4 Models of Outsourcing IT You Should Know

As more and more companies launch digital transformation programs and build custom software, the demand for skilled developers is higher than ever. But in many regions of the world, building an in-house development team is expensive and time-consuming. That’s why so many businesses are turning to IT outsourcing opportunities.

Thanks to our outsourced teams, they get to benefit from top talent acquired and managed by providers that specialize in outsourcing IT services. 

If you’re wondering whether IT outsourcing is a good match for your needs, take a look at these 4 IT outsourcing models and learn more about the benefits they offer.

1. What is outsourcing? Project-based IT outsourcing

In this model, you delegate the full responsibility for building an application to the IT outsourcing provider. You’ll still be one of the key stakeholders in the project and retain some control over it, but it’s the development team that decides how to build your product. 

Pros of project-based IT outsourcing:

• You don’t have to dedicate any time or energy to managing your project. 
• You spend no time on recruitment. 
• No worries about salaries, perks, and benefits, workspace, or administrative costs. 
• You get a project manager assigned to your project. 
• Teams offer detailed project reports and include you in project demos. 
• Sometimes you can even manage a team directly. 

When to choose project-based outsourcing IT?

This model is popular among startup founders who have no technical knowledge or companies with limited technical capabilities that still want to take advantage of the latest technologies to build amazing products or internal tools.

2. IT staff augmentation / team extension

In this model, you hire specialists via an IT outsourcing provider and then manage them directly. This helps to gain more control over your projects. You can choose from candidate resumes proposed by the agency and check whether they match your requirements – not only in terms of technical skills but also cultural fit. 

Pros of IT staff augmentation / team extension:

• You get talented and skilled experts on a short and long-term basis. 
• Full flexibility – you can scale your team up or down within days or weeks.
• You can easily replace developers from your project without spending any extra resources.
• No administrative costs – developers are still employed directly by your vendor. 
• You get developers dedicated exclusively to your project. 
• Your internal team can become far more productive. 

When to choose IT staff augmentation / team extension? 

This model is a good choice if you have an in-house development team working on a project and you want to develop a part of it faster. It also comes in handy when you work on a project with an external team and need extra engineers to speed up the process. If project-based IT outsourcing isn’t a good match for your needs, staff augmentation is a great match – for example, if you’d like to directly communicate with the team and get to know team members to better integrate them with your in-house team.

3. Dedicated team

Companies that need new technical skills can work with IT outsourcing providers using this model. Dedicated teams are provided on a long-term basis, and team members are chosen carefully to match the project requirements. The dedicated team model works well in projects where the duration and scope might change. 

Pros of a dedicated team

• You get access to top talent from around the world. 
• You team up with experts with established work processes who have previously developed projects together. 
• Since team members are used to working together, everyone will be working at 100% efficiency from day one, without wasting any time on the onboarding process. 
• No need to invest time and money in sourcing, attracting, recruiting, and onboarding new team members. 
• No need to cover costs such as private healthcare paid leave, hardware, software, and benefits. 
• Full scalability and flexibility – you can quickly scale your team up or down to address changes in your project’s requirements. 
• Transparent management of resources – dedicated teams usually use tools for remote task management and time tracking, so you can manage your team efficiently and evaluate the project’s progress on your own. 

When to choose a dedicated team? 

This model is a good solution for projects that are large and complex, with scope and timeline likely to change. Hire a dedicated team if you’re not sure what the future project deliverables will be and what their requirements are.

4. IT body leasing

In this model, the vendor finds employees for you. That way, you can take advantage of specialists in a strictly defined timeframe – sometimes even on specific days of the month in the case, your in-house team needs an extra boost. In the body leasing model, specialists are hired for you, but they sign a contract with a vendor. It’s the vendor’s job to negotiate the terms of these contracts so that they meet your needs. However, you are still the one to choose the people who will become part of your team. 

Pros of IT body leasing:

• You can focus on mission-critical tasks instead of recruitment.
• It’s a cost-effective and flexible model for hiring new resources.
• There’s no need to involve your staff or internal HR team in the recruitment process.
• All the administrative hassle of hiring people is off the table. 
• The only thing you need to do is verify and accept the reported number of hours.

When to choose IT body leasing? 

When you need to quickly find developers with specific technical skills but have no time to invest in recruiting (and still want to have full control of your team).

We hope that this article helps you understand the IT outsourcing options out there and check whether any of them match your current needs.

We have delivered successful IT outsourcing projects following various models and have the knowledge and know-how to help your project succeed.