The technology-driven industries are extremely fast and growing. Companies can’t achieve productivity and expandable growth through an in-house software development team. Outsourcing is the only smart way for technology-driven industries to get the work done efficiently and cost-effectively.
IT Outsourcing development model means allocating any specific task or software development project from in-house to a third-party software development vendor. The biggest motivation for Outsourcing to third-party vendors is to save extra cost, precious time, salary expense of hiring in-house, and enjoy a global deep talent pool.
You should keep in mind the most vital thing before outsourcing. If you are going to outsource the extensive IT project or entire building tech operations, you should choose a well-known offshore IT company like Zepto system having 13 years of experience, instead of any less experienced IT vendor.
Today we will explain four famous modes of outsourcing: offshore, nearshore, onshore and hybrid shore. We will look into detail each model and it will enable you to choose the most appropriate model that matches your business needs.
There are mainly four different models for outsourced software development:
- Onshore Model
- Offshore Model
- Nearshore Model
- Hybrid Model
Below we explain each model in detail with advantages to help you choose the perfect model according to your development need.
1- Onshore Development Model
Onshore development outsourcing means that the IT vendor is located in the same country as you are. The main factor in Onshore development outsourcing is geographical closeness and usually with no time difference.
If you selected the onshore development model, there would be no language, culture, and time zone barriers in this model. Any sudden error can be resolved more quickly and efficiently by an easily organized live meeting. You may monitor the development process with less effort and time. Before adopting this onshore model, you should keep in mind that such a model is only appropriate if a Budget size is no concern for you.
2- Onshore Development Advantages
i. Communication Edge:
Working with such a development team who speak their native language erases the communication barriers. It enables smooth communication and managing the project more efficiently.
ii. Matching Time Zone:
Hiring a development team that works in a similar time zone can help you to improve real-time collaboration. It is very beneficial if the project required frequent back-and-forth changes in any project.
iii. Similar Cultural Norms:
Businesses can get the benefit of similar cultural work norms by adopting an onshore development model. They can manage a better development team with a similar cultural norm, language, and working style.
3- Onshore Development Disadvantages
i. Costly Model
The onshore model is very costly, as compared other three outsourcing models.
ii. Limited Talent Pool
The onshore model offers you a limited talent pool, and you can hire a team that is only available in your country.
4- Offshore Development Model
In the Offshore development model, you outsource a development project to a third-party IT vendor located in a different geographical location with a significant time zone difference of 5-6 hours. In simple words, in the offshore development model, you hire a tech team from another country to complete tasks remotely.
The most well-known offshoring countries for US and Western European countries include Pakistan, China, India, and the Philippines. The famous offshore Eastern European countries are Romania, Poland, and Ukraine.
5- Offshore Development Advantages
i. Low Rates
The offshore development model offers you reasonable low rates. The U.S. and Western European companies prefer this model due to its lower cost.
ii. Deep Talent Pool
The offshore development model offers a global deep talent pool to hire skilled and experienced developers at the best rates. The offshore model enables businesses to get competitive advantages in the market.
iii. Regular Updates
Outsourcing daily app management tasks in the Offshore model can help companies keep up-to-date applications without extra expense. Hiring in-house resources for frequent app management may be out of budget.
iv. Speedy Development Process
If you have an in-house development team and the Offshore development model allows you to hire another development team remotely from different parts of the world with time zone differences. When two team works, you can speed up the development process by 24 hours work cycle.
6- Offshore Development Disadvantages
i. Significant time difference.
The geographic distance between companies and the offshore development IT vendor can influence the development process. It can create a communication gap due to significant time zone differences, and meetings may delay.
ii. Cultural Differences
In the offshore development model, you need to adjust your business process according to different cultural norms. When you outsource your project in another country and their people may come from different cultural norms and work habits.
iii. Language barriers
In the offshore development model, the language barriers can be real challenges for companies. It can slow down your development process, create misunderstanding and waste your efforts. Offshore Partners should have at least one common language for a successful development process.
All mentioned above disadvantages are not unresolvable. You can work smoothly with an offshore development partner. Just handle them appropriately.
7- Nearshore Development Model
In the Nearshore development model, companies outsource development projects to third-party IT vendors located closely near the country or in a neighboring country.
Companies prefer the same or minimal time zone differences and a significant time difference is one to two hours. A nearshore development model is an in-between great option among onshoring and offshoring models.
8- Nearshore Development Advantages
i. Little Time Zone difference.
The small-time difference is the real benefit of the Nearshore model. Companies don’t need to work overtime to synchronize meetings with a third-party vendor as they can collaborate same time. you can easily monitor your vendor’s workflow and solve the expected coming issues quickly.
ii. Short Travel distance
In the Nearshore model, travel distance remains one to two hours between the company and third-party vendor. It enables companies’ effortless business trips, easy accessibility to their third-party vendor, and save extra expenses.
iii. Hire skilled person on lower salary
In the Nearshore model, companies can hire highly skilled developers at lower average salaries in neighboring countries. It enables companies to find talent near to their home country.
iv. Similar cultural background
There will be no significant cultural or language barriers which help you and your vendor completely concentrate on the project and deliver within the timeline. Due to similar cultural backgrounds, there is no need to change your working style.
