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Development Outsourcing

3 Outsourcing Models, Explained

In today’s world, outsourcing is not just a cost-cutting option. It’s an integral part of business strategy and it’s increasingly the way that all businesses must incorporate into their resourcing strategy to succeed. In the increasingly difficult hiring market, outsourcing can provide you the necessary workforce to scale quickly and efficiently. Outsourcing also allows your organization to focus on what it does best, while leveraging outside resources to do what they do best. Organizations unfamiliar with outsourcing are usually apprehensive. One of the reasons for this is that they don’t know how to get started. Let’s start by first understanding how outsourcing can be taken advantage of within an organization’s broader strategy.

There are generally three different outsourcing models. Each one has its benefits and drawbacks. Depending on your business strategy, constraints and risks, one might suit your immediate needs better while others might be best for your long term goals.

Here are the three different outsourcing models:



1) New Product Development

If you’re looking to develop bespoke software, be it an internal business tool, integration into other systems, or creating a new digital product from scratch, this is the model for you.

With this model, the digital partner works with you to understand what you’re looking for, engages in a Discovery exercise to get details and then puts a proposal together that meets your business goals while balancing your risks, costs and timeline constraints.

They then provide a seasoned team, which includes Product Management, Project Management, Architecture, UXUI and Design, Development and Testing – all the necessary skillsets needed to create a digital product efficiently.

These engagements are usually for a fixed term, fixed cost and the scope is managed to fit these constraints. The partner helps you prioritize scope so that you get the best value in the product.

2) Retainer Agile Team

Every business has on-going digital needs. However, not every business has the ability to attract and retain great technical talent. You might have several digital initiatives planned for the year, but it neither justifies hiring for nor can you practically hire for the diverse skillets that might be needed. Having a digital partner provide a seasoned team,  leading the projects and delivering throughout the year is a proven and effective solution. With this type of model, an engagement manager typically works with your business unit to understand the immediate and long term goals and then works with your internal team to plan, execute, deliver and support these digital initiatives. By working closely with your leadership, the can plan for the different skillsets needed throughout the year and ensure projects are delivered on-time, on-budget and efficiently. With a fixed monthly budget, costs are easy to plan ahead for and the ROI easy to calculate.


3) Staff Augmentation

Startups and fast growing organizations can have a hard time keeping up with hiring technical talent. They have a pressing need to hire different skillets and cannot hire qualified resources fast enough. Using resources from a digital partner to augment an internal team is an effective strategy. This can be skillet based, taking on individual resources and managing them internally, or hiring a team and giving them specific areas of development. For example, often a good way to start a new relationship is to outsource quality assurance, allowing your team to focus on adding features. Another effective strategy is to outsource to a cross-functional team that helps maintain your existing product line while the internal team focused on the the next major version.

The best way to get started is to start a discussion with a digital partner. Start by reflecting on what your business needs, find a good partner and discuss this with them in detail so they can set you up for success. Often, with their experience, they can come up with suggestions that might be more effective and efficient.


Jason Shultz

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