Dedicated Team or Outsourcing a Project: Which is Better for Startup?
Currently, the sphere of IT is evolving with lightning speed. It is about cooperation between developers, managers, marketers, and analytics, as well as constant feedback evaluation. If a startup aims to create a high-quality and competitive product, classic employment models might be ineffective, making requisitioners look for other ways of cooperation.
You must have heard that IT outsourcing is at the rapid stage of development nowadays. Actually, many of the best software engineering companies, like Skype, Github, and Slack, prefer outstaffing over other models of cooperation. Outsource software development is a powerful commercial tool that can open up great opportunities and deliver outstanding results for the company when applied correctly in certain situations. When considering the possibility of using such services, one should think first of all not about the advantages and disadvantages of the service itself, but about what benefits it can bring to the company and what risks the business can potentially face.
In this article, we want to help you address the issues regarding selecting the best outsourcing model for your startup, namely a dedicated team or project outsourcing.
Moreover, at Qubit Labs, you can receive qualitative consultation regarding hiring both a dedicated team and IT outsourcing.
Referring again to this article’s topic, let’s start with making a quick recap of the mentioned models’ meanings and continue with reviewing their advantages and impact.
What is a Dedicated Development Team
To start with, a dedicated team is a model that implies having a remote team at another company that is engaged in your project’s realization process. It is a separately formed working group with its own management and structures. In this model, an outsourcer’s dedicated development team works solely on a particular project on a full-time basis with direct accountability to the client.
In this model, a client has more control than in, say, outsourced software development because one can interact with the development team and track everyday tasks and general progress. Such involvement helps developers and the startup to be on the same page, rapidly adapt to changes, and see whether something has to be adjusted at any development stage.
The team has a determined goal and aims to implement a single project while being on long-term employment and working on the same level with in-house employees. The team is not dispelling its attention on several products it has to develop. Moreover, the speed and quality of the results are being enhanced. You don’t have to worry that the team is overloaded with tasks or that they won’t achieve the target because daily meetings and constant communication help remedy the problems at their root. The client adjusts team management and sets goals in accordance with one’s internal processes to make the team’s integration into his/her company more effective.
Actually, several cases can be highlighted when speaking of the mentioned team model implementation:
- you aim at long-term cooperation with the team
- the project’s requirements might change during the development process
- you assume that in the working process, there might be a need to expand the team
- you don’t have time or resources to educate and hire the team
- you want to decrease the expenses
There are some other specificities of having a dedicated development team, which vary based on the project and the clients’ expectations. It is essential to mention that the dedicated team model is more individual-oriented. The thing is that when hiring such professionals, startups aim not only to find people who would develop their products but also highly-motivated specialists that will be proactive and interested enough to deliver top-notch results. One could even say that the name “dedicated team” speaks for itself because, usually, people work together on long-term tasks and are committed to achieving set goals.
Advantages of a Dedicated Team
Before describing the benefits, it is significant to say that a dedicated team is being formed based on the company’s requirements.
It is relatively flexible regarding the volume of work and tasks, expenses and resources, and the development team itself. When hiring a dedicated development team, you hire a “coherent organism” that is inspired by the set goals and follows the guidelines.
There are two aspects of the process of forming a dedicated team. The first case is when a team is sort of a separate development unit that includes all the necessary employees, like designers, developers and project managers. The second case is when the client hires a dedicated team to expand one’s own, and that increases the company’s capabilities thanks to several external experts. The reasons for choosing the mentioned model include:
It is easier and cheaper to hire a dedicated team because the specialists are recruited from other countries, where there are lower salary demands among the software engineers. Finding necessary candidates is a process that takes a significant amount of time and requires great effort. The mentioned model is a viable decision because the team is usually already formed. It takes a short period to find suitable employees that are oriented at working with a particular type of project. When delegating the recruiting, onboarding, and other back office processes, you have much more time to focus on the project and save money for other significant processes, like business analysis.
- Adaptability and purposefulness
When the team is immersed in the project and isn’t distracted by other factors, it allows emphasizing certain development stages that imply generating more diversified and extraordinary ideas. The dedicated web development team structure makes it possible to recalibrate the working “pattern” at any phase per current conditions.
- Fast development cycle
You can automatize most of the routine tasks to devote more time to elaborating the project’s essence. It is easy to adjust the assignments in accordance with the situation without slowing down the progress of work.
From the outset, the client decides how many people he/she needs to create the software. If necessary, there is a possibility to add or remove the employees.
The payments and services are transparent, making the cost predictable. The thing is that in project outsourcing, expenses are based on the tasks or working hours, so it is quite challenging to count the final budget in advance, especially when the client makes changes to the project. It allows for avoiding multiple risks, including overpaying in the process of product creation. You can also invite the remote team on the team buildings to the main office to enhance the team spirit and engagement.
