Compare software development outsourcing models to help you choose the right one for your specific project requirements
By 10Pearls editorial team
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Software Development Outsourcing Models: Your Complete Guide
Numerous pain points drive a company to outsource software development to an outside firm, including cost, a lack of local talent with the required expertise, and severe time crunches. Often, a project is simply too complex for internal teams to manage alone, or there isn’t enough time or budget to hire and train new project managers, engineers, or other key roles.
Since each company has unique reasons for outsourcing, various outsourcing models are available, allowing businesses to choose the one that best fits their specific needs and goals. According to your specific requirements, there are multiple engagement models and outsourcing destinations to choose from. This guide compares software development outsourcing models to help you choose the right one for your business.
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A guide to software development outsourcing models
Software development outsourcing companies typically offer three engagement models: project-based, managed team, and team augmentation. Outsourcing models can also be defined by the location of outsourced teams: onshore, offshore, and nearshore. 10Pearls offers a fourth option, rightshoring, that combines the best elements of all the rest.
- Doesn’t require any internal expertise
- Can help meet accelerated deadlines
- More expensive than managed or augmented teams
- Less control over development practices
- Enables multiple simultaneous releases
- Allows internal teams to focus on business-critical tasks
- Requires an internal project manager to act as POC
- Alignment between teams and technologies can be challenging
- More cost-effective than hiring a full team
- Can fill specific experience gaps faster than hiring internally
- Involves more collaboration, making language fluency critical
- Requires more in-house resources
- Provides greater control over development and security
- Language fluency, proximity, and workplace cultures facilitate easy collaboration
- Typically more expensive than other models
- High demand for tech talent can make it harder to find onshore experts
- Often significantly less expensive than other models
- Large overseas talent pools make staffing quick and easy
- Language fluency may vary by team
- Time zones make real-time oversight and collaboration challenging
- Overlapping time zones and languages allow for smoother collaboration
- Provides access to a large and highly educated tech talent pool
- Regional instability makes choosing the right country critical
- Can be more expensive than offshoring depending on the country
- Allows companies to choose the right outsourcing model for each individual role or task
- Maximizes cost savings without sacrificing outcomes
- Unique approach only offered by 10Pearls
Project-based outsourcing
Project-based software development outsourcing involves hiring an external team to handle every aspect of a specific project, such as a technology migration or new application build. The outsourcing partner handles project management, planning, design, software development, QA testing, and everything in between. This outsourcing model is ideal for projects with a fixed timeline and achievable, measurable outcomes, e.g., migrating a monolithic on-premises application to a cloud-native architecture in AWS within 12 months.
Managed team outsourcing
A managed software development team engagement involves hiring a team of outsourced software developers/specialists to work on a specific feature or release under the oversight of an internal project manager. Often, this project manager acts as the point of contact between the external team and internal stakeholders working on other aspects of the same project. This outsourcing model works best for complex projects involving multiple simultaneous software development releases.
Team augmentation outsourcing
The IT team augmentation model involves hiring one or more specialists to fill specific experience gaps in an in-house IT team. This often occurs when a company wants to accelerate new product development, adopt or migrate to new technology, or when a highly specialized tool or programming language is needed for a specific feature that the in-house team lacks expertise in.
Onshore outsourcing
With the onshore software development model, the outsourced team operates from within the same country as the company hiring them. Onshoring enables close – even in-person – collaboration between internal and external teams who share language fluency and workplace norms. This makes onshoring ideal for business-critical projects that require a high level of compliance and security. Onshoring software development is typically more common for heavily regulated industries like healthcare and financial services. However, depending on the location, onshoring can be very expensive due to the higher cost of living and demand for technical expertise.
Offshore outsourcing
Offshore software development outsourcing involves hiring a team operating from countries that are farther away, often across different continents. Offshoring is usually the least expensive outsourcing model, though it depends on the country. For example, Pakistani developers tend to be more cost-effective compared to Polish developers due to a lower cost of living and a larger talent pool. The variable cost of offshore outsourcing makes it an accessible option for many businesses.
Nearshore outsourcing
In the nearshoring software development model, an organization outsources to a team that’s geographically close while still being in another country. In the United States, this includes countries in South or Latin America, such as Costa Rica, Peru, Colombia, Brazil, or Argentina. Nearshore teams are usually within a couple of time zones and share some language fluency and workplace norms with internal teams, and the pricing tends to fall somewhere between onshoring and offshoring.
Rightshore outsourcing
Rightshoring software development is a new approach that blends the best aspects of all other models. In a right-shore engagement, companies can keep key processes onshore or nearshore to ensure oversight and collaboration while outsourcing technical roles to a more cost-effective offshore or nearshore team. This customizable option allows companies to balance cost savings and oversight, which results in improved outcomes and a faster ROI.
How to choose the right outsourcing model for your business
The choice between project-based, managed team, and team augmentation outsourcing depends primarily on what the exact project is and what internal resources you have available.
If you don’t even know where to start with your project and you don’t have any internal resources to commit to it, then project-based outsourcing may be right for you. If you have an internal development team that is already committed to other aspects of your project, hiring a managed team for specific (usually less critical) features is often the best choice.
If you already have an IT team capable of handling most aspects of the build, but there’s a very specific technology they lack expertise in, then team augmentation is the fastest and most cost-effective approach.
Choosing the ideal software development outsourcing destination can be trickier. Onshoring enables close oversight and collaboration, and it can make third-party risk management (TPRM) and data privacy compliance a little easier, but it’s usually significantly more expensive than other outsourcing destinations. Offshoring software development is the most economical option, but the lack of oversight and the potential for miscommunication must be mitigated by working with a trusted outsourcing partner. Nearshore software development teams are highly educated and usually easy to collaborate with. To optimize your software development outsourcing strategy, consider the political stability in key nearshoring locations to ensure a smooth and reliable partnership when choosing a country to outsource to.
The advantages of software development outsourcing with 10Pearls
10Pearls is the only software development outsourcing company offering custom-tailored rightshoring services to meet your unique project requirements. With offices in the US, UK, Pakistan, and Latin America (Costa Rica, Peru and Colombia), we can offer the top tech talent in the regions best suited to your price range and time zone.
10Pearls outsourcing advantages
Cost efficiency
We use our rightshoring software development approach as well as highly efficient, agile CI/CD development practices to keep costs low and maximize the value of your engagement.
Operational efficiency
Our onshore, offshore, nearshore, and rightshore offerings enable 24-hour development and support cycles.
Accelerated delivery
With our global reach and efficient practices, we can help you get your product to market faster to accelerate your ROI.
Technical innovation
We hire top talent from all over the world, with expertise in artificial intelligence (AI), machine learning (ML), IoT, edge computing, cloud-native development, and other emerging technologies.
Collaborative development
Our teams use transparent development practices and your choice of collaboration tools to reduce silos and streamline communication.
Make 10Pearls your custom software development outsourcing partner
10Pearls is a leading software outsourcing company because it combines onshore, offshore, and nearshore offerings, an approach tailored to your organization’s needs.
Our rightshore strategy integrates different outsourcing models to create the most effective and efficient team for your project.
Whether you require the proximity and cultural alignment of onshore teams, the cost advantages and expertise of offshore teams, or the balance of cost and quality offered by nearshore teams, we leverage our global talent pool to provide innovative solutions and guarantee superior results.
Reach out today to discuss your project with one of our software development experts.
Custom software development
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