Hybrid Vs. Captive: Which Outsourcing Method Makes the Most Sense?

Andy Hilliard

Andy Hilliard

Aug 10, 2023 | Accelerance Blog

When considering outsourcing, which do I choose? Hybrid or Captive?

Outsourcing software development is a challenging process. As ARC points out, there are countless development service providers available, and a big difference between good and great. The question is — how do you find the best one for your organization?

The challenge is choosing a partner that will get a project done on time, within budget, and with minimal problems.

There are three essential questions to ask yourself when choosing a development partner:

  • How well do they communicate, both internally as well as with an in-house?
  • Do they have the technical skill sets needed to successfully complete the project?
  • Are they able to complete projects on time? Be sure to check with at least three references.

Maybe you want your project done completely separate from your daily operations. Or you might want your own team involved in the outsourcing process. Before you decide to start outsourcing, here’s an overview of the benefits and differences between a hybrid and captive offshore outsourcing model.


Hybrid vs Captive


Benefits of a Hybrid Outsourcing Model

The hybrid model uses a blended team approach of both on-site and outsourced team members, maintaining tight control and collaboration while increasing team flexibility and throughput at a more cost-effective blended cost. 

This model has proven to be extremely budget-friendly while nurturing close relations and engendering a true partnership. You are able to watch over the process and provide real-time edits while getting the necessary talent for the project. 


Key benefits of this model include:

  • Strong collaboration and communication
  • Establish and fostering an “extended team”
  • Increased talent pool flexibility
  • Access to partner best practices
  • Local control and ownership coupled with lower offshore pricing
  • Post-deployment support


What is a Captive Outsourcing Model?

A captive outsourcing model is essentially a corporate campus based offshore. These captive organizations are overseas subsidiaries set up by global corporations to serve the parent company. They offer an alternative to contracting out projects directly to an unrelated offshore provider.


The Various Captive Outsourcing Models

Hybrid Captive

A model where one continues to perform core business processes for its parent company, where some or a significant portion of non-core work is outsourced. Non-core work typically includes anything that isn’t directly related to the core competency of your company.

By outsourcing non-core work, the parent company can allocate more time and money to its core business elements.


Shared Captive

Specifically, this type of shared captive center works for its parent company as well as external customers. This is both a potential revenue generator and a cost-sharing vehicle for the parent company.


Make the Right Outsourcing Choice 

Choosing an outsourcing partner often requires an inordinate amount of due diligence, time, money, and energy coupled with experience and a comparative understanding of outsourcing best practices. 

Accelerance connects its clients with the most perfectly-aligned expert outsourcing teams culled from their proven network of software development partners from around the world. As a result, we’re able to reduce the risk, time, and cost associated with the outsourcing due diligence process.

Schedule a free appointment with an Accelerance trusted advisor for experienced advice from the premier Global Software Outsourcing Authority®. Together, we can deliver top-tier software development resources and provide professional consulting services tailored to your specific needs.


Andy Hilliard

Andy Hilliard

As CEO, Andy leads and advocates for the globalization and collaboration of great software teams with companies in search of talent, innovation and a globally-distributed extension of their engineering function and culture. Andy founded the ground-breaking nearshore software development services company, Isthmus Costa Rica. He began his global software services career as a division manager at Cognizant during their early formative years.

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