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Thought Leadership

Software Development Outsourcing Models

By Javier Navarro-Machuca, CEO at IO Connect Services
March 24, 2021

The Software Development industry leverages different outsourcing models to stay competitive in ongoing innovation, efficient releases, and sustainable business success. Outsourcing is an agreement where one company hires an external service provider to delegate activities to a more experienced and higher skilled team, to lower costs, or to be able to focus on more critical business areas. There are different models based on the way a Software Development project is approached and delivered:

Staff Augmentation

This outsourcing strategy consists of evaluating the existing resource capabilities and determine the gap in the skills that a project needs. With this practice, the companies extend their teams with the right skills by contracting staffing services from vendors who have the desired knowledge and experience. One common objective is to use staff augmentation for cross-training their teams with savvy contractors.

The client is still responsible for managing the contractors and the work they will be doing. In this model, the vendors allocate their employees to client accounts for a specific period with extensions or renewal options.


In this model, the client delegates the entire project to a vendor. In some circumstances, the client only entrusts parts of the project. The objective is to offload a large bulk of work to the outsourcing company that will be entirely responsible for developing the project. This model is ideal if the client wants to have a fixed price for the project's costs.

Historically, this type of engagement tends to be less flexible for changes in the requirements since these are defined in the contractual terms. Any modification is queued up to a later phase of the development, and it adds extra costs.


In many cases, teams hire external consulting agencies or professionals as an expert voice to assess a specific area or a practice and advise on strategies to achieve business objectives. These types of engagements are focused more on strategy definitions than development. By contracting a consultant, clients have access to deeper levels of expertise that would be costly for them to retain as a full-time employee in the long term.

Learn more about the advantages of nearshore outsourcing here.

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