Shortcomings of Having a Dedicated Development Team
It is not surprising that any model can’t go without cons because there is no “one size fits all” approach when it comes to software development. Nevertheless, it mainly depends on what you’re planning to achieve, and your resources and financial opportunities. Long story short, the disadvantages of this model include:
- The need for sufficient funding
It is significant to understand that working with a dedicated team on a remote basis is like having a group of people who work in-house. The thing is that you still need specialists who will take care of the management-related tasks, communicate with employees, ask them for feedback, and inform them about updates. Thus, it is efficient to implement such a model if you have people responsible for project and product planning. Speaking of the mentioned professionals, Qubit Labs offers an option to hire a team with a project manager or recruit a part-time PM who will manage the team and tasks.
- Rather ineffective for short-term projects
You will have to spend time selecting the potential candidates, making sure they understand all the processes and goals, and can successfully cooperate with other team members. It isn’t worth it in case you need developers for a couple of months.
When It’s Better for Startup to Outsource Project to a Software Development Company?
Let’s see the situations in which the process of outsourcing developers might bring gains to the startup:
- Software development is not your main business. It is much easier and profitable to give all the tasks to the software outsourcing company rather than spend plenty of time and money on employing a team yourself. Moreover, if your company doesn’t have experience with software development, you won’t need to hire a Product Manager or a CTO who will be able to evaluate the candidates’ skills. Thus, in the case of working with outsourcing firms, you don’t need to worry about such details because the professional recruiters will thoroughly select all the employees.
- There is no “proof of the concept.” or MVP. In this case, it would be more practical to cooperate with software outsourcing companies rather than face “cautionary tales.” Also, you can prevent loss and reputation damages. Moreover, you will avoid financial and time expenses by delegating tasks to the professionals.
- Programmers’ overload. In case you have faced a lack of resources, but there is a need to start working on a new project within a short deadline, consider cooperating with the top software development company. It is quite challenging to promptly form a great team because searching for a suitable candidate might take a couple of months.
Benefits of outsourced software development
It is almost impossible to hire skilled developers on short notice because it turns out to be too expensive or contradicting the projects’ requirements. It is often when you just need to hire a couple of specialists to meet the task’s demands, so it might be costly to have a whole team of software engineers when you only require two of them. Therefore, when turning to outsourced software development, the company receives access to a large base of candidates from all over the world that are available for any period. Other benefits of outsourcing developers include:
- Significant savings
When working with in-house teams, you automatically become responsible for taking care of paying taxes, rent, and providing other benefits. If you sum up all the expenditures, there will be a substantial sum. Thus, you can save money by working with the best software engineering companies from other countries, like Ukraine, rather than paying much more money for working with equal outsourcing companies in the USA.
- A pool of talents
If during the development process, you have realized that you need to implement some adjustments into, say, web design, you won’t need to hire a full-time professional. Usually, outsourcing firms have experienced designers and developers on board who can address the task at any time.
- The reduction of risks for your business
There is no need for you to worry about the deadlines when the remote team takes the responsibilities. Outsourcing companies need to maintain their reputation and receive positive feedback from customers. Thus, they will put efforts towards delivering the best possible results.
- No unnecessary contracts
The startups can have direct contracts with the developers, signing them one-on-one. The outsourcing firms take care of all the bureaucracy, and you won’t have to spend time filling in all the forms.
- Access to technology trends
Software outsourcing companies try to stay abreast with the technologies, and it is easy to find professionals who will specialize in any recent IT updates.
Pitfalls of Working with Software Outsourcing Companies
Without going into detail, let’s see several disadvantages of IT outsourcing:
- Difficulties regarding cultural peculiarities
In case you have decided to work with the developers from, say, Asia, they will likely have contrasting attitudes, values, and perceptions of the project. Thus, it is significant to understand whether the employee realizes what results he/she has to deliver. Actually, it is better to outsource developers from the countries the mentality of which is closer to yours.
- The absence of personal communication
Sometimes, the projects’ outcomes might be negatively influenced by miscommunication. It might be challenging to get the meaning of the message, and the developer might interpret it in other ways than the client. Therefore, it is significant to stay in touch all the time to be able to eliminate possible confusion. Moreover, always carefully read the contracts to understand to whom the code will belong. Some of the companies tend to “bind” clients to themselves in this way.
- The risk of hiring juniors posed as seniors
In some cases, companies sell junior-level developers under the guise of seniors, which, in its turn, will lead to enhanced development time and increase the risks of errors and bugs. In contrast, when it comes to dedicated teams, there is a guarantee that all the tasks will be performed by the employee with whom you’ve interviewed.
Therefore, one can’t say for sure which of the two mentioned models will suit better for your startup. It is necessary to keep in mind your goals, expectations, and resources.
We can conclude that a startup can benefit from hiring a dedicated team if it is confident that the product will be successful, and all the diligence won’t be in vain.
However, if there is no proof of concept, it is more effective to rely on outsourcing companies to mitigate the possible unsatisfactory results.