Software Development Outsourcing Models: Which to Choose?

Outsourcing in the IT industry has become increasingly important. Companies need to gain leverage on fast and proficient development to stay competitive. With this demand, there are two software development outsourcing models that have proven to be viable choices for many businesses: the dedicated software development team and the extended team. 

The two models refer to very different team structure in terms of management, capability, and responsibility. So how to choose the right one?

In this article, we will provide insights into the differences between dedicated software development teams and extended teams, as well as how to choose the one that best suits your business needs.

What is the dedicated team model?

A dedicated development team is a long-term collaboration between third-party service providers which involves a team of experts working remotely on the client’s projects as if they were an in-house team.

The team works exclusively full-time, reporting directly to the clients and complying with their corporate policy. In other words, clients have full control over the management and the direction of how dedicated teams handle their projects.

A dedicated team is put together by the outsourcing company to include cross-functional experts who fit the client’s requirements and working culture. Administrative tasks and recruitment are handled by the vendor. Therefore, clients can save time and budget from dealing with organization support tasks.

What is the extended team model?

An extended development team is a group of experts you hire through outsourcing vendors to fill in the gap of your existing in-house team for a specific project.

Unlike a regular outsourcing model, an extended team enables clients to hire a few specialists in the position they lack rather than hiring an entire team. Accordingly, companies can reduce their expenses significantly. This approach provides flexibility in upscaling and downscaling teams for different projects or to meet specific deadlines.

Similarly to the dedicated team model, outsourcing vendors take care of the recruitment process and provide you with skilled experts who suit your business needs. Organizations choose to extend their teams when they require additional skill sets to join them for a niche project.

The extended team is incorporated with the in-house staff. As a result, they need to conform to the organizational management, tools, and methodologies.

Dedicated development team vs Extended team

The major difference between both software development outsourcing models can be summarized in this table.

  Dedicated Team Model Extended Team Model
Communication Partially external Internal
Management Through outsourcing vendors You have full control
Flexibility High level High level
Range of services According to your needs Limited to in-house team’s capabilities

Basically, a dedicated team is a long-term outsourcing partnership where the vendor puts together a team of experts that suits your business needs. This dedicated team will handle all the tasks on your projects like an in-house team.

On the other hand, an extended team model refers to hiring additional experts to fill the gaps in your existing team. Vendors can help you find these specialists to join your internal team by giving you access to their talent pool.

Benefits of a dedicated team

One of the great benefits of the dedicated team model among many other software development outsourcing models is cost and time savings. Hiring new in-house staff to carry out the projects could take months to recruit, interview, and onboard. It also means spending more on monthly salary, bonus, and other administrative employee fees.

With a dedicated team, vendors are responsible for assembling a team tailored to your business needs and goals as well as handling administrative tasks. You only need to pay the team based on performance, which is guaranteed to be transparent pricing as a dedicated team often uses time tracking and project management tools to track their progress.

Furthermore, dedicated team models give you access to a wide range of experts across the globe who are solely focused on your project. You have full control over project planning as well as arranging team members in accordance with the current project requirements. This is to ensure faster completion and better results.

Benefits of an extended team

An extended team is aimed to be an additional supplement to your internal team for new areas of expertise and higher scalability. The extended team model is incorporated into the same working practices and policies as your existing in-house team. Thus, they don’t need to waste time establishing new systems or workflows.

Moreover, communication and collaboration with the clients can be much more efficient and effective since the extended team works alongside your in-house staff. Project management and progress monitoring can be easily tracked as well.

With extended team models, organizations may be able to downsize and simplify their structure through outsourcing. You can then concentrate your workforce on fundamental business operations such as sales and marketing, while the extension team ensures your projects are completed on time.

Which one is right for you?

Now back to our main question: how to choose between the two software development outsourcing models? To answer this, you have to take into consideration your own business needs, goals, and resource availability. 

Both software development outsourcing models, the dedicated team and extended team, significantly differ in terms of management, team structure, and responsibilities. As a result, we must take into account the following requirements:

A dedicated development team model is the perfect choice for you if:

  • You are looking for long-term collaboration for complex projects
  • Your goals, objectives, and scopes are changing
  • You need experts in various skill sets
  • You expect end-to-end management by the team

A dedicated development team is a good option for clients who don’t have the time to closely supervise the project because they can work independently. They also work best for long and complex projects or for clients who have no expertise in the software development area.

However, an extended team model will better suit you if:

  • You already have a team but need to fill in some gaps with specific talents
  • You want to streamline and speed up the development process
  • You want to temporarily scale up the team for a specific project 
  • You want full and effective control of resources

An extended development team is the preferred choice for clients who are facing staffing shortages and time constraints. It is also suitable when you need to save budget because expanding your development team is considerably more affordable than starting from zero.

Conclusion

Software development outsourcing models, namely dedicated teams and extended teams, are examples of combinations that have grown in popularity as an outsourcing alternative. It is therefore crucial to understand the difference between the two. Only then can business owners choose the best option based on their internal resources and operational requirements.

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