Companies often struggle to find the needed tech talents locally. In many cases, when companies need to develop software for their business do not have enough resources in-house. Their team might be lacking expertise in specific areas or do not have enough time to dedicate it to the new projects. Sometimes, executives prefer to use in-house resources in different areas of their business. At times like this, a dedicated software development team seems like a viable option.
It is the best alternative of an in-house development team to achieve company objectives faster, more effectively, and with lower cost. With the dedicated team, companies are hiring tech talents, who are working solely on their project. This model is especially practical as the outsourcing vendor takes care of all the administrative work, and a hiring company can focus on high-level tasks. Due to its many advantages, the dedicated team is one of the most popular models, when it comes to outsourcing software development.
We have gathered all the information you might need to know about dedicated development teams and the principles of this model into one comprehensive guide. It will answer your questions and help you understand the concept better before you hire dedicated developers for your next project.
What is a dedicated software development team model?
A dedicated team is a model of business when the company and outsourcing vendor have an agreement, based on which the vendor provides highly-skilled, professional software developers for long-term basis.
The dedicated software development team can include developers that work with different technologies. Based on the scope and the nature of the work team might consist of:
- Front end and Back-end engineers
- Open-source developers
- .NET developers
- Project manager
- Quality assurance specialists
- Business analysts, and others.
The hired team is not working separately from the company. It is an extension of the existing team and becomes a part of the company itself. The pricing system of the dedicated teams is transparent and straightforward. The hiring company is paying the monthly fee to the outsourcing vendor, which covers monthly salaries of developers and vendor’s service fee.
How does the dedicated team model work?
When a company decides to work with a dedicated development team model, they approach the trusted outsourcing vendor that can provide this service. The company provides necessary information about the project and requirements for the developers.
Based on the pre-defined criteria vendor is recruiting highly-skilled software developers, onboards them and forms a team. This model works best when the hiring company is treating the team as their own.
The team is working on the project of the hiring company only. You can consider them as full-time employees that are a natural extension of your in-house team. The outsourcing vendor is responsible for attracting new talents and can hire more experts to grow the team further upon the company’s request.
While the outsourcing vendor is taking care of the administrative work and support, the hiring company is directly involved in project operations. It gives them the ability to control the workflow, and focus on the high-level tasks, as they do not have to worry about administrative tasks. To ensure the efficiency of the dedicated software development team throughout the project, hiring company and vendor evaluate the performance of each member monthly. They set KPIs and check the progress and make the adjustments if needed.
Comparing a dedicated development team model to others
As mentioned above, the dedicated development team is the best solution in many cases. However, when you are making a decision, whether or not to go with this model, it’s best to compare it to others as well. It will give you a better perspective, and you will be able to make more firm decision, knowing what the other options are.
Often when company executives acknowledge that they are missing developers with specific skills, or find out that they need a bigger team, they start thinking about expanding an in-house team. Thus, they have to decide between the in-house and dedicated development team. It is not an outsourcing model, but many companies struggle to choose between a dedicated and in-house team. Hence, below we will compare these two approaches to each other.
Besides a dedicated team, there are two other outsourcing methods for companies seeking to develop software: Time and material model, and the fixed price model. We will discuss them in details later.
Dedicated team model VS In-house development team
There are advantages and disadvantages to both approaches. However, based on the project the company has, and its priorities, one might be more suitable than another. Let’s compare them based on the criteria your company needs to take into consideration before making a decision.
Access to the talents
When a company is hiring developers for the in-house team, they have access to the local talent pool only. In bigger cities, the talent pool is understandably bigger than in smaller ones but, in most of the cases hiring an expert in a specific field with an acceptable price is very difficult. Thus, companies’ access to the local talent pool is limited.
On the contrary, outsourcing vendors have access to the international talent pool. They have more means to hire skilled experts with the precise skills, experience and background that the client requires.
Having an in-house team is far more expensive than a dedicated development team. The final costs of having in-house development include salaries of developers, additional benefits, sick days, taxes, cost of office rent, equipment etc. There are also extra expenditures, such as the cost of training and onboarding.
Having an agreement with an outsourcing vendor is a lot cheaper. As mentioned above, the monthly cost of the dedicated teams covers all expenses, and the company can cut its charges a lot by outsourcing.
