Software Outsourcing Models for the New Normal

Software Development
The benefits of offshore development are many, and include cost savings, flexibility, speed of delivery and allowing an organization to focus on core activities like sales and operations.
Nicolás Rojas
September 28, 2020
Software Outsourcing Models for the New Normal

Software development outsourcing and IT related services has become one of the fastest growing industries worldwide. Offshore provision of IT services has been fueled by the many advantages it presents for companies of all sizes and industries. The benefits of offshore development are the same as general outsourcing - cost savings, flexibility, speed of delivery and allowing an organization to focus on core activities like sales and operations.

With the recent changes in the economic landscape and sudden shifts in industries worldwide introduced by COVID, organizations must be prepared to deal with uncertainty and change like never before. Software development outsourcing is a powerful tool for companies to embrace change and prepare for the shifting economy.

Two specific ways in which outsourcing can provide value for companies are:

  1. Flexibility: With the uncertain economic cycles faced by companies in 2020, it was common practice to perform layoffs in all areas of businesses. With software development outsourcing, companies can plan, budget and hire for their current needs, and are able to scale their teams up and down easily.
  2. Remote collaboration: The main takeaway introduced by COVID for many companies is that remote work is possible and a sustainable option for the work force. With remote work, companies are able to tap into the worldwide talent pool to source their talent. Cost savings are brought to the table as companies will be able to hire top talent from locations where the cost of living ensures competitive salaries.

Now, what are the different models in which a company can engage with a software development outsourcing company?

1. Dedicated teams

Most companies have in-house technical capabilities. However there will always be the need for more specialized skills, for a company to innovate and maintain its competitive edge. Specialized skills in high demand are mobile app development, cloud architecture, quality assurance engineering, agile specialists and fullstack development. With a dedicated team engagement, the outsourcing company puts together a team with the required capabilities and they start working for the client on any and all requirements that may come up. The dedicated team ensures management, operational and delivery capabilities, so the client can rest assured the team will self organize to deliver the projects demanded by the marketplace. Rates are set depending on the skills and capabilities of the team.

2. Staff augmentation

A staff augmentation approach is very similar to a dedicated team, with the exception that managerial activities are handled by the client company. This means the client must have solid IT management capabilities in-house. The outsourcing company provides the operational and delivery talent to be managed by the client.

3. Project based consulting

This is the most common engagement format for small companies. Whenever a project is planned and scheduled for execution, the outsourcing company will create a plan, assemble a team and develop the project from ideation to production deployment. Rates are set for the duration of the project and future engagements are handled on a per-contract basis.

Conclusion

Software development outsourcing has been vital for companies the past couple of decades. The benefits of engaging with an outsourcing partner include cost savings, flexibility and speed of delivery. COVID has proven that remote work is viable and has highlighted the importance of flexibility for companies. In the new normal, companies must be prepared to deal with uncertainty and offshoring is a great tool to help them accomplish their objectives.

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