Software services: the most used collaboration models

What’s the best way to work with your software provider?

The digital innovation process in industries such as Automotive, Retail, Banking, Fin-tech, Manufacturing and Healthcare, raises the problem of managing high volume of enterprise data, automation processes, and all kinds of technologies.

Of course, thousands of lines of code are required, together with the hardware tools and the know-how to develop it.

The Software Services industry has generated, in 2019, a volume of 1 Trillion US dollars globally, and the forecasts predict a 5.5% growth by 2026.

A hot topic then, as an increasing number of companies are managing the costs, and the risks of being responsible for the entire software development workforce (from ramp-up to HR), by building partnerships with other entities that can provide such tools, resources and expertise.

This partnership can be shaped in different ways, depending on many factors, as the length of the project and the level of experience with specific technologies and industries.

One of the first puzzles to solve regards the way responsibilities will be shared between your organization and your software partner.

Key questions

  • Has your company done outsourcing before?
  • Among your employees, which professionals are currently available to work on the project, and what role can they play in the team?
  • What is your desired outcome, in terms of expertise and know-how that will be retained by your organization?


All these factors, combined with the volume of the allocated budget, will determine the type of collaboration model you will adopt.

Delivery models determine how the work will be conducted, who, specifically, will work on it, and how the project output (results and knowledge) integrates in the overall company’s strategy.

Before jumping to the description of each software development collaboration model, we need to clarify that, in practice, there is not a clear cut between a model and the other one, and the procedures are calibrated to fit the context.

Team Extension

This is the model in which you will hold most of the responsibilities and control over the project execution.

The software provider will help the client with resources (from junior to team lead) and tools, while the client will take over all the rest of the work: methodologies, software tools, scope of work hardware and so on.

While this model might look (and at some extent is) similar to a recruitment services, or headcount extension model, it actually brings the added value of the software provider’s expertise and consultancy.

Team Extension benefits

  • Faster Scalability
  • Access to a highly specific pool of resources
  • By holding the majority of responsibilities over the project, you will retain most of the knowledge and experience
  • It will be easier to manage the resources from a financial and operational point of view
  • The related risks are reduced

Managed Services

the software provider is responsible for delivering output on business income, working on KPIs. Managed-team services include the deployment of a dedicated team, hardware bring-up and technical validation.

The dedicated team usually works on the provider’s premises, constantly connecting with the client’s leadership and technical touchpoints to ensure continuous feedback and coordinated actions.

Resources, tools, expertise, and quality control will be provided. The two parts will individuate a team lead who can guarantee expertise and trust. This professional figure represents the client’s interests in the dedicated team.

This is usually a good frame to start a partnership, as you will have the opportunity to carry your projects efficiently while enriching your toolset and knowledge, by integrating a team lead from your side who will gain valuable experience on the specific technologies and on the outsourcing practices.

Also, this model represents a natural transition as your software provider becomes a trusted partner.

Managed services benefits

  • Clear point of contact in the Team Lead
  • Less administrative work
  • Less overhead in managing a team
  • You will save a lot of time training new resources
  • The client company will retain some knowledge from the supplier
  • Achieving outcomes: the software provider is responsible for the relevance of the output.

Transition CMO-FMO

As you have set the bases of your relationship with your software provider, and considering the option of sharing more tasks and responsibilities, you will face the delicate transformation process from your CMO (current mode of operation) to FMO (future mode of operation). A correct execution of this process is crucial to the long-term success of your projects.

A quick set-up of the governance and transfer of tools and resources will guarantee the continuity of operations and, consequently, a great project kick-off.

The FMO is still a flexible structure, and the client with the software provider, will make adjustments on the way, in response to changes of needs, size of the project and partnership development. 

Solution Delivery

In a solution delivery model, the client completely handles the technical work to the provider, which will be in charge of managing the project in every aspect: scope of work, sourcing, methodologies, software and hardware tools, technical validation etc.

This is an outcome-based collaboration model where the budget is often fixed.

Solution Delivery benefits

  • No overhead or very limited
  • The client buys a solution, with no need to enter the technical details. This aspect makes solution delivery particularly suitable for non-technical organizations
  • Financial predictability
  • Financial risks reduction

Learn more about our collaboration models.

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