Maybe you tried offshoring, but things did not work out as expected. Then you give up and do not want to hear about it. But do you know that there are many offshoring models? The fact that one of them did not work does not automatically mean that offshoring as a whole would not benefit your company.
As we all wear clothes, we know that some models and sizes enhance our features and others that do not. The same is with companies and offshoring. There are many shapes and forms of offshoring. The models are numerous, and it is wise to look carefully at them without discarding a potentially successful business strategy that has helped hundreds of thousands of startups bring their ideas to life.
Let’s look into more details of some offshore models. This article will examine four main offshoring engagement models. The engagement model is how a company can interact with the offshoring agency and team about their projects.
#1. Fixed Price Offshoring Model
This is a prevalent model in offshoring, especially in software development offshoring models. This model allows you to choose an offshoring contractor and decide what will be the final price and the project deadlines before the project starts.
So you know even before you begin when you have your project delivered and what the costs are. But careful. This is only apparently a time-saver. This model requires meticulous planning in advance from both sides. It also requires in-depth mutual knowledge and synergy between you as a client and your offshoring company team. So before the project starts rolling, there will be some time that passes!
Yet, it is very convenient because you can plan your next move and already know what budget you need to allocate for this. However, this model is only suitable when there is a good understanding of all the project requirements. Otherwise, it can turn into a big mess.
It is good to start with shorter-term milestones before entrusting a massive project with a long duration before you know the team and how they work.
It would help if you considered that the contractors could inflate the price because they allow some room for the unforeseen workload.
#2. Time and Material Offshoring
This offshoring model allows more flexibility than the previous one. This model tracks the time the team of individual developers uses to complete the project. Suppose they are all experts or highly qualified, and you already have a clear idea of how much their time is worth.
This is very suitable for projects where the exact pathway to reach A to B is yet to be discovered. So you employ an expert or a set of experts to create this mysterious track for you. You already have a vision and objective, but you need yet to define the road to walk there. This is why this model has no fixed end date nor a fixed price.
You can negotiate payment based on the time spent on the project and the amount of so-called “materials” – the work of individual members or developers, the resources employed, and any materials they need along the way.
This model of offshoring is very flexible. However, it will need more of your attention. You need to be monitoring the steps and express your opinions quite often. A drawback is that there is no fixed end date – so you cannot guarantee all will be delivered on schedule. However, you can navigate with the team and ensure your project has a continuous improvement, even after the initial stage is completed.
#3. The outsourcing-offshoring model
This offshoring model is viable when a startup company needs only a short-term offshoring solution. So usually, they need a managed offshoring that they need to employ for a short while.
So if you need external aid only for a specific project for a limited timeframe, this style of outsourcing-offshoring is right for you. It binds the advantages of outsourcing – short-term engagement, project-based contracts, and offshoring – lower costs and access to various talents.
There are no binds and contractual links. When the project is done, you can also end the contract.
The advantages of outsourcing-offshoring are the lower-overall costs than traditional onshore outsourcing. It is a great model if you want to extend your in-house team for a specific project within a particular time frame.
#4. Custom-Tailored Offshoring
This model of offshoring is custom-tailored according to your needs. Some offshoring companies also use the term Yourshoring. It represents a model where a managing company directs the hiring process. They ensure that all the staff you hire are aligned with your mission and vision and would be motivated to work on your objectives.
It is a great saver in terms of time and resources. The company directing the offshoring finds your “tribe” that resonates at the same wavelength as you. This is crucial and reduces the turnover by 70% rather than regular offshoring. You might pay a bit more initially, but it is a money-saver in the long run.
Yourshoring-offshoring is becoming a prevalent solution for startups because of their characteristic of innovation. They are not just searching for employees. Startups need and want leaders with creative ideas.
Conclusion
As we have seen, offshoring comes in many shapes of forms. The model you choose for your startup will often define your company’s future. So it would help if you considered all the factors and laid the ground for a successful company right from the beginning. Choosing a suitable offshoring model is your top priority if you want to proceed with a remote team. This has proven a successful business model for many companies, and yours can be one of them!
