Can you relate to any of these dilemmas?
- You need a full-time inside team, but it is too expensive.
- You need an outsourced team, but it may not be reliable enough.
- You want local resources, but it sounds impossible to find the perfect team.
If so, you're not alone!
The following article explains two of the most efficient outsourcing methods in IT, their pros and cons, and how each of these models can help businesses.
What is IT Outsourcing
IT outsourcing is the delivery of IT-enabled business processes, services and applications, and technical solutions by external service providers. Utilities, software as a service, and cloud services all fall under the outsourcing umbrella.
A business may outsource its IT for a variety of reasons, including taking advantage of advanced technical skills, reducing costs, and simplifying expansion.
A McKinsey report states that 87% of a test’s respondents have or anticipate recruitment bottlenecks in their IT teams within the next few years. Many other sources also support this claim, which shows that the worldwide IT talent shortage is on the rise.
This is one of the reasons why the role of IT companies has become so important and why so many business owners are turning to IT outsourcing. In fact, companies spend much more of their IT budget on external services than they did 10 years ago (US CA).
IT Outsourcing Methods
There's no doubt that the right people are one of the most important ingredients in a project's success. Many SMEs and startups have difficulty adding resources to an existing team, especially those with specific skill sets. It is rare to rely on in-house personnel in traditional outsourcing.
This is when the Extended and Dedicated team models come into play.
Dedicated Team Model
As opposed to a traditional execution model, a dedicated team is often said to provide better results. Many companies prefer this model because it has improved delivery, clearer project status, and enhanced flexibility with dynamically changing plans.
Simply put, you can extend your software development facilities through a dedicated model. As part of remote collaboration in software development, dedicated development teams are a popular partnership model.
Transparent and effective, this model is ideal for well-established and growing companies alike.
Pros of Dedicated Team Model
Given its optimal costs and selected professionals, the dedicated partnership is the most suitable option for enterprises seeking long-term collaboration. This model is best suited for:
Entrepreneurial Startups: A startup is expected to grow in its early stages. Choosing a dedicated team can be a great solution in this case. Adopting this method allows you to build a team, reduce hiring costs, and develop products more quickly.
Projects With Long-Term Goals: This model is appropriate for long-term, complex projects with potential for expansion. In order to fully unveil the potential of your project, you will need a strong team of developers to help you along the way.
Working with a dedicated team means you can rest assured the people you start with will stay with you until the very end. Other reasons to outsource using this team model include:
- Predictable and measurable budget
- Requests can change at any time because the scope is not strictly defined
- Full control of project management
- A dedicated team of professionals understands the client's objectives and business goals
- Use of web tools including Skype, Asana, Trello, and Basecamp to communicate with the team every day
- Team members have a high level of dedication to the client
Cons of Dedicated Team Model
Despite the obvious benefits, the dedicated team model is not a one-size-fits-all solution. Here is a list of situations where a dedicated team collaboration model may not be the best solution.
Projects With Short-And-Middle-Term Goals: Small projects with clear and defined requirements don't require a Dedicated team. When the work scope is clearly defined, you simply need to assemble a team to carry out the tasks.
Limitations In Time And Budget: Choosing a Dedicated team model for a project does not make sense when your budget is strictly fixed. Some projects do not require a full-time designer or project manager. Essentially, a fixed-price model is sufficient to achieve the required result here.
Other disadvantages of this model include:
- Crewing takes time
- Team management also takes time (unless you hire a project manager from a service provider)
- For projects that do not require constant software development, the dedicated team model may be more expensive than the time and material model
Extended Team Model
Extended team (also known as staff augmentations) is an IT outsourcing method. Core developers are located in-house, while remote developers extend the development team. Collaboration between both teams helps fill in the inexperience or skill gaps.
An extended team can either be nearshored (into another country on the border) or offshored (to an entirely different continent). There is no right or wrong approach; what's most important is that the team you work with is an extension of your company.
Pros of Extended Team Model
If you don't have skilled developers to support your team, the extended team model (ETM) is a good choice. ETM is among the IT outsourcing methods you can use to start a side project while keeping your core team’s focus on something else.
This method is ideal for projects that are meant to be expanded gradually. Other benefits of this model include:
Benefits Shared: Working with an Extended team can be beneficial to a company's in-house team. They are able to learn from each other, share tips, and work together to solve problems. Introducing ETM makes the team leaner and more efficient. There are no cutbacks or downtimes since the only essential staff is employed
Flexible And Time-Saving: This collaboration model enables flexibility and scalability without recruiting. ETMs save time and effort that you would otherwise spend on recruiting and training. Other benefits of this team model include the following.
- There is an international talent pool
- Dedicated developer teams are fully invested in your project
- You can control the hiring process to meet your requirements
- All team members share the responsibilities
- The payment model is transparent and efficient.
- There are no hidden costs
Cons of Extended Team Model
Although the extended team model has its advantages, it also has its disadvantages and challenges.
Language Barrier: The fact that the in-house and extended teams will need to work together may complicate integration because there may be a language barrier or cultural difference. So it is recommended that you check a candidate's language proficiency before hiring.
In-house Misunderstandings: New employees should feel supported by both new management and new colleagues as they settle in and become familiar with the company's internal processes. It is important to let the core team know that the new colleagues are not there to replace them but rather to relieve them of certain tasks.
To summarize, a dedicated team model is the best choice for projects with many vague requirements, whereas the extended team model is a great choice when your IT department lacks skills or experience and you don't want to go through the recruitment process.
Building scalable and efficient development teams for startups and businesses worldwide is among our many accomplishments. By leveraging our expertise and direct access to a large talent pool, we can help you set up your own extended development team and fine-tune your operations according to your needs.
Our IT Outsourcing Company will be there to support you and assist you with any challenges you face down the line.