Outsourcing has long been a go-to strategy in the tech world, especially for companies seeking to innovate and tackle advanced projects with large, well-organized, multidisciplinary teams. In 2023 alone, global spending on outsourcing reached a staggering $731 billion. For many businesses, hiring a dedicated team of software developers through an outsourcing provider is the most efficient way to achieve goals while balancing the budget. But what's the difference between traditional outsourcing and the extended team model? And how can each approach help you fill skill gaps, expand your team, and maintain control over your project?
In this guide, you'll discover:
- The secret behind outsourcing’s popularity in the tech sector
- How to determine if outsourcing developers is the right solution for you
- Whether to choose freelancers or a dedicated software development company
- How to protect your project when hiring an outsourced team
- What the Extended Team model is and its key benefits for your business
Why Do Companies Choose to Outsource Work?
Outsourcing has gained immense popularity in the tech industry due to a combination of factors that align with the dynamic nature of technology and business.
Access to Experts’ Knowledge and Skills
The rapid development of technology makes it difficult for companies to maintain an in-house team with knowledge of all the latest innovations and specializing in niche issues. Particularly in smaller companies, creating specialized teams focusing on a wide variety of issues is simply not possible. Outsourcing allows you to support your team with skills that may not be readily available in-house but are crucial to the development of a particular project.
Cost Optimization
Outsourcing is also in many cases the most cost-effective solution. It allows companies to reduce costs associated with recruiting, training employees, and maintaining full-time positions. For large corporations, sending programmers to the "bench" is not as much of a problem as it is for smaller organizations that cannot afford it.
Freedom in Operations
In addition, flexibility and scalability, which are among the many advantages of outsourcing, allow technology companies to quickly adapt to market changes and the need for employees on a project. Extending or reducing the team is no longer a problem, nor is getting an expert to help with specific tasks.
Outsourcing vs. Extended Team: Choosing the Right Strategy for Your Business
When it comes to scaling your business, selecting the right approach can make all the difference. Two popular strategies are outsourcing and building an extended team. While both can help you achieve your business goals, understanding their key differences is essential to making an informed decision.
Outsourcing involves delegating specific tasks or projects to an external provider. This approach often leads to cost savings and increased efficiency, as you tap into specialized expertise without the overhead of full-time staff. However, outsourcing can limit your control over the process and the final outcome, as the external team operates independently, often without deep integration into your company’s culture or long-term vision.
On the other hand, an extended team functions as a remote arm of your in-house staff. Unlike outsourcing, these professionals work closely with your core team, sharing your company culture and goals, while remaining offsite. This model offers greater flexibility, fostering deeper collaboration and ensuring alignment with your business objectives over time. An extended team is ideal for businesses seeking long-term partnerships and seamless integration into their ongoing operations.
Freelancers vs Software Development Company: Comparison
Some companies experiment with hiring freelance developers, instead of the ones provided by software houses. Let’s compare these two types of contractors and see the differences.
Freelancers
Freelancers typically offer more flexibility in terms of working hours and project commitments. Availability may vary, and they might be working on multiple projects simultaneously. Clients may need to take on a more active role in project management, setting goals, and monitoring progress. The quality of the work can vary based on the individual's commitment to testing and debugging. Scaling may require hiring multiple freelancers or managing a team of freelancers.
Software House
Developers provided by software houses are usually part of a team with diverse skill sets. It gives you access to a broader range of expertise within the same organization. Often adhere to established quality assurance processes, including peer code reviews, testing frameworks, and quality control measures.
Read more: What Is a Software House?
Software houses are better equipped for large-scale projects. You can easily scale up or down by allocating resources from within the organization. Typically have dedicated project managers who handle timelines, milestones, and client communication. It provides more structured project management processes.
Software House: Stability & Quality
Freelance developers and software house developers each have their advantages and drawbacks. Freelancers may be skilled and experienced but the problem of aligning with the in-house team, scaling, and may occur with time. Software houses offer a more comprehensive, structured approach for larger and ongoing projects. Proven quality, good project management, experience, and excellent teamwork are the main advantages that software house developers have over freelancers.
6 Things to Know before Finding an Outsourcing Partner
Hiring developers for outsourcing can be a great way to access a pool of talent, reduce costs, and scale your projects efficiently. However, it's essential to take steps to protect yourself and ensure a successful collaboration. Here are some tips to help you protect your interests when hiring developers for outsourcing:
1. Clearly Define Requirements.
Clearly articulate your project requirements, including specifications, functionalities, and expectations. Provide detailed documentation to avoid any ambiguity.
2. Background Check.
Research and verify the outsourcing company or individual developers. Check their portfolio, reviews, and testimonials. Look for relevant experience in the technologies and industries related to your project.
3. Legal Agreements.
Draft a comprehensive and legally binding contract that outlines all terms and conditions, including project scope, milestones, payment schedules, confidentiality clauses, intellectual property rights, and termination clauses. Consult with a legal professional to ensure the contract is enforceable in both your and the developer's jurisdictions.
