Outsourcing as a business has been around for a long time. It is a rapidly growing segment of the industry and a precious solution for various companies. Both large enterprises and start-ups are reaping the benefits of outsourcing their businesses. This approach helps companies reduce costs and increase their competitive advantage. Also, by outsourcing software development, companies can bridge existing expertise gaps and accelerate larger-scale projects.

Outsourcing offers so many options nowadays. Some outsourcing companies run on a ‘turn-key’ basis; some offer to scale up your in-house team with their programmers; Some will give you a project manager, while others will not. Although outsourcing software development is an intelligent choice, choosing the right outsourcing model is crucial for success.

In this article, we will talk about the types of IT outsourcing models and how to choose the right Outsourcing model for your project. So let’s get started!

Types Of IT Outsourcing:

There are three main types of IT outsourcing: Onshoring, Nearshoring, and Offshoring. The difference between Onshore, Offshore, and Nearshore can be explained by the physical location of the service provider.


1. Onshore:

Onshore outsourcing means the team is located in the same country, your developers may be from another city, state, or region. This is the most convincing option on the list since you work with a team in your country of origin. Typically, there are no major time zones, language issues, or cultural differences. The drawback of this approach is that development services provided in your country can be quite expensive. For this reason, many companies plan to outsource IT services overseas.

2. Nearshore:

Nearshore outsourcing means the delegation of software development to neighboring countries; for instance, Singapore companies choosing technology partners in Vietnam. Nearshoring is often considered a good balance between profitability, quality, and the physical proximity to your outsourcing partner.

3. Offshore:

Offshoring is the process of outsourcing IT services to a company based abroad. Hiring offshore developers is generally the most cost-effective option. The benefits of offshore development are vast. But, It can be more challenging to sustain because of time zone differences and language constraints. But, if you have an experienced project manager, you probably not going to have any of those drawbacks as an experienced project manager will devise a communication plan to keep in touch when it’s convenient for you.

Types Of IT Outsourcing Model:

1. Staff Augmentation Model:

The staff augmentation model enables you to add expert developers to your internal team. This will maximize the efficiency and competencies of your in-house development team. These outsourced experts become part of your in-house team and collaborate with your employees. With this outsourcing model, you can keep full control over the project.

When your development process is too slow, you lack scarce or advanced expertise, Or when you only need 1-3 experts, not the entire team to support the project then the staff augmentation model can be the best choice.


  • Quick access to developers
  • Cost-effective
  • Best talent pool
  • Flexibility
  • Full control over the project development


  • Full responsibility
  • Integration and management outsourced professionals
  • Communication gaps
  • Collaboration difficulties

2. Project-Based Model:

This model is also known as the software outsourcing model. In this model, the software outsourcing partner handles the overall process according to the specifications outlined at the beginning of the project. The project-based model is more conventional and practical than the other outsourcing models.

When companies have their projects with no core expertise, they may hire a software outsourcing provider who can completely handle the software development process within the agreed timeframe. Under this model, companies sustain minimal control but can be kept informed on project progress regularly.

This model is suitable for companies that have limited software development expertise. Also, software outsourcing is perfect for companies that have a clear idea of the product they want to create.


  • Clear timeframes and results
  • Time-efficient
  • Complete accountability lies on the project manager
  • Prompt recruitment process
  • No micro-management


  • Less control over the project
  • Inflexibility
  • The outcome may be good and well planned but does not comply with industry standards or best practices.

3. Dedicated Team Model:

In this IT outsourcing model, the supplier will provide you with a dedicated team of employees to work on your project. The team will consist not only of software developers but also testers, analysts, UI/UX designers, and project managers. You share the responsibility to steer the project with the outsourcing partner. A dedicated staff is solely assigned to your project. The outsourced PM is responsible for the team. These developers are not part of your organization.

Under this model, you and the team will agree on accountabilities, timelines, results, and scope. Moreover, It is crucial to communicate well to guide the project’s direction.

It’s in the best interest of the outsourcing company to manually choose a group of people who work great together and can lead to a successful outcome.


  • Complete control
  • Minimal risk
  • Better communications
  • High transparency
  • More flexibility
  • Agile development process


  • Lengthy recruitment process
  • More responsibility

How To Select Among Outsourcing Models That Fit Your Requirements:

As a business owner, you need to analyze all aspects of the project with the outsourcer. There are many factors while choosing an outsourcing model for your company. Here are some tips to help you determine the most appropriate model for your project.

  • The reach of your project.
  • The estimated time frame for the project.
  • The preferred project management method.
  • If the team may need to be augmented for the development process.
  • The degree of technological innovation in the project.
  • The amount of flexibility you need.
  • In-house team’s competencies and abilities.

When drafting a contract with an outsourcing company, keep all these aspects in mind. Ideally, you should get some help from your potential technical partner when making a decision. Describe your project, needs, time, and budgetary constraints. And be sure to mention whether you have an internal team or not, as well as the level of flexibility you expect.


Now, when you think about choosing the right model for outsourcing your developers’ team. The above-shared information will be very much helpful to get you to your decision. Each model has some advantages & disadvantages. Now you may have to take a call based on your requirements. Always go with the best price to quality ratio.