Rethinking IT Outsourcing Model with Agile Connected Teams

22 May 2020

Rethinking IT Outsourcing Model with Agile Connected Teams

by Sngular

Just as the nature of work has changed in recent years, so has the nature of outsourcing. 

In every company, regardless of size, the expectation has never been higher for IT to respond quickly to market needs. Software must be developed rapidly, and developers must have the right technical skills. Here is where outsourcing comes to play an important role. Factors such as team, skills, and technical expertise are costly and often unavailable in-house. For these, and many other reasons, organizations decide to outsource their product or service development. 

Successful IT outsourcing can be a crucial strategy for organizations to remain competitive and strengthen their competitive edge. However, seeing the value of IT outsourcing is one thing, but choosing the right model requires you to understand its possibilities. Let’s review the different outsourcing types.

Onshoring vs. Offshoring vs. Nearshoring.

In simple terms, IT outsourcing means that an external third-party vendor will complete a particular part of project delivery. The difference between each approach is reflected in the physical location of your outsourced team. Let’s review all different types of outsourcing:

On-shore: It means that your outsourced development team is located in your own country or in a country where labor rates are generally consistent with those where the service is received (e.g., US-to-US, Spain-to-Spain, etc.). The downside is that the development services offered in your country may be rather pricey. 

Offshore: It happens when you outsource IT software development services to a team that’s based overseas. This model is usually the best cost-effective option as labor rates are lower, and there may be a significant difference in time zone (e.g., Spain-to-Singapore, Spain-to-US, Mexico-to-Spain, etc.).

Nearshore: Nearshoring happens when you outsource IT development to a neighboring country. It is usually within or close to the same time zone and where labor rates are generally lower than those where the service is received (e.g., Mexico-to-US, Spain-to-Uk, etc.).This option has a great mix of cost-effectiveness, quality, and the physical proximity of your outsourcing partner. 

Any of the above outsourcingsoftware development models can give you a wide array of benefits – including faster time to market, staff augmentation, and higher quality results – while reducing costs. The end result will be a unique strategic position in a competitive market and a globalized environment. But some questions need to be assessed before deciding the best fit for your organization.

Avoiding pitfalls

Deciding to work with an outsourced IT software development vendor is always strategic. It involves an in-depth analysis of many factors. 

Our approach is to create a long term collaboration with our clients throughout the evolution of their product or services. This relationship starts by helping them understand what’s the best model for their organization by assessing the following structured questions: 

Are you willing and able to work with development teams in different time zones? 

Determining if your organization is willing and able to work with development teams in different locations or countries with possible different time zones is key. Your organization must decide if they are willing to work with a team based in a different country with a potential big time difference or not. Each choice has its pros and cons, but if you are keen to work with remote teams in different time zones, then you have to consider another factor.

Are you willing to work with teams that are: (a) zero to 1 time zones apart, (b) two to three time zones apart, or (c) more than three time zones apart?

In other words, how far are you willing to have your outsourced team? Are you willing to have them nearshore or overseas? The time zone difference gives the benefit of the “follow-the-sun” working model. You can achieve longer working hours and higher productivity. Team members can hand a project over to someone who starts their day at the end of their working day. That way, the project continues to move forward non-stop. Needless to say, that more extended coverage gives the organization not just the advantage of a faster Time-To-Market, but also the ability to respond to crises on time.

However, there might be issues that need to be addressed. For example, it might be harder to find time to collaborate, especially in cases where there is no real overlap between two time zones.

How many developers do you anticipate needing for your project?

The size of the team is another vital component. You can start with a small team of 4-5 people and then scale up depending on your needs, or you can start with a team of 100 people and scale down based on project needs and backlog. 

You might have different priorities throughout the year, depending on either internal or external changes. Sometimes, you might need to add more working groups to the team because there is more work to be done. Sometimes, new skills are required, so you need to adapt to the team accordingly. You will have to consider all these possibilities when thinking about the size of your team.

What technology skills do you anticipate needing for your project?

Are you building a mobile app from scratch, and you need a UX/UI team, Scrum Masters, Mobile Developers, etc.? The ability to quickly build a team of ideal talent with the necessary skills and knowledge to carry a project out successfully is key. 

Which Agile methodologies are you currently using/would like to use?

Over the years, we have proven that Agile methodologies can improve productivity and ensure timely and cost-efficient deployment. There is no doubt about that. Whether it is Kanban, Scrum, Lean, XP, or any other Agile Methodology, your organization will be adding the maximum possible value to the product or service while adapting the development process to the evolution of the requirements of the project. 

Our Agile Connected Teams Model

We are not a company based on massive hiring; our model is quite the opposite. It consists of creating teams that contain the most qualified talent for the project, which allows us to offer our clients more value in terms of cost and scalability. We create multidisciplinary teams of specialists (developers, designers, and other technical profiles) who are chosen based on their specific expertise for the job and because their location can offer greater economic flexibility to our clients. 

This approach has helped us help organizations make the right decisions about the outsourcing model that best fits their needs and achieving greater productivity, flexibility, and the most operational benefits while minimizing risk. Our proven model allows us to deliver outsourcing services contracts successfully and consistently.

Discover how our Agile Connected Teams can help your organization by taking the ACT Assessment. 

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