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What outsourcing engagement model is right for you?

Serhiy Haziyev and Halyna Semenova | June 5, 2015
Outsourcing should be a strategic partnership, not a simple hand-off of duties to a third-party. Getting that right requires smart preparation.

Outsourcing should be a strategic partnership, not a simple hand-off of duties to a third-party. Getting that right requires smart preparation.

Implemented correctly, strategic partnerships are a happy collaboration where expectations of delivery and results are clear from the start. By bringing in outside minds, it's possible to innovate and drive your product to levels beyond what your internal team might have accomplished. New ideas can come from anywhere.

A proper planning phase is important. It's not only about thinking ahead but also about being on the same page with your outsourcing provider every day and benefiting from their expertise, as opposed to viewing outsourcing merely as an easy way to offload commodity work. You need to select the proper engagement model that is transparent to both parties and provides a strong governance for all aspects of the relationship.

To accomplish that, it's useful to understand the various outsourcing engagement models and how to best apply them to your situation — in the case discussed here, software development.

An engagement model is a framework that defines collaboration between a client and an outsourcing vendor. It determines a level of control and responsibility, as well as provides a base for further relationship development. There is no "best" universal model to match every company`s needs.

So how do you select an engagement model that works for your business? Here is a brief overview of the most popular models grouped into Tactical and Strategic engagements.

Tactical Engagement Models:

* Staff augmentation is the simplest model. This approach allows companies to extend existing in-house staff with outsourced workers. The typical client's business driver for such a model is cost reduction. It may work fine on short-term basis, although it requires high client involvement to supervise the augmented staff. It means that Project Management and Technical Leadership remain on the client's side while routine development or testing, for example, can be augmented with offshore or near shore resources provided by an outsourcing vendor.

There is no need to argue that the level of innovation from outsourced vendors with this model will be quite low in most cases. In fact, the less span of responsibility, the fewer drivers to innovate exist.

With the Staff Augmentation model the span of responsibility usually is quite narrow. It may include technical implementation tasks as well as prototyping, but the product vision and decision scope of the augmented team members is so limited that it doesn't facilitate thinking outside of the box.

It is important to set proper expectations and establish alignment between a client and outsourcing vendor on which party is responsible for steps in the Product Development Lifecycle it helps avoid solving unpleasant issues in the future.


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