Header Menu Icon
Blog Post Page Background ImageBlog Post Page Background Image
Optimal Software Development Outsourcing Model Blog Post ImageOptimal Software Development Outsourcing Model Blog Post Image

Optimal Software Development Outsourcing Model

Choosing the software development outsourcing model for your project is an important task. Since the chosen model defines the way you collaborate with your outsourcing partner, it has a big impact on the outcome of the project. Before you make that vital decision, you should analyze the constraints that are posed on your project and organization. The final step is matching of the constraints to outsourcing model characteristics.

But first, let's start with the definitions and analysis of common outsourcing models.

Software Development Outsourcing Models

1) Fixed price

This model - as its name states - is based on a total work estimation. The estimation can be done only if complete specification of the project is finished before the implementation starts.

Pros:

  • you and your outsourcing partner know exactly what will be the outcome of the project
  • minimizes your budget risk
  • no management of the development process

Cons:

  • the project specification must be completely available before the implementation starts
  • outsourcing provider will minimize its risk by overestimating the effort and thereby provide you less value for your budget
  • specification changes are not possible
  • no guarantie that the deadlines are met

Recommended:

  • for small projects with fixed release date
  • if complete software specification is created in advance
  • if no requirement changes are expected
  • If the project budget is fixed
  • to test your new outsourcing provider

2) Time and material

In this model you have complete creative freedom during the whole course of your project and you only pay for the actual time spent.

Pros:

  • complete flexibility in terms of project requirements
  • effort extimates are realistic and thereby provide you more value for your budget
  • monthly paymens to outsourcing provider create less impact to your financial liquidity

Cons:

  • increased risk of not reaching release deadline
  • increased budget risk
  • management of the development process is needed

Recommended:

  • for medium size projects with flexible release date
  • if only the project vision is fixed, but the requirements are defined during the project and are subject to change
  • If the project budget is not fixed
  • you know and trust your outsourcing provider

3) Dedicated team

This model allows you to augment your product development team with the cherry-picked resources of your outsourcing provider.

Pros:

  • complete flexibility in terms of project requirements
  • effort estimates are realistic and thereby provide you more value for your budget
  • monthly payments to outsourcing provider create less impact to your financial liquidity
  • complete control of process and quality standards
  • minimized risk of not reaching release deadline
  • dedicated team members working only on your project

Cons:

  • inefficient for small projects
  • intensive management of the development process and resources

Recommended:

  • if maximal cost transparency and fixed monthly budget are required
  • for large projects with flexible release date
  • if only the project vision is fixed but the requirements are defined during the project and are a subject to change
  • If the project budget is not fixed
  • you have your own well organized product development team

Executive summary:

Choosing the optimal outsourcing model for you project should be done with care. Important questions which should be answered before making the choice are:

  • Do you have a product development team in your organization?
  • Do you have a fixed budget and a deadline for the release?
  • Do you have a finalized specification?
  • Do you know and trust your outsourcing provider?

To help you chose the optimal software development outsourcing model for your project, we have created a small recomendation matrix:

ConstraintsFixed PriceTime and MaterialDedicated Team
Project sizesmallmedium/largelarge
Budget and timeframefixedflexibleflexible
Development process controllimitedgoodcomplete
Requirementsfixedevolvingevolving
Methodologywaterfallagileagile
Own development teamnoyes/noyes
Recommended forSmall projects with a clear definition of all requirements and without your own product development team.Medium projects with a clear goal but without a specification and without your own product development team.Large and complex projects with maximum requirements flexibility, development process control and with your own product development team.

If you have any further questions, or simply need help by the analysis to make your decision, please contact us. We offer you a free consulting.