Dedicated Team VS Outstaffing: Which model is best?

Note: the article was updated in October 2020.

Whether it is a large company daring to start its digitalization journey or a small startup aiming at building the next big thing, all of them often face the same challenge — the shortage of skilled IT workers. As recruiting is a tedious process, not every business is ready to play this game. But there is a way out. Both outstaffing and dedicated team models are aimed at expanding a companies’ development and QA team without having to hire staff directly, thus making the lives of business owners much more comfortable. The question remains — which model fits your project best?

What is an Outstaffing Model?

Outstaffing is a business model that suggests complementing the company’s development team with external software developers and/or testers. At first sight, it is nothing more than including a contractor to the business processes. The difference is that the contractor is carefully selected by an external provider to ensure they fit the client’s requirements perfectly. In general, the outstaffing model looks as follows:

• You, as a client, define the requirements for the developers/testers on your project.
• The outstaffing company provides you with a list of fitting professionals.
• You interview the shortlisted specialist(s) and choose the best one(s).
• During the project, the chosen developer(s)/tester(s) become a part of your team and perform the assigned tasks.

What is a Dedicated Team?

A dedicated team is a model that suggests hiring a group of remote IT-workers to deliver software development or testing services. Dedicated teams are also assembled by the outsourcing company of your choice, but it also includes a Project Manager, eliminating the need for hands-on management by the client. If you’ve decided to hire a dedicated testing team for your project, this process will generally look like:

• You define the project requirements and send it to the outsourcing company.
• The provider assembles the team and creates the roadmap to build/test your product.
• During the development/testing, you communicate with the development testing team and get all the information you need.
• The end result of a dedicated team hire is a finished project/ready-to-market product.

Dedicated Team VS Outstaffing

The main difference between outstaffing and dedicated team models is defined by their objectives. Essentially, the purpose of outstaffing services is to hire a single specialist (or a few) to join your team and work as long as you need it. The outstaffed workers are under your direct supervision, and it is your responsibility to use their skills to suit your business goals best.

The purpose of a dedicated team structure, on the other hand, is to complete a particular project, such as developing an MVP, designing/testing an app, or building a website. In this case, project management and all administrative issues are usually the responsibility of the service provider. Let’s have a look at some other differences between the two models so that you can make the right choice.

Work and organizational culture

There is a big difference between outstaffing services and a dedicated team model in the context of organizational structure and work attitudes. The developers/testers of a dedicated testing team are often closely linked through many years of shared experience and therefore work together well. The level of understanding and spirit in a dedicated team is not comparable to those qualities in a group of outstaffed IT specialists. What’s also important is that dedicated teams always come with all the tools, skills, and development environments necessary to deliver a project. Furthermore, your outsourcing partner is in charge of making sure their workspace environment is comfortable and all necessary infrastructure is in place. This, in turn, has a huge positive impact on the team’s overall performance.

Management efforts

One of the most significant differences between the two models is the efforts spent on managerial tasks. When we speak about the supervision of the outstaffed tech talent, this often is a client’s responsibility. To be precise, you will have to either appoint a manager from your in-house team or spend additional money to hire somebody to do this job for you.

A dedicated team model is more convenient in this context, as it always comes with an experienced project manager, who is responsible for the project outcomes and shares the project updates with you regularly. An additional bonus of the dedicated team is that you have to sign only one contract instead of several/many individual contracts like in the outstaffing company.

Experience and expertise

The companies offering outstaffing services usually find excellently trained and committed specialists that meet the highest standards. However, outstaffed developers/testers aren’t necessarily familiar with the types of projects/products your company works with and might not have much experience in your industry.

Dedicated development teams consist of experts from the fields specified in the client’s requirements. This ensures that you receive an excellently managed team of specialists with proven experience in similar projects. Due to the high level of expertise, a dedicated team can help you to identify your real needs and be proactive contributors to your project. Their individual experiences and collective know-how can help you introduce new features.

Clarity and transparency

Since you have full control over managing the outstuffed team, your manager should have a deep understanding of the software development/testing process and ensure the necessary clarity of the workflow. If this requirement is not met, many issues can occur. In the case of a dedicated team model, the risks are lower. The transparency of the processes is considered to be one of the most significant advantages of such a model as a dedicated team. Regular reporting and the careful documentation of each step and result are an essential part of the service. The careful recording of the respective working hours and expenses provides an overview of both the tasks done and the costs incurred.

Pricing

In both models, the service provider is the one who is responsible for recruiting and hiring IT workers. When outsourcing a dedicated team, the provider also can cover the costs for office space, software licenses, hardware and equipment, employee training, and additional wage benefits. Generally, both models enable your company to achieve considerable cost savings through the use of offshore capacities. It is worth mentioning, though, that the pricing calculation with a dedicated model is much more straightforward. Monthly invoicing makes your budget planning easier, and transparent reports enable you to track the actual development costs per feature, sprint, development/testing stage, or the whole project.

Communication

Clear-cut communication is vital to the success of any project. This is especially true for outsourced and outstaffed projects where developers/testers work remotely. When it goes to an outstaffing company, merely finding the skilled workers is not enough. With this model, you need to set up a communication process and select the appropriate communication channels and tools. This makes extensive coordination with everyone involved necessary. Otherwise, the work of your outstaffed team may yield disappointing results.