S3 tech blog

The offshore software development  model now is evolving by leaps and bounds. For those who have doubts which level of outsourcing or business model will suit their business objectives best, we introduce this article. Here we present main aspects of the offshore software development models for the outsourcing.

S3 Corp – Viet Nam Software Outsourcing 

So, the software development outsourcing models can be categorized into the following groups:

By Levels

By Business Models

OFFSHORE SOFTWARE DEVELOPMENT MODEL BY LEVELS

Choosing a form of partner relationship, the first what is noticed, is how the customer wants or can control the amount of work performed by the contractor. The level of such coordination defines access to the resource base from both sides, involved in the realization of the business project. Based on these indexes, the forms of the cooperation are classified the next way:

Low-level Outsourcing

High-level Outsourcing

Complete Technical Outsourcing

It is natural, that every enterprise is trying to look for the best contractor for the outsourcing project. This implies, that customers are trying to find the most experienced and highly professional players in the outsourcing market. But on the other hand, the more experienced is the contractor – the higher price for his services customer needs to pay. Even for the small projects.

LOW-LEVEL OUTSOURCING

So here the low-level offshore software development model comes in. At the beginning of the outsourcing services provider career, the newcomers always try hard to be noticed and demanded in the future. Moreover, the price is mostly more than attractive for the customer. In low-level offshore software development model, the product management is left within the customer company. But development and QA processes are shared to outsourcing. As for development processes, low-level solution coding and software delivery are outsourced in this model. In QA it is manual testing and test development.

HIGH-LEVEL OUTSOURCING

High-level outsourcing, like previous offshore software development model, leaves the product management inside. As well in QA outsourcing team design and perform tests under in-house supervision. The difference here is that the project management, solution, and test design are passed to the offshore development center. The rest is still left under the in-house supervision. Outsourced processes are controlled by the architect-level software engineers: developers approve code-design and interpret PRD, architect level testers approve tests and interpret PRD.

COMPLETE TECHNICAL OUTSOURCING

In this case, the name speaks for itself. In this offshore software development model, internal processes basically contain product requirements document development. Still, all the technical aspects are outsourced: PRD interpretation, solution design, solution development and solution implementation.

OFFSHORE DEVELOPMENT BY BUSINESS MODELS

As from the economic perspective, the outsourcing engagement into the development allows to significantly reduce costs for one or the other project. The reason is that company will not need to maintain additional structure and enlarge in-house development department. All the offshore development business models are the perfect fit for those, who have decided to pay only for the resources they are actually used or the development sprints actually delivered. Working with the in-house team is always related to the unavoidable idle time of some employees here and there during the project implementation. It is hard to hire an employee who is willing to work only for a few months and start the job search once again. In this case, dedicated developers or IT staff augmentation come to the rescue.

The commonly accepted IT offshore outsourcing business models or billing models are listed below:

Fixed Cost Model

Dedicated Development Team or Dedicated Resources Model

Hourly / Time & Material model

FIXED COST MODEL

One of the safest offshore development outsourcing model is the ‘Fixed Cost Outsourcing’. The fixed cost offshore outsourcing is very beneficial engagement model for the small and medium scale enterprises, thanks to the fixed pricing. This is widely used practice in such cases since the budget is fixed even before the project kick off to eliminate the possibility of hidden and unexpected costs. Considering the fact that start-ups and SMEs are often limited financially, this model helps them to feel safe and be sure that they will not run out of the budget before they have a final product in their hands.

DEDICATED DEVELOPMENT TEAM OR DEDICATED RESOURCES MODEL

This offshore software development model is team-based. That means, that the base factor of project success – is the offshore developers. The dedicated development team is the source of all the technologies, architecture, and produced code. A dedicated team is a profile unit which is involved in one project at a time, which is mostly used to release some big volume product or system. As such project development is a long-going process that lasts for all its existence time, the permanent team for its support is required. When the active development stage comes to an end, the most of the developers can be dismissed, except for the few specialists to maintain and supervise the code and its future improvement.

HOURLY OR TIME & MATERIAL MODEL

Hourly or “time & material” billing is narrowly aimed offshore software development model. It is used mostly when the total scope of work cannot be estimated. Nature of this kind of the project is vague and dedicated developer cannot be assigned. The volume of work can change during the work progress. But the time frames are preliminary established, so this term can’t be shifted. Within this model, the applications developed are small or midsize and don’t require allocation resources. In this model, the client is charged for the actual amount of time and efforts spent by the software engineers on the project realization.

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