Choosing the Right Outsourcing Model for Your Business

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To outsource or not to outsource – has been a question for many companies. Temptation of reducing costs, improving efficiency and gaining access to exceptional capabilities by outsourcing is great, although some loss of management control and external risks have always concerned businesses. Despite all the risks, the global market trend is showing that more businesses are favoring outsourcing their work to other companies. According to Stratistics Market Research Consulting, IT outsourcing is accounted for $314.92 billion in 2015 and is expected to reach $481.37 billion by 2022 growing at a compound annual growth rate (CAGR) of 6.2% [1]. If you have decided to outsource, there is a number of criteria you should check beforehand to make sure that your business will benefit from such collaboration. PSA has come up with an eight steps guide to a successful software development outsourcing project.

But before you checkmark the eight steps, you need to decide which outsourcing model fits your needs best. There are three engagement models:

  1. Project-based outsourcing – the entire project or specific tasks are performed by external team.
  2. Staff augmentation – temporary staff is added to the company’s team when additional skills are required to support a project.
  3. Dedicated team – a development team is hired to work exclusively on company’s projects with full control over the team.

Cost-effectiveness is another area where you have to consider different models. Several pricing models exist nowadays to suit company’s budget, specific needs and rules.

  1. Fixed price model – cost and time frame are specified prior to the start of the project.
  2. Time and material – allows modifying project specifications based on changing needs.
  3. Dedicated team model – the team works as a part of customer’s infrastructure, allowing optimal cost for a retained team of resources

One of the big advantages of outsourcing models is flexibility and the ability to combine different approaches thus creating mechanisms that work best for you.

Once you have chosen the outsourcing model for your business, follow the eight steps to increase your chances for a successful project:

  1. Vendor Selection – check technical capabilities, reliability, quality of resource and communications.
  2. Project Negotiation – create a well negotiated contract.
  3. Documentation Development and Delivery – discuss how documentation will be managed.
  4. Risk Management – estimate possible risks and define ways to respond to them.
  5. Project Kick-Off – define the workflow and communications processes during this initial stage.
  6. Project Tracking – measure and report the status of milestones, tasks, dependencies and efforts.
  7. Project Acceptance – determine criteria based on which the service or product will be considered acceptable.
  8. Postmortem – review the work carried out and all the aspects that made project a success as well as discrepancies and possible solutions for future projects.

Professional Software Associates has proven to be a reliable vendor in the software development industry with 90% returning customers. We provide guidance and full transparency throughout the full cycle of the outsourced project.

For more details on choosing the right outsourcing model, please check a white paper “Eight Steps to Successful Software Development Outsourcing”.


  1. http://www.bigmarketresearch.com/stratistics-market-research-consulting-pvt-ltd-publisher

PSA Marketing Team

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