Software Development Outsourcing Models: Which one to use and when

Are you a company in the post pandemic period and are struggling to keep up with demand? Are you looking to expand your IT department to meet this demand? Do you need an efficient and easy fix for your problems? Luckily, despite the increased challenges in 2022, there are many solutions to augment and extend your IT team immediately without the added costs and time to hire new employees.

This article will outline how the fix cost, staff augmentation, and team extension models work and which model will best service your needs, especially as companies face the additional challenge of staffing shortages in this post pandemic period.

Fixed Cost Model

The fixed cost model is what most companies use to outsource IT work. This model can work if the client and the outsourced team have worked together in the past and there is a good understanding of each other’s processes and culture. The fixed cost model is ideal if the project is well understood by the client and both the client and the outsourcing team know the obstacles and costs of the project.

That being said, It almost can never work if it is the first time you are working with an outsourcing company. If it is a first-time project, there are many variables that the outsourced team needs to adjust to such as the specifications of the project, the apps available, and the outsourced team needs to adjust to the work culture of the client team. The fixed price model is not ideal especially if you are not fully aware of the amount of work that is needed to complete a project. If you are unexperienced in outsourcing, costs can be unexpectedly higher due to misunderstandings between the client and the outsourced team.

Read more about when to use a fixed cost model by reading our article: “Why does outsourced engineering fail? (And how do you make it better?)”

Staff Augmentation

Although similar to the team extension model, Staff augmentation is focused on filling gaps within your team. This model is ideal if you need to hire external engineers, generally on a Time and Materials contract basis. This model is easily scalable and it benefits those that are looking for flexibility. This model is ideal for those who are looking for additional experts to develop another part of their product. The staff augmentation model allows a greater degree of efficiency compared to project based outsourcing models.

Unlike the team extension model, the project is being completely managed at your company while the outsourced employees are external developers. This model is ideal if you have had previous experience but it can cause problems while communicating and relatively small issues can lead to bigger issues down the road.

Read more about the different types of outsourcing models by reading our article, “Software Outsourcing as a Response to The Great Resignation.”

Team Extension

The goal of the team extension model is to do exactly that- extend an existing team by integrating an outsourced team into the project. This model works best when you want to expand a project in the future and you plan for the inhouse team to support it. It is also great if the project is unusual and you do not want to shift your inhouse workers to work on this project, or there is an expertise gap that needs to be filled and the recruitment costs and time would affect the project greatly. This model allows a company to have complete control over their project due to the outsourced team being completely integrated as one cohesive team.

Serengeti’s unique and proven Team Extension Model makes this the most viable option for many clients. Serengeti’s team extension model consists of three phases: the onsite phase, the transition phase and the offsite phase. Each phase has proven to help companies tackle the lack of expertise their company has, the growing backlog they may have and there is significantly less time spent on these 3 phases than is spent on recruiting and training new employees. 

In the onsite phase, our senior experts, also known as “Ambassadors”, spend time with you and get to know you. During this phase, our ambassadors familiarize themselves with your corporate culture, application functionality, programming technologies, tools and development, and management methodologies. Our “Ambassadors” understand you and help to bridge your team with the new extended team.

During the transition phase, our ambassadors move offsite and lead the project. This is when teams are formulated and we plan and solve any issues that may arise. The focus in this phase is to create a high performing team and create autonomy for our team leads. By the end of this phase, your core, self-managed team is ready for any tasks that may come their way.

In the last phase, we start doing the work. We become a flexible, reliable and scalable team that you can consult with any time. With our vast industry knowledge, we are able to assist you and your company in implementing new technology trends to resolve your inefficiencies.

Watch how our team extension model can best benefit you.

Overall, the team extension model is beneficial as you can access an international talent pool, there is flexibility and transparency managing your project, the external team works with your inhouse team as one cohesive unit and you are able to consult with industry experts just like if they are inhouse employees. For most companies, this is the best model for their outsourcing needs as it avoids the hassle of hiring during a time that is already hard to retain and keep workers.

Conclusion

In conclusion, depending on how big your project is and whether or not you have had experience with outsourcing, it will greatly affect which model you choose. For most short term and concise projects, the staff augmentation and price fixed models will be more than sufficient. But if you have a bigger project which needs a lot of coordination and flexibility as well as if you are unsure about how to outsource your project to render the best result, team extension is the way to go. It is better to buy the best and only cry once.

The right outsourcing model is one of the essential items for a successful collaboration, but it is not the only one. Find out in our Checklist which other criteria are important when choosing an outsourcing partner.