November 14, 2017
Digital Transformation
Software Development

What are the Options When It Comes To Outsourcing Custom Software Development?

What are the Options When It Comes To Outsourcing Custom Software Development?

The digital transformation processes require service providers to offer new options for how the Application Development and Delivery Leaders and service providers structure their engagement. In addition to the traditional staff augmentation and fixed-price models, there are various new partnership models depending on the desired outcome for the client. When and where can you use each engagement model?

In the recent “New Engagement Models Emerge For Custom Software Outsourcing” Report by Forrester, Senior Analyst Christopher Condo has highlighted six new engagement models which have emerged over the past few years. These are the ones beyond the traditional offshore cooperation, augmenting in-house staff and fixed price projects.

Christopher Condo
The main differentiator is a variable degree of responsibility, control, and risk that client and vendor select to best suit the needs of the engagement
Christopher Condo , Senior Analyst at Forrester

For example, Ciklum, which is also featured in the Forrester report, offers four cooperation models – Extended Team, Managed Team, Projects and Managed Services. Each model sustains an ideal balance between the client needs, stage of involvement, timeliness and price.
However, even these four models cannot cover all client demands.

How do you understand which model is the right fit for you?

Here’s the algorithm Ciklum uses to align the client’s outsourcing objectives with the business objectives and improve the chances of success for the engagement:

How to choose the right outsourcing model?

* Discovery Workshop is not an engagement model, but a tool helping the client formalize the requirements and define the model bringing the best outcome


According to Forrester, to choose the best engagement model, organizations need to have a clear understanding of what stays in house versus what they can outsource. By using this scheme, Ciklum clients have all taken steps to clearly define skill sets that are strategically core to their business and those that are not.

Matthew Colebourne
The UK team provide the commercial aspects, the Ukrainian team provide the technology. Keeping this clear divide allows us to avoid over-complicating development since all the developers sit in one location. Whilst this isn’t always possible, it’s definitely something that I would highly recommend
Matthew Colebourne, Director-New Business of the Trinity Mirror Plc

“It’s not only about out-of-the pocket costs, but the output you get”

According to Christopher Condo, to accelerate digital transformation and derive greater value from each outsourcing engagement, it is important to follow the recommendations from leaders. Here are the tips from Ciklum clients, who have already went through it all:

  • Do not choose the outsourcing provider based on the cost-efficiency only:

    The cultural difference can cost you money, the geographical location can cost you money, or time for that matter. Different time zones can cost you money. In the end it’s not only about out-of-the pocket costs, but the output you get, – Søren Schmidt, JABRA

  • Choose the right model:
    Stick to the basic staff augmentation and Agile principles if your requirements are not mature yet. Choose Managed Team or Managed Services if the work can be easily handed off.
  • Maintain human touch:
    Thoroughly acquaint yourself with the team leader of the remote team or the project manager. Develop a rapport and lay a foundation for clear guidelines and explicit expectations. Putting faces to the names will help both sides gain trust and mutual respect.
Brian Fink
Outsourcing is not going to fix your problems, it’s going to highlight them
Brian Fink, Head of Service Delivery at Ciklum

Considering the option of outsourcing IT services? Just drop a few lines about your project into the contact form and we’ll get in touch with you in 24h.

Read also:

To Manage Or Not To Manage? Extended Team Vs. Managed Team

Choosing a Top Outsourcing Software Development Company: Tips & Tricks