Offshore software development has become popular for businesses looking to outsource specific IT operations. There are various models for offshore software development, each with its own set of advantages and disadvantages. In this article, let’s explore the different offshore software development models and discuss choosing the right one for building a solid remote team. We will also explore the key factors businesses should consider when outsourcing their software development, including cost, quality, and scalability. Whether you’re a small startup or a large enterprise, understanding the different offshore software development models and how to choose the right one can help you achieve your business goals.
What is an Offshore Development Model?
Overall, an offshore development model refers to how software development tasks are outsourced to a team or organization in a different geographical location. The primary goal of offshore development is to leverage the offshore location’s cost and skill advantages while maintaining the onshore team’s quality and delivery standards. This approach can provide significant cost savings for companies, as labor costs are often lower in offshore locations. Additionally, offshore teams may possess unique skill sets that are not readily available in the domestic market, providing businesses with access to a broader talent pool.
The offshore development model allows businesses to focus on their core competencies and outsource non-core activities, such as software development, to specialized teams. It can help companies to operate more efficiently, as they can delegate tasks to teams with the necessary expertise and resources to complete them effectively. However, choosing an appropriate onshore and offshore software development model can become challenging. This way, let’s simplify the selection process by reviewing the three main offshore development models, their benefits, and additional challenges that may arise.
3 Main Offshore Software Development Models
There are three major offshore software development models: fixed cost, dedicated development team, and time and material. Each model has its own set of advantages and disadvantages, and the appropriate model will depend on the specific needs and requirements of the client. Let’s review each offshore software model to get a better idea of its benefits.
Fixed Cost Model
The first offshore development model you should consider is often described as the fixed cost. Based on the description, the main feature is that you get a fixed cost associated with delivering the entire project or its particular deliverables. This model is ideal for projects with a well-defined scope and clear deliverables, as the project’s scope is agreed upon upfront, and any changes to the scope will require renegotiation of the contract. It means the client can clearly understand the project costs and a fixed budget and plan and manage resources more effectively.
In this model, the offshore team is responsible for delivering the project within the agreed scope and timeline. The client can clearly understand the project costs and a fixed budget. It can provide a sense of security and predictability for the client. While the model can bring a range of positive features, it also has certain limitations. It can be more complicated to predict the actual cost of the entire project since its cost can fluctuate during development. Additionally, if the scope of the project changes, the client will need to renegotiate the contract, which can be time-consuming and may delay the project.
Dedicated Development Team
In offshore software development modeling, a dedicated development team refers to the offshore development center of specialists assembled and managed by the client company. This specific team is exclusively dedicated to the client’s projects and works closely with the onshore team to ensure that the project is delivered on time and within budget. This model is best suited for long-term projects that require a high level of collaboration and communication between the onshore and offshore teams.
One of the main advantages of the dedicated development model is that it allows the client to have more control over the project and to manage the offshore team more effectively. The client can have direct communication with the team and can provide them with clear instructions and feedback. Additionally, the client can build a long-term relationship with the offshore team, which can benefit future projects. However, one of the main disadvantages of the dedicated development model is that it can be more expensive than other models. The client is responsible for assembling and managing the team and must provide them with the necessary resources and tools.
As a whole, the mentioned team structure in software engineering is more or less universal. Yet, the specific number of specialists depends on the project’s scope and the outlined business objectives.
Time and Material
Of all offshore software development models, time and material is often highlighted as the most flexible one. This model is based on the time and resources required for the project. The client pays for the resources and time spent on the project, and the offshore team is responsible for delivering the project within the agreed timeline and budget. This model best suits projects with flexible scopes and deliverables that may change over time. It allows the client to respond to changing project requirements more effectively and to manage resources more efficiently.
Concerning the model’s benefits, it’s becoming possible to respond to changing project requirements effectively. Cost-wise, the time and material formula allows agreeing on a specific rate and only paying for the resources and time required, making it more flexible and efficient. As the project progresses, the client can add or remove resources as needed, making it a better option for scalability and maintainability. Yet, the client should maintain control over the project and ensure it doesn’t exceed the budget.
Final Remarks
When it comes to choosing the onshore and offshore software development model, its selection can become a challenging process. Each model, including the fixed cost, dedicated development team, and time and material, comes with various benefits and challenges. Yet, selecting a suitable model wouldn’t be challenging with a reliable remote team. When hesitant, getting comprehensive nearshore consulting is a great idea. This way, you better understand how to establish a remote team, get the most out of it, and select the suitable cooperation model.
