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Dedicated development team vs. outstaffing vs. project-based models: All you need to know about outsourcing in 2021

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(Image credit: Image Credit: Wright Studio / Shutterstock)

Outsourcing is seen by companies as a flexible business transformation to speed the market, find a partner to elevate their business processes, and integrate a digital solution in daily operations. Deloitte states that over past years appeared the trend of "multi-vendors" and "multi-sourced." Companies seek a perfect solution from different places and choose what fits their business model best, not considering the only one option. In the Deloitte Global Outsourcing Survey of 2018, most companies viewed outsourcing as a way of agility and service improvement. However, with a 2-year-difference, they would consider outsourcing for cost benefits and the opportunity to choose from a wide pool of tech talent.

There are quite popular destinations in Eastern Europe and Latin America for nearshore and offshore outsourcing. Some businesses would even set Offshore Development Centers. Although outsourcing is globally used for different purposes, short- or long-term IT projects, companies still should proceed carefully in choosing vendors, selecting software developers, and understanding the details of the outsourcing process. There are several IT outsourcing models the client should consider before starting their search.

Hiring a dedicated development team for your projects

A dedicated team is basically a team of software developers under the vendor, i.e., supervised by the outsourcing agency you have chosen for your project. When you hire a dedicated development team, there are several benefits that your project and company can reap because of how this model makes the outsourcing experience.

These are some advantages:

Different costs and savings. The rates to hire developers via outsourcing are different for each country. For example, a Costa Rican developer earns $40 per hour, a Ukrainian developer earns $25-$49 per hour, and a Brazilian can earn $25-$40 per hour. Meanwhile, in the US, a software developer earns $56 and above per hour, so if you choose to outsource, you will end up saving a lot of money.

Experienced project management. A big plus of having a dedicated team is that the vendor provides a project manager and a team. It's not always the case, but sometimes it can ease your managerial workload.

Expansion of team. It is easy to expand the number of members on the project team even during the project when you need it.

More time to focus on business core aspects. Since the dedicated team of developers is managed by a vendor and just tracked by your tech responsible during main deliverables, you and your in-house team can then spend time on other tasks and important projects.

Save time on hiring. The agency usually already has a ready-to-start programmer to work on your project; you will get only the thorough vetted CVs of candidates with the desired skill set in a matter of days. You don't need to spend a few months on the recruitment process when you can do it in 2 weeks.

Outstaffing model, and when to choose it

Among all IT outsourcing models, the outstaffing model is ideal for companies seeking specialists to integrate into their in-house developer team. The client has more control over the process during the project and tracks the developer directly. Your remote developer is working full-time with the same schedule as the rest of the team. You can hire developers from different regions and countries as diverse as Ukraine and opt for the outstaffing model.

Benefits of an outstaffing model

Lower recruiting cost. The recruiting cost and the salary you have to pay a developer you get via outstaffing are much less than what you'd have to pay for hiring and keeping an additional in-house developer on the roll.

Complete control over development. Since you, as a client, are working directly with the developers, you will have full control over the development process and make sure that they deliver a high-quality job.

Client access. As the client is the main responsible for the communication with the hired developer, you will not find it difficult to reach out to the programmer. There is no third-party involved.

The developer's schedule is the same as the client's. As you hire developers full-time, they follow the rules and schedule of your company. Ensure that you outsource nearshore or have long time overlaps to keep the fast pace of work.

Project-based outsourcing

This model is the best for the companies that wish to assign the project completely to the vendor. If certain routine projects don't need specific in-house knowledge and don't require the client's participation, you can outsource them. However, in the project-based outsourcing model, there is minimal scope for the client to request or make changes while the project is in progress because almost all control is in the vendor's hands.

Some of the advantages of this model are as follows:

Cheapest model. This is the most affordable model out of all available, so you ultimately save a lot of money if you opt for this.

Best for short-term projects. If you need a short-term project completed professionally, the project-based outsourcing model is perfect for you since the outsourced team will handle the entire project.

Full-cycle project development is easy. From the moment you sign the agreement with the vendor, the project is entirely in the developer team's hands.

Wrap up

Thus, we find that each of the IT outsourcing models described above is useful and ideal in their own ways, depending on your requirement. If you want to be involved moderately in the project with the outsourced developers handling most of the project, a dedicated development team is what you need. If you want to work directly with the developer and expand your team, the outstaffing model is what you need. However, if you want to be minimally involved in a short-term project and would rather have the outsourced team complete it, project-based outsourcing is ideal for your company. After all, you have to choose the model you wish to use based on your project needs and what your purpose is to outsource.

Galina Divakova, Head of Marketing, YouTeam

Galina is Head of Marketing at YouTeam, a Y Combinator-backed marketplace for hiring remote software developers.