IT Outsourcing Services Explained: All Brass Tacks One May Need to Know

19 January 2023 Writer: Lera Grechanik 120 views

As more technology and software are integrated into human activities, the demand for software development is also growing. Today's businesses that made up their minds have several options to choose from and decide how to implement their idea into the software. One of them is to outsource. 

35% of all outsourcing services in the world belong to the technology or IT consulting services field. If we translate these stats into money, we arrive at the sum of $4,4 trillion, according to Statista.

Such numbers cannot go by themselves and are supported by the benefits of IT outsourcing. So, in this article, we'll dive into IT outsourcing nitty-gritty. But first, let's get the IT outsourcing guide going by defining "what Is IT outsourcing?". 

What are IT outsourcing services?

IT outsourcing services are a process of cooperation with software development service providers. The IT outsourcing service lies in the customer hiring a third-party team to perform the end-to-end development cycle or any of its components, such as front-end development, testing, UI/UX design development, and so forth.

Besides, IT outsourcing may involve hiring a team to bolster the in-house team. This practice is usually adopted to tackle large and complex projects. Such an outsourcing model contributes to avoiding redundant expenses on hiring in-house staff, saving time on recruitment, strengthening the existing team, achieving better results, etc. More about the advantages of IT outsourcing comes a little later and for now, let's figure out what types of IT outsourcing exist in the market.

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Types of IT Outsourcing Services

IT outsourcing can be categorized on the geo-location of an IT service provider and customer. This type of categorization has its subtypes. Let's review them.

Nearshore Type

Nearshore outsourcing is a collaboration where the development team and the customer are located in different countries, but the countries border each other. For example, if a customer from Germany hires IT specialists from Poland, this type of collaboration would be considered Nearshore outsourcing.

Offshore Type

Offshore outsourcing involves trusting a development team from another country that does not border the customer's country. This method is most often practiced in Celadon - we provide IT offshore outsourcing services for customers from different countries in Europe and the USA.

Onshore Type

As you may logically guess, onshore outsourcing is when the IT service renderer and a client are based in the same country.

What are the IT Outsourcing Models?

Whatever the case may be, IT outsourcing is not always a winning strategy. How effective it will be for you is a matter of the IT outsourcing business model you pick. A model should be decided before the contract is signed and given your occurrences. Review the various IT outsourcing models before opting to hire third-party employees.

In-House Team Enlargement

In contexts where it seems that the current staff resource is not enough, this model of team strengthening by outsourced professionals in the development field can be advantageous.

Dedicated Team

While the previous model was relevant for companies with their own IT team, the dedicated app development team model will work well for cases with no in-house developers but requires professionals for long-run or complex software development projects. In addition, hiring a dedicated team instead of an in-house one will free a company up from staff recruitment, administrative procedures, and expenses necessary for having such a team. In contrast, contracting a third-party team obliges paying a service fee as the service provider has already employed and taken all employee responsibilities.

Full-Process

Full-process outsourcing model means trusting the whole project to be developed by a third party. When you delegate a project to outsource, you transfer complete control and responsibility for the project to the service provider. In other words, the development team takes care of all the development process steps, appoints a project manager to manage the team, and monitors the results, the final product, and risks.

Why You Should Use IT Outsourcing

It is all one needs to know about how the IT outsourcing Industry works. So, It's time to touch on the most exciting yet crucial topic- when to turn to IT outsourcing.

Required Quicker Market for an Idea

 If you need to get to the market as quickly as possible, then an excellent solution is to turn to outsource. As mentioned in the previous sections, speed is one of the IT outsourcing advantages. Typically, outsourcing teams have extensive experience implementing various ideas. Therefore, you can expect them to help you validate the idea and trust them to develop the MVP, scale, and update the product to meet market needs. 

A Business is a Young Startup

According to Failory's report, financial problems are the 4th reason young startups fail. As the in-house team requires considerable expenses regularly, IT outsourcing is a point to consider. In contexts where every penny counts, it may be more reasonable to outsource and trust a development team with a full-ranging development cycle. Leveraging the benefits of IT outsourcing services will result in quicker product development, lower expenses, quicker market access, etc. 

Project Rescue

There are situations where the finished product needs to be updated and refurbished, sometimes a complete rebuild. In such cases, it is prudent to entrust the work to third parties due to the possibility of requesting a specific service such as various integrations, legacy code rewriting, design creation, etc. Ordering a separate service from the development cycle is a strong advantage of IT outsourcing services apart from speed and financial costs.

Choosing the Right IT Outsourcing Partner

The most evident one out of all disadvantages of IT outsourcing services is to find a provider that will take care of your product as their own. However, this guide has glad tidings for you! You don't have to worry about a tricky search for IT outsourcing companies, as Celadon is the one that will take your idea in hand and lead it through the full-range development cycle right onto the devices. Contact us to make the first step to success. Our team will reach back to you in no time to discuss all the nuts and bolts. 

Areas of responsibility - brand and growth marketing. Strongly believes that software development is an art and marketing is not just about sales but about sharing your passion. Her educational background in the field of business and marketing allows her to create expert content and help others to grow and expand knowledge.

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F.A.Q.

01.
What are the types of IT outsourcing?
Nik
Head of Sales

The most common way to classify IT outsourcing is based on the geolocation of customers and service providers. Hence, we may arrive at three types of outsourcing:

  • Onshore outsourcing is a collaboration between IT service providers and customers based within one state.
  • Offshore outsourcing refers to international cooperation. e.g., the software development team is based in one country, and the customer is in another.
  • Nearshore outsourcing is partnering between IT specialists and customers based in bordering countries.
02.
How can I understand that I need IT outsourcing services?
Lena
Project Manager

Going for IT outsourcing services is a thing to be carefully thought over. Consider your budget capabilities, goals, project complexity, time to market, and other points. 

However, there’re cases when IT outsourcing is likely to be beneficial:

  • Short time to market, and the product should be delivered as soon as possible;
  • A venture is a beginning startup, and hiring an in-house team is too costly;
  • One has ready-made software that needs to be refurbished, updated, or rescued.
03.
What are the IT outsourcing models?
Valeria
Head of Marketing

Okay, you decided to pick IT outsourcing to get your idea implemented. The next step is selecting a business model that will give you the most results. The IT outsourcing models usually go in three:

  • In-House Team Enlargement;
  • Dedicated Development Team;
  • Full-Process.
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