When you have an IT project deadline looming, or your in-house team lags and daily tasks are piling up, you may consider staff augmentation. But navigating the process of bringing in outside help requires understanding outsourcing models.
Gaining a basic understanding of outsourcing models also equips you with deciphering the details of a contract with a third-party provider. Here are the basics of outsourcing options:
Location-Based IT Outsourcing Models
This can include a range of alternatives based on the type of work, including nearshore and offshore outsourcing. Your IT team may have a role that you need to fill but does not require the talent to be on-site, expanding your opportunity to find the right contractor.
At times, it’s not the location driving your choice but the type of role you require and how that role will interact with your in-house team. Here are the forms that relationship-based models can take:
- In a staff augmentation model, the third party provides talent that joins your team to manage internal projects or programs.
- A managed team model allows your company and the outsourcing provider to determine which tasks will be fulfilled with desired outcomes stated.
- A project-based model turns an entire project over to the third party with clear specifications and timelines for the desired outcome.
Pricing for Outsourcing Models
In addition to location- and relationship-based outsourcing models, companies may also prioritize a third party for meeting talent requirements based on cost. For many companies, cost savings is a significant driver for outsourcing because they do not need to cover a salary or benefits. Still, they also eliminate the time and cost of the hiring process. Here is how pricing is often structured for outsourcing:
The service provider has a standard rate, with tools and workspace included in the cost, usually billed monthly.
Time and Materials
This is a popular model in which service providers bid on a project to meet the client’s needs.
In addition to an agreed-upon price for the project, this model offers additional incentives for exceeding expectations or timeline requirements.
This is similar to an incentive price structure, offering additional benefits when the team reaches a specific milestone in the project.
The decision to outsource shouldn’t be taken lightly, but it offers some benefits that may make sense when a talent shortage and timeline constraints put pressure on your team. For more information about outsourcing models and choosing the right partner for your talent needs, contact us at Proper Connections.