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3 IT Outsourcing Models: Guide To Choose A Right Model For Business ? 

Author: Innotech Vietnam
Date: 26/04/2022

IT outsourcing offers so many options nowadays. Although outsourcing software development is an intelligent choice, choosing the right outsourcing model is crucial for success. This article will provide types of outsourcing models and how to choose the right model for your project. So let’s get started!

 

I – Types Of IT Outsourcing Model: 

 

IT outsourcing

 

1. Staff Augmentation Model:

 

The staff augmentation model enables companies to add expert developers to their internal teams. This will maximize the efficiency and competencies of their in-house development team. These outsourced experts become part of the company’s in-house team and collaborate with their employees. With this outsourcing model, companies can keep full control over the project. 

 

When their development process is too slow, they lack scarce or advanced expertise, or when they only need 1-3 experts, not the entire team to support the project, then the staff augmentation model can be the best choice. 

 

Pros: 

  • Quick access to developers 
  • Cost-effective 
  • Best talent pool 
  • Flexibility 
  • Full control over the project development 

 

Cons: 

  • Full responsibility 
  • Integration and management outsourced professionals 
  • Communication gaps 
  • Collaboration difficulties 

 

2. Project-Based Model:

 

This model is also known as the software outsourcing model. In this model, the software outsourcing partner handles the overall process according to the specifications outlined at the beginning of the project. The project-based model is more conventional and practical than the other outsourcing models. 

 

When companies have projects with no core expertise, they may hire a software outsourcing provider who can completely handle the software development process within the agreed timeframe. Under this model, companies maintain minimal control but can be kept informed on project progress regularly. 

 

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. 

 

Pros: 

  • Clear timeframes and results 
  • Time-efficient 
  • Complete accountability lies with the project manager 
  • Prompt recruitment process 
  • No micro-management 

 

Cons: 

  • Less control over the project 
  • Inflexibility 
  • The outcome may be good and well planned but does not comply with industry standards or best practices. 

 

 3. Dedicated Team Model:

 

In this outsourcing model, the supplier will provide a dedicated team of employees to work on your project. The team will consist not only of software developers but also testers, analysts, UI/UX designers, and project managers. Business owners share the responsibility to steer the project with the outsourcing partner. A dedicated staff is solely assigned to your project.  

 

Besides, the outsourced PM is responsible for the team. These developers are not part of your organization. Under this model, business owners and the team will agree on accountabilities, timelines, results, and scope. Moreover, it is crucial to communicate well to guide the project’s direction. 

 

Therefore, it’s in the best interest of the outsourcing company to manually choose a group of people who work great together and can lead to a successful outcome. 

 

Pros: 

  • Complete control 
  • Minimal risk 
  • Better communications 
  • High transparency 
  • More flexibility 
  • Agile development process 

 

Cons: 

  • Lengthy recruitment process 
  • More responsibility 

 

Further reading: OFFSHORE IT OUTSOURCING: FROM COST CUTTING TO GROWTH

 

II – How To Select A Right IT Outsourcing Model?

 

Business owners need to analyze all aspects of the project with the outsourcer. There are many factors when choosing an outsourcing model for your company. Below are some tips to help them determine the most appropriate model for your project. 

 

  • The reach of their project. 
  • The estimated time frame for the project. 
  • The preferred project management method. 
  • If the team may need to be augmented for the development process. 
  • The degree of technological innovation in the project. 
  • The number of flexibility companies needs. 
  • In-house team’s competencies and abilities. 

 

When drafting a contract with an outsourcing company, keep all these aspects in mind. Ideally, companies should get some help from their potential technical partner when making a decision. Describe their project, needs, time, and budgetary constraints. And be sure to mention whether companies have an internal team or not, as well as the level of flexibility that they expect. 

 

it outsourcing choosing

 

III – Guide For Choosing The IT Outsourcing Model

Which outsourcing model should a business choose? In fact, no one can give a cut and dried answer to this question. However, below is a guide for the right answer. 

 

Companies could consider the following and will soon arrive at which type of outsourcing model which apt for their business: 

 

1. Project Requirements

 

Before companies consider IT outsourcing, they need to understand their exact project requirements. Knowing their project requirements like the back of their hand will also help them avoid confusion as the project outsourcing and development progresses. 

 

Some questions to be answered are: 

 

  • What do companies hope to accomplish on project completion? 
  • What is the scope of their project? 
  • Which are the core features companies want for your final product? 
  • Have they set their project milestones? 
  • What are the deadlines companies have in mind? 

 

When business owners get a clearer picture of their project requirements, they will be able to analyze what type of outsourcing works best for them. Once they have found it, they will be able to hire the right team for their product development success. It will also help companies avoid costly mistakes in product development. 

 

2. Type Of Pricing Model 

 

Business owners need to fix a budget first and give some thought to the type of pricing model they want to adopt for the outsourcing services. Would companies prefer a fixed price model, a value-based pricing model, or perhaps a competitive pricing model? 

 

Once their budget is fixed, they can narrow down their search to the professional outsourcing agencies that fall in their budget range. 

 

3. Outsourced Project’s Dependency On The Core Team

 

Project management is no mean task, especially when it comes to outsourcing projects. All their teams must come together under one umbrella to work towards the end goal. There must be proper coordination and communication between team members. 

 

If the outsourcing partner and their core team both have a stake in the development process of the business owner’s project, then it is imperative that everyone’s work hours align. In such a case, companies should try to avoid offshore outsourcing, as the time zones will make proper coordination a chore. 

 

Once companies have determined their core team’s role in the project, they will get a clearer idea of what type of outsourcing model will align with their project needs. 

 

4. Type Of Relationship With IT Outsourcing Entity

 

IT outsourcing entities hold excellent customer service in high regard, as client satisfaction determines their next source of bread and butter. Companies need to set the level of interaction they want with their entity. 

 

Do business owners want to assign their project work and wait till it’s completed before initiating contact? Or do they want to be completely involved with their project development? The type of relationship they wish to maintain with their entity will also help decide on the type of outsourcing that will prove most feasible for the project management. 

 

See more: [2022] IT OUTSOURCING: TOP PROS, CONS, AND WAYS TO DEAL WITH

 

Conclusion

 

Now, when companies think about choosing the right model for outsourcing their developers’ team. The above-shared information will be very much helpful in getting decisions. Each model has some advantages & disadvantages. After all, they may have to take a call based on their requirements. Always go with the best price to quality ratio.

 

Innotech is one of the leading firms in outsourcing in Vietnam. With 14+ years of experience, we’ve been assisting startups and organizations of all kinds with software solutions. We improve workflow efficiency, address business issues, and aid in acquiring competitive strategy with cutting-edge tech stacks.

 

We are ready for long-lasting and be well-prepared for any model you pick up. So let’s contact our team of experts if you have any queries or concerns about outsourcing. We’ll be more than pleased to assist you!