IT outsourcing is a strategy based on the analysis and evaluation of functions that should be better performed by an external service. The company identifies tasks that are difficult or impossible to perform on its own, hires experts with all the necessary resources to solve these tasks on time. This is one of the fastest-growing in the industry. According to experts from Deloitte, it is expected that the market will reach $ 397.6 billion by 2025.
According to Clutch, 8 out of 10 small companies are planning to outsource their business processes to IT in the next two years. For start-up companies, IT outsourcing can be an excellent solution for solving problems of reducing financial and time costs at the early stages of development.
There are 3 types of business models in IT outsourcing, which are determined by the way of cooperation and the result. Next, we will look at the pros and cons of each of these models:
1.Project-Based Model
This model is used when the software outsourcing partner manages the process according to predefined tasks and time frames. The project manager from the outsourcing team is fully responsible for the quality and performance of the project. This model is suitable for companies that have little experience in software development and a clear idea of the product they want to create.
Pros:
- clear time frame and result;
- saving time;
- fast recruitment process;
- lack of micromanagement;
- all responsibility lies on the shoulders of the project manager.
Cons:
- less control over the project;
- lack of flexibility;
- the result may be good and well-planned but does not meet industry standards or best practices.
2. Dedicated Team Model
In this model, the client hires a special team for the project, which will be involved only in this project, becomes a technical consultant and product consultant, and can offer ideas and alternative solutions. The team will consist not only of software developers, but also testers, analysts, user interface/UX designers, and project managers. In this case, the customer shares responsibility for project management with the outsourcing partner. This model is best suited for early-stage startups, complex long-term projects, and projects with many uncertain requirements. If you want to test your idea, find a suitable product for the market, or create an MVP to test the market, then you need a special team.
Pros:
- flexible development process;
- working with professionals with the best expertise in your industry;
- the final product will meet the requirements of your industry and solve the problem;
- lack of micromanagement;
- full control.
Cons:
- long hiring process;
- more responsibility for the project.
3. Outstaff Model
This is a kind of outsourcing when you do not need a full-fledged development team, and you hire only 1-3 separate experts. These outsourced experts become part of your in-house team and collaborate with your employees. The outstaff model of IT outsourcing is best suited for short-term projects, as there is a risk that your outstaffers may change over a long period.
Pros:
- no need to hire an entire team;
- quickly close the gaps in the project;
- cost-effective;
- the best talent pool;
- full control over the project.
Cons:
- long search and hiring process;
- more time for adaptation;
- full responsibility.
To choose a suitable outsourcing model, it is necessary to analyze with a potential partner such aspects of the project as the reach of the project, the estimated time frame, management method, degree of technological innovation, degree of flexibility, competence, and the expected result. When drawing up a contract, it is necessary to take into account all these aspects.
At Openix Solutions, we successfully use all business models under the tasks set. Our experts are always ready to advise, help evaluate, develop a project and offer the best solution and team.