4. Non-Disclosure Agreement (NDA)
Have the developers sign a Non-Disclosure Agreement to protect your sensitive information and intellectual property. This helps to ensure that the outsourcing team doesn't share or use your project details for other purposes.
5. Regular Communication.
Establish a clear communication plan with regular updates and progress reports. Utilize project management tools and platforms to track work, communicate efficiently, and maintain transparency.
6. Code Ownership.
Clearly define the ownership of the code and intellectual property in the contract. Ensure that you retain full rights to the code developed for your project.
Read more: How to Find the Perfect Technology Contractor?
Do You Need a Development Team Extension? 4 Common Scenarios
Are you wondering if your team is sufficient to meet all business goals and needs? Maybe you are considering hiring additional developers, but you still have doubts. Take a look at the following list and check if extending your team is the solution your company needs.
I Have Problems with Meeting Deadlines
Are you finding it challenging to meet project deadlines with your current team? Does it affect the quality of work and satisfaction of employees?
I Have to Deal with Temporal Understaffing and Lack of Flexibility
Is the size of your team sufficient during peak workloads or project spikes? Are developers overworked or stressed by the amount of work at the current stage of the project? At the same time, you don’t see a need to hire more developers because you won’t have enough work for them soon.
I Have a Problem with Cost Optimization
Are budget constraints preventing you from expanding your team when the workload demands it? Do you feel like you don’t want, need, or have time to hire more developers for your in-house team but you need more employees ready to work now?
My Company Lacks of Expert Knowledge In-house
Do you often encounter situations where your in-house team lacks the specific expert knowledge required for certain tasks?
If you are struggling with the issues described above, outsourcing is the perfect solution for you. The next step is finding the company that will connect you with the developers that will be the perfect fit for your team.
The Advantages of the Extended Team Model
An Extended Team offers a cost-effective solution, allowing you to access additional resources without the long-term financial commitments associated with permanent hires. Let’s take a closer look at the benefits of the Extended Team model.
Cost Predictability
The dedicated team model offers a predictable, cost-effective solution, especially when hiring new employees becomes financially challenging. With a clear and detailed contract, the extended team model ensures that your costs remain stable, even as you hire a dedicated team to support your project. This predictability is particularly beneficial for small teams or businesses looking to manage expenses without compromising on quality.
Lower Cost of Development
By extending your team with remote software developers from various parts of the world, you can access high-quality tech talent at a significantly lower cost than hiring locally. Outsourcing services allow you to reduce overheads while maintaining the quality of your work, making it a smart choice for companies needing to augment their development capabilities on a budget.
Flexibility & Scalability
The extended team model provides unmatched flexibility. You can quickly scale your team up or down based on your project's needs, ensuring that you have the right people around at the right time. This model is ideal for companies experiencing fluctuating workloads or needing specific skills for different phases of product development. Whether you need to expand your team temporarily to meet a deadline or reduce it after completing a milestone, the team extension model gives you full control over your project.
Access to Pre-Vetted Specialists
When you hire an extended team, you’re not just adding more developers to your roster—you’re integrating experienced professionals with a proven track record into your existing team. These developers are carefully selected to match your business and technical requirements, functioning as an extension of your in-house team. This ensures that you’re working with top-tier talent that is equally responsible for the success of your project.
Knowledge & Experience
Attracting top tech talent, especially at the senior level, can be challenging. The extended team model allows you to hire experienced software developers who bring valuable insights and leadership skills to your team. These professionals don’t just fill skill gaps; they actively contribute to your development process, helping your core team work smarter, not harder. This ongoing cooperation enhances productivity, reduces code churn, and improves the overall quality of your software solutions.
Fresh Perspective & Collaboration
An extended team can help your in-house team grow by sharing ideas, strategies, and best practices. This collaboration leads to a more dynamic and creative development environment, resulting in higher quality code and a better end product. By fostering a culture of continuous learning and open communication between your core in-house team and the extended team, you create a cohesive unit that works together towards a common goal.
In summary, the extended team model is a powerful solution for businesses looking to expand their development capabilities while maintaining control over their projects. By seamlessly integrating external expertise with your core team, you can overcome challenges, meet deadlines, and build a dream team that drives your business forward.
Summary: Key Benefits of Extending Your In-house Team
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It’s a budget-friendly option. Extended Team means predictable and lower costs of development.
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Flexible and scalable solution to give you the exact number of developers you need now.
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Meeting the deadlines and faster delivery.
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Less stress and pressure for your in-house development team.
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Knowledge and skills you don’t have in your in-house team.
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Pre-vetted specialists. We carefully choose the best candidates to join your team.
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Fresh perspective and idea sharing.
Let's talk about choosing the best dedicated team for your project!
Contact us and we will talk about the details of our collaboration! At Primotly, we're passionate about collaborating with individuals and businesses like yours to bring about positive transformations.
