Joe Spencer
"I know how to plan the success..."

Being a flexible and Customer-oriented business, Offshore Outsourcing offers a number of elaborate models of co-operation. There are no good or bad models. Each of them is associated with its specific benefits and is suitable for a specific business case. Choosing the one of all available models is a thought-out decision based on the analysis of the specific needs and requirements.

The Offshore Outsourcing models differ by the level Customer’s involvement in the process of Custom Software Product development and management processes and level of offshore programming team’s dedication to Custom Software Development Project.

The highest level of Customer’s involvement and interaction is provided by joint-venture model. It means establishing a joint venture with an offshore partner for achieving mutual benefits. Usually, cheap workforce is the basic benefit for onsite partner, and partnership with solid foreign company is the priority for offshore co-owner.

This model requires significant investments from onshore party. Because the value must be recovered, this model is suitable for long-term projects. There are examples when joint-venture Offshore Outsourcing model resulted in complete merger with offshore company and establishing of operations in foreign country.

Offshore Development Center is a model providing offshore programming team working full-time over a single Custom Software Development Project. This remote group of Coders may either implement programming tasks alone or work over the overall Custom Software Product development Custom Software Development Project (Custom Software Product architecture and design, coding, testing, deployment).

In this Offshore Outsourcing model Customer or customer’s onshore team is responsible for the majority of management functions as well as for requirements specification and risk management. Normally, in such a model fees are fixed and paid on a monthly basis. Permanence of offshore programming team is the key benefit of this model. Because the fees are paid on a monthly, but not hourly basis, this model is suitable for long-term or permanent projects when Custom Software Development Project management team is available onshore.

Offshore/onshore model is a good choice for outsourcing small and terminal projects. It means outsourcing a Custom Software Development Project to onshore company with offshore operations. Commonly such companies are headquartered onshore providing sales and management activities in the customer’s country, and have an offshore Custom Software Product development center for technical tasks such as designing, programming, testing, etc. The advantage of this model is that Customer communicates with onshore provider but pays offshore price. Still, this model is more expensive than pure offshoring model.

Pure offshoring model means outsourcing individual Custom Software Product development projects to one or more (multisourcing) Offshore Outsourcing service providers. This is the most risky model however it is the most profitable for small individual projects. Service provider is responsible for the whole Custom Software Development Project management, and efforts are paid on hourly basis.

Selection of any of these models must be a result of detailed analysis of specific business needs, goals and prospects.

Published on 8/5/2007