Outsourcing versus outsourcing is an endless debate. Companies are forced to make this choice every time they need to build a project or implement a new feature.
First, companies realize that they need a few developers, or maybe a whole team, for your software project.
Then they think about how much they will have to spend on quality in-house developers, which is probably not the best option.
In the end, they decided to hire a foreign software development company and were confused with a bunch of terms like outsourcing, human resources, dedicated team and others. We will analyze the details of outsourcing versus HR and explain all the terms of offshore development. You will also learn how to choose the best offshore development model for your project.
Overseas development model
Offshore software development, also known as outsourcing, is the process of subcontracting/outsourcing software development to a development agency outside of the client’s country, unlike onshoring, which takes place in the customer’s country.
According to a survey by the National Outsourcing Association, cost savings (35%) and improved customer experience (23%) are the top reasons companies choose to outsource.
Some misconceptions about outsourcing occur because the concept of outsourcing can have two meanings:
In a broad sense, outsourcing is an agreement between two parties. The first party (customer) wants to hire another company (outsourcing company) to perform an activity that could have been done by itself.
On the other hand, outsourcing has a narrower meaning and means outsourcing the entire project and not just some specific tasks.
According to McKinsey, about 70% of US companies dominate the global outsourcing market share.
It turns out that about 300,000 jobs are outsourced outside the US each year. Companies mainly outsource software development, accounting and marketing services. It is believed that outsourcing increases the efficiency and expertise of small businesses.
There are three main models of offshore development:
- Redeem personnel
- outsource
- Dedicated team
What is outsourcing?
Outstaffing is a type of overseas software development in which a client hires a subcontractor from an outsourcing company to perform development tasks.
It can be said that foreign developers actually become remote in-house developers for the client’s company during the entire period of cooperation with foreign agencies.
Typically, hiring is best for clients who have strong internal teams and want to find an expert in a certain field or save money on hiring new employees.
What is a dedicated group?
The dedicated team model is perhaps the most misunderstood in outsourced development. A dedicated overseas team consisting of two or more high-quality developers involved in the development of a particular part of the project. Unlike HR, an outsourcing company manages the developers of the dedicated team that is hired. And, unlike the outsourced collaborative model, a dedicated team is responsible for a certain part of the development process.
Dedicated teams can become an outsourced development model after a while. This usually happens when the customer is satisfied with the quality of the cooperation. Need an offshore development team?
Difference between outsourcing and outsourcing.
Well, here are the main factors whose difference is quite obvious:
Purpose
Outside :
Find a proper developer with some business expertise.
Outsourcing:
to build or rebuild a quality product from scratch.
Time
Outside :
started to develop faster because the developer was employed by an outsourcing agency.
Outsourcing:
It takes time to speed up the process as an outsourcing company needs to evaluate the project, clarify the specifications and train the staff.
