At Trustify Technology, we have been working in the IT industry for more than 15 years and we often face the following situation. A business organization turns to software outsourcing to overcome in-house development problems such as limited team capacities, major software bugs, delays in delivery, slow down in development, or inability to keep up with technological change. However, the final outsourcing decision was often delayed by concerns about which outsourcing model to choose, as well as the loss of control over the development process or data protection concerns due to strict company security policies.
We will guide you through the software outsourcing models to help you choose the right model for your software development project. To explore the specifics of outsourcing for your potential software vendor collaboration, check out Trustify Technology’s IT outsourcing services.
These are the important factors to consider. In this article, based on Trustify Technology’s experience as an IT services provider, we share suggestions for mitigating the risks of IT outsourcing and implementing an effective outsourcing initiative.
Which Software Outsourcing Models Should You Choose?
In order to help you consider all the options available in the software outsourcing market, we have prepared an overview of three most common software outsourcing models: full-scale software outsourcing, dedicated team, and IT staff augmentation.
(Read more about: IT Outsourcing vs. IT Outstaffing)
The choice of the model usually depends on your specific business requirements. However, some outsourcing providers may offer you to stick to a certain model because it is more cost-effective for them or they have a limited range of outsourcing models to provide.
That is why we recommend that you define your outsourcing strategy before contacting your potential vendors.
IT Outsourcing Models
Full-scale software development outsourcing
Under this model, the vendor assumes full responsibility for the organization and management of the development team, the quality of the results and the associated risks of the project, ultimately taking over the entire development process. To see how this outsourcing model works in practice, check out the project we did for a fintech company in the US, where Trustify’s technology team covered all stages of the process, from business analysis to development to post-live support of the software solution.
Suitable for:
If you don’t have an in-house development team or lack the expertise required for a particular software to be developed, or if you are overwhelmed by other projects going on.
Pros:
- Less administrative and management effort required on your part and free time to focus on your core business tasks.
- SLAs guarantee specific specifications need to be met, as well as software quality and delivery times.
- Expertise in software development and best practices.
- The risks associated with the project are also handled by the vendor.
Cons:
- Takes longer to set-up than other models.
- There is less control over the development process compared to other models.
How to do it right from the beginning: Request a factual report and assign a contact point to communicate regularly with the vendor. For example་. Trustify Technology offers daily online meetings and weekly project updates report within this model.
Dedicated team (or managed team)
With this model, the vendor collaborates by having a dedicated team working on the projects directly (on an outsourced part of the project) alongside the internal teams and/or other vendors’s teams. The dedicated software development team shares the same risks and responsibilities. The dedicated team management is on the vendor side and the Project manager will regularly report the progress status to your Project manager (or the product owner ).
Suitable for: Customers who choose this option usually already have their own in-house development teams and processes in place but lack the resources and/or expertise in certain areas.
Pros:
- The dedicated software team is typically assembled by vendors; The team composition is adjusted according to the needs of the project. (by adding or removing members).
- Save time and effort in project management while maintaining full control over the project outcome.
- Faster to get the team up and running than full-scale outsourcing.
- Access to overall technical expertise and management.
Cons:
- The presence of new teams may cause disruption to existing development flow.
- Difficulties in communication are also an obstacle to achieving effective cooperation.
How to do it right: We recommend finding a responsible vendor who can connect and integrate and connect to your development environment without hassle, with all the necessary infrastructure in place for the project.
Staff augmentation (or team extension)
Under the IT staff augmentation model the vendors offer remote experts working on your project and you manage them directly.
Suitable for: when you already have an established development team but the development process is slow and/or you lack a certain specialized or advanced expertise. This model is also suitable when you only need a few extra resources (team members), and not a full team.
Pros:
- The actual number of software developers needed can range from just 0.5 to 100 full-time equivalent. Note that augmentation models in particular work best from 10 FTEs and above.
- It is suitable for both long-term and short-term collaboration. For example་. When you have a development problem which you need IT professionals with specific skills (e.g. Machine Learning, AI, Python, etc.) to solve it.
- The team size can be flexibly scaled up or down (with sufficient notice) according to your business needs.
Cons:
- You are fully responsible for the risks associated with this project.
- It is also your responsibility to onboard and manage the external experts.
- Lack of communication is an obstacle to effective cooperation.
Even though the management is on your side, it is recommended that you hire software developers from a trusted vendor that will help you monitor the performance of their employees and solve any problems to increase the quality of services you get.
Don’t fall into the trap of outsourcing
Regardless of the model chosen, there are general precautions you should take regarding outsourcing contracts which apply to all of the models:
- Signed NDAs can prevent leaks of confidential information. For security-critical applications, we recommend choosing a reputable software development vendor because they typically have more experience dealing with this matter and detailed security policies in place.
- Software outsourcing providers should record all deliverables in a common knowledge repository that you can retrieve at any time. And access to a task tracking system like JIRA will give you a much needed visibility of your project’s progress on a day-to-day basis.
Bonus: Decide on a pricing model
- Fixed price: You pay a predetermined price based on the time and effort estimated by your outsourcing partner at the initial period of cooperation. We recommend this model when you already have a software vision and you know there is very little chance that changes may happen in the future, like in waterfall projects.
- Time and Materials (T&M): Providers are paid monthly based on the total hours charged by the vendor. It is suitable for full-scale outsourcing of Agile projects, as well as dedicated teams and staff augmentation models, where the scope of work is often agreed beforehand, but the team size may change over time (scale up or down) according to development needs at the time.
How To Achieve a Successful Outsourcing Endeavor?
A suitable IT outsourcing model offers significant benefits: lower costs, optimized development process, and higher software quality. To make the right choice, you need to determine:
- Current development issues (slow development, lack of specific expertise, etc.).
- The level of control you are comfortable with (if you want full control, or share it with the vendor).
Once you’ve chosen a model, you can start short-listing and choosing vendors. We recommend limiting the number of potential vendors to 3 to 10, focusing on their credibility factors such as years of experience, professional credentials, previous case studies, and client’s testimonials. Trustify Technology offers all 3 outsourcing models, so we invite you to consider us as a candidate to help manage or strengthen your project or development process. Just send us a message and discuss the details.