Software Development Outsourcing Models and Benefits Explained

Software development outsourcing is the new business model that enables organizations or software companies to delegate part or all of their development work to a third party.

As we move into 2023, the trend of outsourcing software development continues to rise, with businesses seeking cost-effective ways to maximize their software development efforts and deliver innovative, high-quality software products.

By the end of 2023, it is expected for the IT and software outsourcing segment to reach a revenue of US$460 billion.

Outsourcing provides an attractive option for companies to access skilled professionals from around the world, which accordingly enhances operational efficiency and contributes to delivering high-value products and services.

In this article, learn about software outsourcing, its benefits, trending models, and how to choose between them.

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What Is Software Development Outsourcing?

Let’s break down this term into two parts, Software Development and Outsourcing:

At its core, “software development” involves the creation, design, testing, and implementation of software solutions to address various business needs.

This encompasses a wide range of applications, such as web and mobile apps, enterprise software, and cloud-based platforms. The development process requires meticulous planning, coding, quality assurance, and continuous improvement to deliver innovative and user-friendly software.

Outsourcing”, as a broader concept, involves delegating specific tasks or functions to external service providers. Companies opt for outsourcing to leverage the expertise of external entities, reduce costs, and enhance operational flexibility. 

So, in software development outsourcing, businesses collaborate with third-party vendors to handle their software development projects.

For Whom?

Software development outsourcing is a universally applicable model, as software development plays a crucial role in virtually every industry, contributing to their growth and efficiency. 

So, answering the question of who should go for software development outsourcing? The answer is, it’s for you if you’re a software provider and you need to reduce costs, offload work from your core team, extend your team capabilities, or start a new project that requires special skills and experience. 

Simply put, software development outsourcing offers significant advantages to both customers and employees. For customers, it translates into better quality products delivered in less time. Simultaneously, for employees, it frees up valuable time, allowing them to concentrate on core tasks.

And also it’s beneficiary for investors and business owners because they get to improve operational efficiency and eliminate obstacles and roadblocks from their business workflow.

What Are The Most Common Types Of Software Development Outsourcing 

Outsourcing models vary and can be somewhat interconnected because some are based on location, while others are based on the relationship between the provider and the clients.

Now, let’s detangle these models so you can differentiate between them and find out which one best fits your needs.

1. Location-Based Models

On-premise Outsourcing: 

It is the model of hiring an outsourced caliber or team and having them work from your own office.

In this case, the outsourcing provider handles the onboarding and training, ensuring the new resource seamlessly blends with your in-house team.

Onshore Outsourcing:

In onshore outsourcing, you get software outsourcing services from a provider operating in the same country but not necessarily in the same location or city.

This model overcomes language and cultural barriers and ensures smooth communication and traveling between the outsourced team and the company’s location.

Nearshore Outsourcing:

With the nearshore outsourcing model, you hire a software development outsourcing company in a neighboring country.

This model minimizes the time zone difference and guarantees easy traveling between the locations for both parties.

Offshore Outsourcing:

This model has no limitations because it involves working with a team almost across the world. This can be either in China or India.

Although this model offers much lower rates, it can be challenging to get high-quality work from talented resources due to language and cultural barriers.

Among all these models, nearshore stands out as the ideal choice. Offshoring may present numerous language and cultural obstacles that can impede the overall process. However, nearshore combines the advantages of cost savings, seamless communication, and smooth navigation, while also overcoming any language or cultural barriers.

Confused Between Models and Need an
Outsourcing Provider to Help You Make
the Right Decision?

Download our whitepaper “A Checklist to Choosing the Right Software Outsourcing Provider” and choose your outsourcing partner with confidence.

2. Relationship-Based Outsourcing Models
(Team as a Service)

Staff Augmentation:

Staff augmentation services help you extend your in-house team and boost your team’s capabilities. You might assume that this is similar to hiring a new resource, but the key difference is that this resource is a third party, not one of your employees. 

By getting this resource through outsourcing, you effectively remove a multitude of responsibilities such as hiring and training from your plate, you just get a talented professional who is ready to join right away.

It’s also worth mentioning that staff augmentation can be on-site or remote, making it an option to hire an augmented staff in another country.

Project-based Model:

This model is particularly suitable when your company experiences an overflow of work and projects that exceed your in-house team’s capabilities or involves managing custom software development projects with highly specialized requirements.

In such cases, it becomes essential to enlist the expertise of an external team to handle the project on your behalf over the long term.

The project-based model is one of the most popular models because you don’t have to keep an eye on the project challenges, management, and risks.
However, with fewer responsibilities comes the disadvantage that you have the least control over the project.

Managed Team Outsourcing:

In the managed team model, also known as “dedicated team”, you hire a cross-functional dedicated software development team exclusively on your project.

This is unlike staff augmentation, where you can hire multiple resources for various projects. 

And unlike the project-based, this model offers more governance and control, with the team directly reporting to your project managers. So you get full control of the project.

If You’ve Made up Your Mind on any of these Models, Contact Us Today and Learn about Our Outsourcing Services and Capabilities.

Now, after exploring these different software development outsourcing models, if you still have any doubts about what you should go for, find out next the key benefits of software development outsourcing.

Summing Up The Software Outsourcing Benefits You Don’t Want To Miss

We’ve come across multiple benefits of software development outsourcing in this article but here, we will sum up them all! 

  • Get the chance to access a diverse talent pool of all specialties from around the world.
  • Minimize your core team workload to focus on the business’s value proposition
  • Reduce hiring costs, time, and effort.
  • Get optimized work quality crafted by high-profile experts.
  • Ensure easy scalability.
  • Get full-time professional support around the clock.
  • Hire local resources who speak your own language. 

By understanding these benefits, you can now discover asgatech’s process for providing software development outsourcing

asgatech’s Manpower Outsourcing Process

1. Identifying Outsourcing Requirements

We begin by defining your outsourcing goals and model, gathering your requirements, and conducting in-depth research and analysis to pinpoint your needs in terms of capacity and skills.

2. Selection and Outsourcing

After the planning phase, we carefully select experts with the required talent and capabilities, directing them to their assigned roles and responsibilities before the official start date.

3. Outsourcing Implementation

Once the outsourced caliber starts, we ensure that the teams implement the most effective practices and latest technologies to manage your projects with agility and efficiency.

4. Performance Monitoring & Support

We monitor our outsourced team performance using KPIs and provide real-time performance reporting to fully realize our people’s capabilities.

Final thoughts. We believe that software development outsourcing will continue to evolve, with the adoption of advanced software development technologies, such as Artificial Intelligence (AI), Machine Learning (ML), and the Internet of Things (IoT). 

And at asgatech, we’re equipped and ready to empower businesses with these cutting-edge outsourcing models and robust solutions that boost their businesses’ performance and agility. 

Join our network now and kick-start your software development outsourcing with asgatech. 

Set Your Outsourcing Needs And Goals Now
In Collaboration With Experienced Business Analysts And Outsourcing Experts From Asgatech.

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