How to fit outsourcing project into different business models?

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‘’We told you it will take us more time for that money. If you would like to make it faster, we need to talk about some extra costs or you need to wait 2 more weeks.’’

A few weeks ago I was listening one of my friends having this conversation with his constructor.

But let me bring you two steps back with the story.

Good – Cheap – Fast

My friend (who is badass web ninja by the way) was looking for almost a month for a person or a company to repair his new apartment and at one point he had 3 offers in front of him:

  1. One that was the most expensive one, but with estimated time of 3 weeks (was by far the best offer by time criteria)
  2. One that was the cheapest one, but with estimated time of at least 7 weeks
  3. And one offer that was not the most expensive nor most cheapest one, with estimated time from 4 to 6 weeks

He was confused. For the same task that he put in front of 3 teams he got 3 different offers and didn’t know how to make the right decision and get the best value for the money.


“But wait, didn’t you say he is very smart badass web ninja?”

Yup, he is.

A doctor.

King of the game.

Lord of web development.

But at the same time he knew nothing about construction, neither he’s previous knowledge could help him.


How to make right decision?


This conversation made me remember one of the lessons I got as a young person starting a career:

“Next to you is always someone that is by far better than you in something you know nothing about.”

Wow! So simple, but so hard to remember sometimes.


Making a business cooperation for a job or a project that you know nothing (or next to nothing) about is never a simple task to do, no matter how smart and intelligent you are.

If we translate this story with hiring outsourced software development team we can see some similarities.

How to do business with outsourced development team?

Even though some companies (or individuals) don’t have a lot of experience hiring outsourced software development teams there are a few criteria that can be used for making business arrangement adequate:

  1. Be wise to choose the business model which best suits your business strategy
  2. Look for their references that can be similar to your project
  3. Check if their team can be scalable fast


#Business model

Different business models can get you different project outcome and different project ROI. Before you make any business agreement with outsourced team, you should consider a few already established business models that are working:

Extended Office

Outsourcing team can be extension of already existing development teams of your company. Also, companies with a strategy to expand their in-house development capacity with an ‘outside partner’ cooperate with outsourced software development companies on the basis of the extended office model.

The cooperation usually starts with a pilot project during which the processes between the client and outsourced teams are synchronized, communication channels created, thus the grounds for future long term and strategic cooperation put in place.

After the completion of the pilot, both companies make resource planning for the period to come. Working remotely from offices in Serbia, or sometimes on-site at client’s premises software development team can be managed and controlled by our clients, although in-house project management is always assumed.


Per Project Cooperation / Fixed Price Development


The Fixed price development model is a model where outsourced team is engaged on project delivery basis. The model of cooperation is applied when companies have specific project and/or modules of larger design to be developed.

Project management is in-house and all responsibility for successful delivery in accordance with specification, timelines and deliverables is solely on outsourced team. This model assumes that both, the client and outsourced team have complete understanding of the project in terms of scope, timelines, risks and budget before project is approved and development started.

In accordance with predefined terms, deliverables and payment dynamics outsourced team undertakes development and takes complete responsibility for project management. If required client can monitor development process and have access to detailed documentation generated in every step of the project progress.


Joint Ventures and R&D Cooperation


Some outsourced teams are interested in tight partnerships and/or joint development and commercialization of innovative technology products and solutions. If there is a mutual interest, outsourced team might co-invest in projects with its clients.


If you’re thinking how to choose between two different outsourced teams and you’re not sure which one will deliver you better quality, look for their references. One of the best solutions in this case could be to ask both of teams to introduce you to some of their references so you could see yourself if they deliver on time and with good quality.


Would you like to be in position where you choose the cheapest outsourced team of 2 and ending up with project stuck because they didn’t have extra hands to help them with your new functionality? In more than 80% of the projects, analysis phase can’t get 100% accurate scope of functionalities.

Most probably some of them will come in later phase of development and in that moment the most important thing is that your outsourced team has enough resources to deliver everything. What can you do in this situation is to ask them if they have ecosystem built around them and are they able to get extra hands fast.



Even though cost control and saving money mind set is what makes business sustainable for a longer term, cheap services doesn’t necessary get you lower costs or a better ROI on projects or in real life.

But enough about our thinking, what would be your ideal business model for hiring outsourced team?

Give us a feedback below or tell us your good or bad experience that you had.




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