Top 6 offshore development models: Which is right for you?
Scaling a team is never easy. The more staff you add, the trickier it becomes to manage and administer your operations. But not every way to scale is the same. Some bring additional burdens while others solve key challenges.
To choose the right path, it’s crucial to understand what the most popular offshore development models have to offer and which one aligns best with your goals. In this article, we analyse six strategies — from time and material to dedicated development team models — to help you make an informed decision.
Let’s get started!
What are offshore development models?
Offshore development models refer to the structure and approach an organisation uses to work with a tech team based in an offshore location. These models typically vary based on the level of commitment expected from the engineers and the organisation’s business goals.
For example, a US company can leverage a project-based model and hire Filipino engineers for temporary tasks or opt to build a dedicated development team in India with specialists that add long-term value to their business.
When is the right time to invest in an offshore development model?
Regardless of what model suits your business the best, the signs you need to go offshore are the same across the board. Here’s how to know if it’s the right time:
You can’t fill key positions
According to IDC, by 2026, more than 90% of organisations will be affected by the global IT skills shortage, with an estimated $5.5 trillion in losses due to delays, quality issues, and lost revenue.
So it’s no surprise that Western companies in the US, Europe, and Australia increasingly turn to offshore models to scale their development teams. Sticking to building a local team results in a long hiring process that usually leads to taking on new hires who are underqualified, overpaid, lack soft skills, or are a combination of all three.
In contrast, hiring from a talent hub like Bangalore, India, gives instant access to thousands of highly qualified and motivated candidates with the right cultural fit.
If you haven’t been impressed with the candidates you’re seeing or their wage demands are scary, it’s time to go offshore.
Your costs are getting out of hand
Employee wages account for more than half of the fixed costs of the average business in Western Europe and the US. Reports suggest that engineers are the most highly paid workforce today. When you hire expensive local talent with eye-watering salaries, you risk spending more on the payroll of employees than is typical for your industry.
One of the main advantages of an agile offshore model is that it allows you to save money and increase margins without compromising output quality.
By going offshore to a country like India, where the cost of living is lower and disposable income is higher, you get access to highly qualified engineers without the prohibitive development costs you face locally.
You’re turning down growth opportunities
Imagine your business is growing like never before, receiving inquiries from potential clients which would be game-changers. Unfortunately, because of your limited capacity, you can’t accommodate them, and are turning away valuable profit and growth.
This is exactly the situation where investing in an offshore development centre to scale your tech team is the ideal solution.
You’ll have access to a huge pool of qualified engineers — specialists whose mentality is all about delivering top-quality products — at a fraction of the cost you’d pay at home. And since this is an offshore team (not simply outsourced talent), they will be a part of your business for years going forward, enabling you to take on more work and generate higher profits on the way!
There are plenty of other reasons to use offshoring, but if your business is growing fast and you’re struggling to keep up, then it’s a no-brainer.
Top 6 offshore development models explained
You already know what offshore development models are and when to consider them. Now, which one fits your needs best? We’ve broken them down below to make your decision easier.
Project-based model
This model is designed for short-term work. You define what needs to be built, agree on a deadline and budget, and the software development provider executes the project from start to finish.
It may be an excellent solution if you have a standalone task and don’t require ongoing collaboration after delivery. While this has the advantage of being hands-off and flexible for the client, the standard of work is often low and ongoing maintenance and development can be a real problem.
Time and material (T&M)
T&M allows you to pay for the actual time spent and resources used, without locking in a rigid scope. It’s regarded as a cost-saving model due to the lower upfront fees, but it often ends up costing more for ongoing engagements.
It’s suitable if your product or scope is still evolving and you need flexibility to adjust as you go.
Development team extension
A development team extension model allows you to expand your existing in-house team with offshore engineers who follow your workflows, tools, and processes. It’s a great solution if you already have strong internal development practices but lack the right talent to scale operations.
Dedicated development team
With this model, you can build a stable team of offshore engineers who work exclusively on your product. They integrate into your workflows and collaborate with your internal teams over the long term.
If you require ongoing development and want consistent team members who understand your systems deeply, setting up a dedicated development team sounds like a perfect fit.
Offshore development centre (ODC)
An ODC operates as a long-term strategic hub for product delivery and innovation. When you build an ODC, you’re not just hiring engineers, but also business analysts, data scientists, designers, and other roles collaborating under one roof.
This model is ideal if you’re scaling your product and need a reliable offshore base to support multiple functions without compromising quality or control.
The Scalers’ offshore development model
The Scalers is an offshore development partner that builds fully integrated teams using a unique offshore model. Their approach involves building teams with specialists who are culturally aligned with organisations and add long-term value to their businesses.
It can work for you if you’re looking to build a high-performing offshore team that serves as a true extension of your company, without the operational burden.
Why choose The Scalers’ model to build your offshore team?
Perhaps you’ve tried offshoring in the past and didn’t get the results you hoped for. The developers weren’t quite up to standard, communication felt clunky, or the team just never fully clicked with your way of working.
The Scalers’ model is designed to tackle exactly those and many other challenges business and tech leaders face when going offshore.
Pros of The Scalers’ model:
- Access to top-tier talent. The Scalers sources and hires the top 1% of Indian tech talent in Bangalore, ‘The Silicon Valley of Asia.’
- Cultural alignment. Your offshore team adopts your tools, workflows, and ways of working, with your company DNA fully embedded. They function as a true extension of your in-house team.
- Fully managed operations. Everything from recruitment and HR to office space is handled on your behalf.
- Enhanced security. Your offshore team operate under strict security standards, including ISO 27001 certification, and follows the same compliance and data protection requirements as your internal teams.
- Long-term stability. With an employee attrition rate under 15% — well below the 34% average for Indian offshore companies — The Scalers build tech teams that last.
Cons of The Scalers’ model:
- Geographical distance. Your team will be thousands of miles from your headquarters, but ongoing support from a dedicated Chief Happiness Officer (CHO) — combined with opportunities for on-site visits and team workations — helps bridge the gap and maintain strong collaboration.
Real example: How The Scalers’ model helped an industry leader achieve its goals
In 2018, Preqin, a UK FinTech, needed to scale its engineering team to, among other goals, deliver a new flagship product. Hiring in London was too slow and expensive, and their previous development partner in India didn’t deliver as much as they expected.
That’s when they discovered The Scalers and its unique offshoring approach, kicking off what would become a successful, long-term partnership.
Preqin started with a four-person team in Bangalore that quickly grew into a 450+ person R&D centre. The Scalers handled everything from recruitment and onboarding to office setup and HR, allowing Preqin to stay focused on building quality software.
With engineers working inside their systems and culture, The Scalers’ model gave Preqin the speed, alignment, and long-term scalability it needed to thrive.
Do you want to know more about our unique offshore model and how we can help you build, extend, and scale your tech team? Fill out this form, and one of our senior executives will contact you promptly.
In summary
There are several offshore development models you can choose from for building a tech team abroad, depending on your unique business needs. But that’s not all you should be considering. It’s equally important to select an offshore development partner that offers unique advantages that no other company can provide you.
We hope this guide on offshore development models has been helpful. To continue exploring and learning more about offshoring, check out the related articles below.
