Outsourcing. The word may still be strange to some, but in these times, it is a service that is gaining more and more strength. Why?

There are several reasons that help explain the phenomenon, but it is important to detail the importance of the service and how it can help in the development of a business. Despite some reticence, outsourcing is undoubtedly a path that cannot be overlooked.

To start with a quick explanation, the most common approaches nowadays are either working with a third-party outsourcing provider or establishing captive operations in competitive markets like Portugal. Engagement models can be differentiated based on customer organization’s need for management control, cost of operation, risks and other factors.

One of the biggest fears for beginners is the thought of losing control of their own business. It is important to demystify this idea, because this service only seeks to function as a driver to the business; a great help when for some reason you do not find solutions internally. Portugal entered the map of outsourcing in this decade and it is not difficult to understand why. The location, the excellence of resources and the competitive cost structure have made the country a showcase for European companies. Cleverti, for example, founded in 2010 is already operating in 9 countries with a mix of operative models.

Time and Materials (T&M), Project Fixed Cost and Managed Team. These labels may sound strange, but they are the three most recurring approaches in an outsourcing service.

Each approach has its own specificity and you need to realize what each one has to give to your business. Project-based outsourcing is considered to be the most appropriate for development of software with well-defined requirements and deliverables. On-site presence may be required to facilitate estimating, specification and relationship management. On the other hand, T&M is suitable for those projects where the requirements are unclear, maintenance or one-off projects. This is the explanation for the first two approaches.

With a certain amount of complexity and accompaniment we have the Managed Team service. This may be the best option if you want to build a more continuous project with a long term relationship. It’s important to understand that in this model the trust and partnership are the most important words. The feeling is that the customer is just not one more, but rather a special client that will put the trust necessary for the development of your business.

This centre model caters for software with changing requirements, maintenance and support of large systems, research and development, testing as well as other types of complex ongoing medium- or long-term tasks. In this type of engagement vendor provides necessary facilities and allocates a team that works only on account’s projects and is managed by a customer representative. This option is usually preferred when resource requirements are low. The customer is charged a fixed monthly fee per full-time employee (FTE).

It is important to realize that there is a lot more to gain than to lose from the outsourcing service. This approach will deliver benefits in terms of improved focus, optimization of processes, reduction of operational costs, faster time-to-market, etc. But companies must thoroughly evaluate each option to identify one that represents the best fit for their specific requirements, business culture and strategic goals.

The approach selected will depend on whether the primary driver is short-term cost savings or whether the company has long-term vision for offshoring/nearshoring and wishes to retain control over processes and intellectual property. It’s not easy to find the right partner, but you should look for one who can help you pursue your strategy.

Portugal, and more specifically Lisbon, points to the near future as one of the main technology capitals of Europe. As a stage for major tech events such as Web Summit the Portuguese capital has attracted more and more international clients and emerges as a great alternative for those who want to opt for an outsourcing service.

By Tomás Santos | Business Development Manager | via LinkedIn