Different Types of Outsourcing Models You Need to Know

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Olga Demidenko
Author, Geomotiv
Published: Apr 29, 2022

Remember the last time you had to provide an immediate replacement for a skilled professional in your in-house team. It probably laid a heavy burden on administrative resources and required significant investment the next day.

Indeed, some companies can deal with that situation and pour their abundant money resources into gearing internal teams. But what if the local area lacks experts with rare or specific expertise in cutting-edge techs, and you have to look outside and explore international hiring waters?

In this case, outsourcing can become a universal answer to any query. So, no matter your company's goals, you can fill in resource gaps by hiring tech talents from a top software development outsourcing vendor

Outsourcing comes in various forms and models to meet the different needs of clients around the globe. This article wants to explore the types of outsourcing models and determine which ones to choose for a particular project.

Types of IT outsourcing models

Broadly speaking, there are two main types of outsourcing:

Location-Based Outsourcing
OnshoreNearshoreOffshore
You work with a team residing in the same country as your local team, but in
a different region
Your remote team is located in the neighboring regionThere’s quite a distance between you and an outsourcing team

When a physical location is a decisive factor, companies can choose between offshore, nearshore, or onshore IT outsourcing models. You can read our recent article dedicated to the topic to know their differences. In that piece, we explored their peculiarities and completed a head-to-head comparison of their distinctive features.

In short, it depends on how far away from the core team you will hire tech talent. Besides, geographical proximity should be considered, service costs, and the ability to find a trusted IT outsourcing partner. Not sure how to choose one for your case? Here’s our guide to finding the right software development vendor.

Role-Based Outsourcing
Full outsourcingDedicated teamTeam augmentationManaged IT services
The client hands the entire project workflow to the vendor’s development teamThis model allows hiring teams with the necessary tech skills and proficiency to work independently on the predefined scope of the projectTeam extension is a way to access temporary talent with rare or advanced expertiseIt is a type of business process outsourcing that suggests managing the entire IT operations and technologies on behalf of a vendor

Full outsourcing

This model presupposes that the client hands the entire project workflow to the vendor’s development team. They agree on the deliverables and timelines and set the procedure for communication and reporting. As a rule, the frequency of these procedures is negotiated before signing the contract.

The client and the vendor agree on project requirements and draft a specification as a point of future reference for the executor. The vendor takes full responsibility for project launch, management, and delivery while the client has little involvement in the process. They can appoint their PM and let them communicate with the IT vendor’s project manager.

Full outsourcing model: quick facts.

Summary: The client entrusts the development process from planning to release to a chosen service provider. A vendor takes responsibility for the project and manages associated risks.

Best for: companies with overloaded teams or those lacking software development teams in-house.

Main pros for businesses: no distractions from core activities; reduced expenses; complete alignment with pre-negotiated timeframes and requirements.

Dedicated team

This IT outsourcing business model allows hiring teams with the necessary tech skills and proficiency to work independently on the predefined scope of the project. For example, if your in-house team lacks the required expertise or is overloaded with other tasks, the dedicated team can work fine. Besides, it allows for retaining proper control over the team and owning all the code produced. 

The vendor provides a dedicated project manager who is in charge of supervision, reporting, and other management efforts. Moreover, your IT partner is expected to take full responsibility for the hiring and onboarding of the outsourced team. Eventually, it gets down to working solely on the project without integrating it into the company’s internal operations.

Dedicated team outsourcing model: quick facts.

Summary: The client hires a cross-functional team to work on the specific project or its part. The vendor manages the entire team and provides a transparent review of the processes and deliverables to the client.

Best for: companies that want to avoid massive overtime or lack specific expertise but want to retain complete control over the processes.

Main pros for businesses: transparent project-wise activities; access to relevant tech expertise; no need to invest in project management.

Team augmentation

IT staff augmentation is also called team extension and is one of the most optimal ways to access temporary talent with rare or advanced expertise. To ensure its success, you need to engage a trusted IT outsourcing provider that will go through the sourcing, hiring, and onboarding processes. You, as a client, are expected to approve the most appropriate candidate to join the team.

Consequently, you will get external specialists that will work as part of your in-house team and report directly to the management. When a business needs to change and you need to scale up or down, this outsourcing model provides an easy way to adapt to the situation.

Team augmentation model: quick facts.

Summary: The client quickly ramps up necessary resources to work as part of their in-house team.

Best for companies that go through rapid expansion and those lacking specific skill sets.

Main pros: lack of HR-related hassles and administrative efforts; quick team ramp-up; access to top talent; complete control over the development process.

Managed IT services

It is one type of business process outsourcing that grants the utmost level of autonomy to an outsourcing partner. It means managing the entire IT operations and technologies on behalf of a client. From creating the proper IT infrastructure to subsequent support and maintenance, the managed team is the one to rule them all.

Besides, project management is also the vendor’s area of responsibility. Moreover, the remote IT partner is the one to decide on the pool of technologies and services that are needed to fulfill ongoing and strategic goals. The client, in turn, can concentrate on other business-critical tasks and improve their bottom line, customer service, and operational agility.

Managed IT services: quick facts

Summary: The client entrusts the entire IT-related landscape to a managed team led by the vendor’s project manager.

Best for: companies with no expertise in IT-related activities.

Main pros: ease of business scalability; access to top talent with rich tech and business expertise; reduced costs.

Let’s summarize the main points for a quick reference:

Full outsourcingDedicated teamTeam augmentationManaged IT services
IT expertisenot obligatorynice to havenecessarynot necessary
Client’s Involvementlowmedium highminimum to no
Controllittlemedium highminimum to no
Flexibilitymedium to lowmedium highmedium
Team scaling abilitieslowhigh highlow
Responsibilityservice providermixed or sharedclientservice provider
Management effortsservice providermixed or sharedclientservice provider

Which one of the discussed IT outsourcing models can work for your case? There is no universal answer to that question. Yet, the above considerations can swing the pendulum to one side or another. If you are still unsure which type of outsourcing to choose, engage Geomotiv.

With us, you will be able to slice and dice development costs by 50% and achieve excellent results faster! Entrust your IT operations to our talented team, ready to work according to one of the outsourcing models.

How we set up cooperation

  • The work begins when you’ve reached out to us. Our specialists get to know the most crucial project requirements and analyze them from business and technical perspectives. Next, we schedule a call with you within 24 hours. Next, we negotiate engagement principles and decide on cooperation models that would work for both sides.
  • Then, depending on the type of outsourcing model, we get down to searching for relevant candidates or assembling a team on our side. Based on the chosen cooperation strategy, we can provide fully managed or dedicated teams that report to you directly.
  • Next, we prepare an SLA with specified project scope, timeframes, and the budget. Then, we negotiate mutual communication guidelines, set up the reporting hierarchy, and provide a continuous onboarding process.
  • Finally, our specialists or teams get down to work on the project.

To learn more about our offering, don’t hesitate to contact us. Just share the details regarding the future tasks, and we’ll come up with the most optimal solution.

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