Mainstream Technologies

Thought Leadership

Outsourcing Models

outsourcing modelsThis article continues the discussion found in “OUTSOURCING SOFTWARE DEVELOPMENT” by highlighting the pros and cons of three distinct outsourcing models typically used today.

We understand that every business is different.  Their culture, needs, challenges, goals, and structure are unique.   However, they all share the desire to manage their costs in the most efficient manner possible.  Fundamentally, the economic logic driving outsourcing is reducing costs while improving services to improve the bottom line.[1]

So let’s take a minute to define the most common forms of outsourcing models available in the marketplace today.

Staff Augmentation/Contractors

Staff augmentation or hiring a contractor is an outsourcing strategy which consists of evaluating the existing staff and then determining which additional skills are needed.   This approach leverages both existing resources as well as outsourced contract workers.

The goal of staff augmentation is to address temporary staffing requirements by acquiring ‘contractors’ and placing them within the existing structure of the organization.[2]

Advantages

  • You have the ability to temporarily expand capacity without long-term obligations,
  • You can add specific skills or skill mix to fit business demands,
  • You’re able to integrate contract staffing into your corporate culture and train them accordingly,
  • Depending on the term of the project, securing temporary staffing can often be accomplished at a lower cost than hiring permanent staff,
  • You are able to contract or expand capacity based on evolving needs.

Disadvantages

  • Temporary staffing is often supplied by providers who use entry-level applicants,
  • You must be aware of the selection process that it may take time to get a contractor productive,
  • Since the engagement is temporary by design, you accept the risk of high turnover which could affect delivery,
  • Once a temporary staffer leaves, a measure of institutional knowledge is lost and the interview process must be repeated if/when the need arises again.

Offshoring

Offshoring in this context describes the sourcing of technical and administrative services to support business operations from outside the home country.  The economic logic driving outsourcing is cost reduction to improve corporate profitability.[3]

The growth of IT services offshoring is linked to the telecommunication and Internet expansion overseas of the late 1990s.   With these enhancements, it became possible to shift the actual production location of services to low-cost countries in a manner theoretically transparent to end-users.[4]

Advantages

  • Generally, hourly rates are preferable to domestic rates for similar work,
  • There is capacity available to be tapped,
  • On a case by case basis, providers are able to translate business needs and requirements to the offshore development staff.

Disadvantages

  • Evaluating a provider based strictly on hourly rates poses a risk to the success of the project since it could take longer to accomplish a given task,
  • There are often language and cultural barriers that crop up during the life of a project that impedes productivity,
  • Often offshore developers are insulated from the client by the provider,
  • Although the time difference can be perceived as an advantage i.e. the development staff is working while you are sleeping.  In practicality, this can pose a hurdle to project progress by communication delays,
  • Although hourly rates may be attractive, the other factors mentioned above may require more project management and development ‘time’ to complete the project,
  • Offshore providers may or may not provide relevant consulting services.  You must be aware from the outset what the provider’s competencies are.

Inshore

Inshoring (or Onshoring) is the opposite of Offshoring.  Inshoring is the sourcing of technical and administrative services to support business operations from inside the home country.[5]

Advantages

  • You have the ability to temporarily expand capacity without long-term staffing obligations,
  • You can add specific skills or skill mix to meet immediate business demands,
  • You have the option of handing off a project while minimizing direct supervision,
  • You are able to contract or expand services based on evolving needs,
  • In many cases, you have access to the developers who are working on your project.
  • Inshore providers may or may not provide consulting services.  You must be aware from the outset what the provider’s competencies are.

Disadvantages

  • The evaluation process to select a provider can be extensive depending on the nature of the project,
  • Blending corporate cultures can be a challenge,
  • The provider may or may not have bought into the success of the business.

Mainstream Technologies  

In this world of increasing complexity, your business is facing challenges every day that technology can address.  You’re looking for a reliable resource that brings industry-specific experience and knowledge of how to effectively approach a challenge that will maximize your technology investment and drive value to the bottom line.

Mainstream Technologies is more than a software development firm.  Mainstream is a firm with a proven track record of guiding businesses thru the maze of options to arrive at scalable solutions that streamline processes and transforms information into business intelligence.

  • Mainstream Technologies is technically agnostic which means that we’ll approach a project with the best tool(s) that meet your specific challenge.
  • Mainstream Technologies’ IN-FLIGHT CONSULTING™ means that we continually look for ways to recommend feature additions and value to your solution throughout the lifecycle of the project which may not have been apparent at the beginning.

We employ a best of breed development methodology that blends the promise of Agile and Iterative development methods so at every point in the development lifecycle we’re sure to meet your expectations and minimize the potential for wasted effort.

Our people make the difference!  Our team of developers, analysts, architects and project managers average 15 years’ experience with 7 of those at Mainstream.  As a destination employer, you can be sure you’ll have access to the brightest minds in the industry today.  Ask our clients, they speak on our behalf.

Advantages

Mainstream Technologies offers our clients:

  • A deep pool of technology professionals who understand the nature of business and how technology is applied appropriately,
  • Direct access to the development staff,
  • A firm who leverages Best of Class Agile and Iterative development methods to maximize your investment,
  • The ability to extend or contract your development capability as needed with a firm who is vested in your long-term success,
  • The ability to cultivate and retain institutional knowledge specific to your business,
  •  Access to complimentary services including Hosting, Database Support, Application Support/Development/Integration.

If you’d like to learn more about Mainstream Technologies, call us @ 501.801.6700 or visit our website at www.mainstream-tech.com.

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[1] http://en.wikipedia.org/wiki/Offshoring

[2] http://en.wikipedia.org/wiki/Staff_augmentation

[3] http://en.wikipedia.org/wiki/Offshoring

[4] http://en.wikipedia.org/wiki/Offshoring

[5] http://en.wikipedia.org/wiki/Onshoring

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