9- Nearshore Development Disadvantages
i. Geographically limited
In the nearshore development model, companies have fewer options to select third-party IT vendors when they want to outsource. They are geographically limited to choosing a partner from a neighboring country with significantly less travel distance.
ii. More expensive as compare offshore model
Nearshore development model comparatively less expensive than doing in-house software development operations. It is not a cheaper option as compared offshore software development model. The Nearshore model is not suitable for American and Western European companies. In reality, an offshore model is more appropriate for American and Western European companies, as they can hire from Pakistan, China, and India at a cheaper rate. You should have the idea that nearshoring is also a high-price model that is not feasible for startups or new businesses with low budgets.
iii. Limited Options
In the nearshore development model, companies are bound to hire third-party IT vendors from geographically neighboring countries. They are limiting themselves to search and hire top IT talent from the globe. If companies adopt the nearshore model, they deprive them self of a deep pool of skilled software development teams.
10- Hybrid Development Model
The hybrid development model is a seamlessly combined development effort of offshore and onsite software development teams. This model enables businesses to optimize the efficiency of in-house resources and outsource development teams. The Hybrid model uses a blend team technique of both On-site and outsourced IT, team members. It helps in maintaining tight control and collaboration while increasing team flexibility at a more cost-effective and blended cost. The hybrid software development model is a terrific choice for businesses to blend onshore and offshore models. They can produce the best results in complicated software development projects.
IT staff augmentation and project outsourcing are blended in a way, to meet the specific needs of the project. In short words, a hybrid model combines the benefits of IT staff augmentation and IT outsourcing.
11- Why need hybrid development Model
In this fast-paced business world, IT outsourcing has become a popular choice for companies. It helps them get competitive advantages, reducing cost and maximizing productivity in the market. Some IT projects are complicated and confidential. There may be a high risk to assigning the entire project to an offshore development team due to potentially losing business secrets or other problems.
The Hybrid development model solves this risky concern and enables businesses to complete the complicated and confidential development project with a unique combination of onshore and offshore models.
12- Hybrid Development Advantages
There are organizations such as Salesforce, Google, Amazon, and Facebook that have successfully benefited from the hybrid model of staffing and hiring. Hybrid models have become more relevant especially after the pandemic because remote working is the new normal.
i. High-Quality Product
The hybrid model utilizes global offshore development specialist resources according to project demands. It also integrates in-house development experts with the same project. It ensures to produce the highest quality product.
ii. Reduce Communication Barriers
The hybrid model enables companies to manage the development project in-house by hiring a local project manager. Placing an in-house project manager with different language skills makes it easy to communicate and collaborate with offshore development teams from other parts of the world. Ultimately cost reduction by hiring an in-house project manager and reducing communication barriers.
You are developing a complex software application from an initial point or updating your current application or you need regular up-gradation and management of existing application hybrid model gives you the ability to manage the development team and increase or decrease team size according to your requirements and budget.
iv. Cost Predictability
The IT team cost is recurring from month to month so you have full monthly cost predictability in the hybrid development model.
v. Build lasting Vendor Relation
The hybrid model gives the facility of hiring local project managers. It enables companies to schedule face-to-face business meetings and physical visits in the third-party vendor office. It helps build trust, long-term business relations, and a deep understanding between third-party vendors and the company.
13. Hybrid Development Model Disadvantages
i. Costly Hiring from Local market
The Hybrid model facilitates companies hiring a local project manager or key team member. It is often costly due to the current market salary structure and it is more expensive as a compared offshore development model.
ii. Risk of Mismanagement
The Hybrid model is a combination of three models, it depends on the nature of the project. There may be all types of teams like an onshore team, offshore team, or nearshore team as per customer requirements. It may require an additional project manager or offshore manager to manage a variety of teams within the system. Any mismanagement of leadership, administration or manager of this circulated model will cause low-quality products, extra expenses, or project execution failure.
IT outsourcing is the most suitable and fast-paced excellent approach to compete in the current IT world. Selecting the best shore model entirely depends on your software development project requirements. Every model has diverse characteristics and benefits. The main point is which outsourcing model perfectly fits and suits your business.
This article will assist you in clearly understanding and identifying which outsourcing model is perfectly fits your business.
When should you go for the IT outsourcing model?
If you want to minimize your expenses, save time, avoid overhead costs by hiring in-house. If you need an urgent skilled software development team with various technological skills, but:
- You don’t have a budget and time to hire an in-house IT team.
- You need a contract-based and temporary IT team according to specific project needs.
- You are looking for a highly skilled software development team with multiple advanced development skills.
Do you need a specialist software development team to complete the project within the deadline by utilizing the above-mentioned outsourcing models?
Contact us and we will give you a highly skilled development team or guide you on which outsourcing model is best for you.
Short Glimpse about Zepto Systems Limited
No matter what service model you choose, Zepto Systems solutions would be fully tailored to your specific needs without any hardliners.
- Zepto Systems is an IT Consultancy and offshore IT Services Provider agency. Since its inception in 2008.
- As an ISO Certified Company.
- A Highly Professionals in the IT market with a decade of experience.
- Offering flexible business models, like IT Consulting, Managed Services, and Remote IT Resources.
- A deep talent pool of 250+ in-house developers
- Zepto can reduce your development costs up to 60%
- Zepto has a proven record of successful project deliveries.