IT Outsourcing is a tool that companies have at their disposal to innovate and grow while navigating the challenges of an increasingly competitive market. However, amidst the various forms and models of outsourcing, it can sometimes be difficult to distinguish them and choose the one that best suits each company's reality. In this article, we explore the different types of models that you may encounter so that you can make the best decision based on the specific needs of your company.
To begin with, let's understand what Outsourcing is. In general terms, this service involves contracting a third party to perform specific functions. In IT, this translates to hiring external providers for software development or hiring specialized consultants. This approach allows client companies to gain greater flexibility and focus on the crucial areas of their business, while leaving secondary responsibilities to external specialists.
So what distinguishes the different types of Outsourcing available in the market?
Outsourcing Models
Dedicated Team: Total project management
If the preference is to delegate the complete management of the project, without having to worry about its execution, then the "Dedicated Team" model is the best.
Here, the company obtains a functional team managed externally, allowing full focus on the core business. In reality, you only need to present the requirements of what you want to see developed and define the deadline for delivery. Then, the outsourcing company will be responsible for assembling the best team for the project's execution and presenting the final product or service, as agreed upon between the parties.
This model is common for projects or entire departments and facilitates expansion into new areas. Here, the client company may not even directly contact the team responsible for the project development, but they will receive the deliverables nonetheless.
The major advantages of this approach are that the client doesn't have to worry about team composition or technical project management. In fact, it's a way for companies to grow and expand their business without the need to increase their internal structure and address their IT (Information Technology) needs. It's especially beneficial for companies looking to undertake projects in technical areas for which they do not have internal expertise.
In summary, this model is for those looking for:
Turnkey project development;
Development in highly specialized areas that are not the central focus of the business;
Not having to spend time on human resources management processes.
Team Extension: Control and Access to Experts
The "Team Extension" model is more suitable for those looking for highly qualified consultants to reinforce an existing project or team. It allows the client to maintain full technical control of the project and its management, with quick access to highly specialized knowledge, making it a "Time & Materials" based model.
With this option, clients avoid the bureaucratic processes related to hiring, retaining, and managing professionals. Additionally, they don't have to spend time on the recruitment processes for new professionals, which in the IT field can be quite time-consuming.
This model offers great stability to the clients' projects because the supplying company is contractually responsible for replacing consultants who decide to take on other projects or who become temporarily unavailable. Additionally, there are a set of safeguards present in the contracts, including Service Level Agreements (SLAs), established between the parties.
In general, this model is suitable for those looking to:
Reinforce an existing project or team;
Work with highly qualified professionals;
Maintain complete control over project management;
Avoid spending time on human resources management processes;
Have a stable team, not worrying with turnover.
Nearshore or Employer of Record (EOR): international expansion
Finally, if the company's objective is to internationalize or access professionals from other geographic locations, there is the Nearshore or Employer of Record (EOR) model.
In this case, the client will collaborate with a company with representation in the target country that will help them expand their operations to that region without having to worry about the associated bureaucracy. Thus, the EOR takes on the responsibility of managing tasks related to human resources management and payroll processing, handling topics such as employment contracts, benefits, taxes, and compliance with local labor laws.
With this model, the client company can reduce costs and access a wider range of talent quickly and easily, leveraging not only technological expertise but also knowledge of the specific legal procedures of the country in question.
This option is suitable for those who:
Want to establish a development hub in another country without having to establish a presence there;
Seek to avoid legal constraints due to unfamiliarity with labor laws in the target country;
Quickly access professionals located in other countries;
Benefit from the attractiveness of the talent pool in other countries.
How to Choose
The first step is to understand the models available in the market. Then, it's important to reflect on your specific needs, starting by determining whether you want the development to be done under your control, or if you prefer to simply receive the finished product/service, or even if the goal is to reach other markets.
Next, it's important to evaluate the different suppliers that can offer these services and determine if their work methods and culture align with yours.
If this service seems to be a good solution for your company, talk to our team so we can help clarify all your questions and show you how we can help you grow here.
