+ Opportunity To Acquire New Skills From The Vendor Company’s Professionals

– Takes A Bit Of Time To Achieve Full Potential, Making It Unsuitable For Short-Term Projects

– You Don’t Get To Form The Team Yourself

3. Staff Augmentation Model

The most direct approach out of all three, staff augmentation extends your in-house team by giving you full control of individual experts. You’re responsible for allocating tasks, managing their progress, and communicating with them remotely. If you need specific expertise that you’re currently lacking, this will be the most suitable model.

+ Full Control Over All Aspects Of The Project

+ Extremely Flexible, Unlimited Number Of Additional Experts

+ Compatible With Projects Of All Sizes

– Requires A Lot Of Skill And Time To Manage Optimally

– Full Accountability For Success/Failure

– Closing Thoughts –

Which combination of types and models of IT outsourcing you’ll choose varies greatly depending on your needs. Focus on your project requirements, available time, current in-house experts, needed skills, and other aspects. The best option is to consult some of your most experienced employees and see what their opinions on these subjects are. Don’t be afraid to spend additional time answering relevant questions and weighing the different pros and cons – after all, this is a much better alternative than getting an unsatisfying outcome.