What Types of Offshore Software Development Models Are There?

Looking to outsource your software development? With numerous options overseas, figuring out the best offshore development model for your business can get confusing.

However, not all offshore models are created equal. Choosing the right approach can make or break your offshore success. So, how do they differ?

Don’t worry. We’ve got your back!

In this article, we’ll explore three standard offshore development models: the Fixed-Price, Time and Material (T&M), and Dedicated Team models. We’ll look at their pros and cons and how they operate.

Read on to get the know-how on which is best for your business!

The Fixed-price model
This traditional model remains popular for its predictability and simplicity. Here’s how it works:

Imagine you have a well-defined project with precise specifications, timelines, and budget plans. The Fixed-price outsourcing model could be your go-to option. The outsourcing partner provides you with a fixed project cost upfront in this approach. This cost remains unchanged, regardless of the actual time and resources invested by the outsourcing team.

Pros:
Costs are 100% predictable from the start
Zero surprises or cost overruns if requirements are locked
Simple to budget and get financial buy-in
Cons:
Specs need to be highly detailed
Scope expansion is a project killer
Change requests can delay delivery and bust bus
What it’s best for

The Fixed Price model is ideal for well-defined, short-term projects with limited room for scope changes. It works well when you clearly understand your project’s specifications and can provide precise documentation. It’s not so great for complex software with shifting requirements.

The Time and Material (T&M) model
With T&M, you pay hourly or daily rates for offshore developers working on your project.

Picture a scenario where your project’s scope isn’t entirely clear, and you expect changes or improvements along the way. This approach provides more flexibility, as costs are determined by the time and resources spent.

Pros:
Flexibility to handle changing scope and fluid requirements
Only pay for actual work performed, even if specs change
Avoid endless haggling over change orders
Cons:
Hourly pricing means costs are less predictable
Communication and alignment are crucial to preventing scope creep
Potential for delays as the project scope is more fluid, which can lead to longer development cycles
What it’s best for

The Time and Material model is well-suited for projects with evolving requirements, long-term collaborations, or situations where you’re not entirely sure about the project’s final scope.

The Dedicated Team model
This offshore development model is the gold standard for most complex tech projects.

Here, you hire specific offshore developers dedicated just to your project. They become an integrated extension of your in-house staff.

The Dedicated Team model gives you unparalleled flexibility, alignment, and oversight. You stay in the driver’s seat by managing the dedicated resources day-to-day, ensuring total control and smooth continuity. Plus, you can tweak team sizes and payment plans to your advantage.

Pros:
Tight integration between onshore and offshore staff
Developers focused solely on your project and goals
Flexible scaling up or down as needs change
Access to scarce skills like AI, security experts
Lower costs while maintaining quality
Tight oversight and IP protection
Customisable team sizes and payment plans
Cons:
Needs solid in-house project management
Potential time-zone complications
What it’s best for

The Dedicated Team model shines when you need a high degree of control, want a long-term development partner, and can commit to resource-intensive management.

Choosing the right model for your needs
At The Scalers, we specialise in building dedicated offshore teams tailored to each client’s needs.

We assemble versatile groups of professionals combining design, engineering, QA, and expertise. These dedicated teams operate as seamless extensions of core organisations.

Other models like T&M or Fixed Price can work for specific projects. But for most initiatives, Dedicated Teams will maximise outcomes, innovation, and value.

As software development goes global, talent and cost advantages are too significant to ignore. Dedicated teams allow you to access these benefits while maintaining control and continuity.

So, when it comes to strategic impact and execution, offshore dedicated teams check all the boxes!

Summing up

Offshore outsourcing is now mission-critical, but choosing the wrong model equals disaster.

The Fixed Price model offers predictability yet inflexibility. Time and Materials provide flexibility at the cost of uncertainty. But for complex initiatives, Dedicated Teams are the best choice. The extended in-house staffing enables strong collaboration, knowledge sharing, and ownership, leading organisations toward success.

At The Scalers, our dedicated teams are ready to supercharge your projects and deliver outstanding results. We’re always here to help, so feel free to get in touch today for the inside scoop!