IT industry is on the rise, and the demand for the software developers is constantly growing. Hence, it is not surprising that developers tend to change their workplaces often. The staff turnover in IT industry is high, which is a problem for companies with in-house teams. Not only they have to go through the long administrative processes and recruitment when a developer quits, but they are also losing the time and resources they put into training and onboarding. Not to mention the negative affect the turnover has on the project development.
It is not a big of a problem in a dedicated software development team. The outsourcing vendor takes care of such administrative processes and is responsible for replacing the developers quickly, without causing damage to the project development.
Many companies find it easier to manage an in-house team. They have face-to-face communication, and as the developers are local, there is no cultural gap whatsoever. Compared to the dedicated development team model, where the staff might be overseas with a different cultural background.
To mediate these differences, outsourcing vendor takes care of initial onboarding and ensures that the team is compatible with the company.
When is it better to have an in-house team?
While the dedicated model has many advantages against the in-house development team, for some companies, it might not be the right solution. It depends on the project specifications and company objectives. For example, if you want to develop a digital product, that will be the core product of your company, it might be better to have internal developers. As sooner or later, you will need them.
If you have an in-house team developing it, they will be aware of the project, the workflow and the culture of your company. In future, the same team will work on updating and maintaining the product.
Dedicated development team vs time and material
What is time & material model?
Time and material is another outsourcing model, which takes actual time spent working on the project as a foundation. The pricing for this model takes time and material (effort) into consideration. Thus, companies that go with this model are paying for the results.
This model ties the work scope to the project, not to the people. Outsourcing vendor has defined tasks that the developers must accomplish within the set time frame. Thus, the company does not have to hire, for example, back-end and front-end developers. Instead of this, with this model, the vendor distributes the relevant tasks to the developers.
Time & material and dedicated development team models share some of the benefits. Both of them offer high efficiency. With the dedicated team, it is high, as developers work solely on the client’s project. And with the time and material model, specific developers work on the concrete tasks.
Both of the models offer a high degree of flexibility too. As in both cases, the company can decide which tasks are more critical and distribute them accordingly.
When is the time & material model a good choice?
- The project is small and does not take much time to develop.
- You need developers to do the continuous maintenance of your software several hours a week or month.
- Your company wants to build a minimum viable product (MVP).
- You need to make small changes in your software or update it.
- Your project scope is not defined yet, or it is dynamic.
Dedicated development team vs fixed price
Fixed price is another outsourcing model that many companies use for developing software. As the name suggests, this model comes with fixed costs. The company is entering the agreement with the outsourcing vendor, based on which the latter should deliver the project until the deadline.
The company and vendor agree on the scope of work, price of it and the deadline beforehand. The vendor is responsible for delivering the project as agreed. It gives a lot of clarity to the company, since they know what they will be getting, when and at what price.
Dedicated software development team model and fixed price model have the price clarity in common. The client always knows how much he or she is paying and to whom. There are two crucial differences between these models that are critical to consider when choosing between them.
Having dedicated developers gives the company a lot of flexibility, as the team is an extension of an in-house team. If the project scope changes or the new priorities arise, the company can quickly adapt to the new requirements. As the company is paying a monthly fixed rate, the changes in scope do not affect the price, if of course, the company does not need to add more developers.
Fixed price model does not offer the same flexibility. As the company and the vendor agree on price, deadline and scope of work in advance, altering the scope of work is not that easy. The vendor might not welcome the changes as it follows a pre-defined plan. It does not mean that company cannot request any changes at all. Of course, the client can negotiate some adjustments, but it will result in delays and require extra costs.
Involvement in project
When working with the dedicated development team model companies have full control over the processes. Even if the team includes the project manager that defines tasks and manages the project, the company representatives are directly involved.
With the fixed price model, the company gives full control to the outsourcing vendor. Due to the nature of the agreement, the company does not need to be involved in the processes. Usually, the project manager who manages the client’s project from the vendor’s side provides timely updates to the client. So, the client does not have to keep control over the project.
When is the fixed price model a good choice?
- You have a clear goal and a set deadline.
- The scope of work and product roadmap is clearly defined.
- You have a short-term project, which will be supported in-house.
When is the dedicated software development team the best choice?
Now you know about the outsourcing models and differences between having an in-house development team and outsourcing with the time & material, and fixed price model. Now let’s see when is the dedicated team model the best choice for the company.
You already have an in-house team than needs extension
Sometimes the internal development team is not enough, they might be busy with the other projects, or do not have enough expertise in certain areas. Or you might be starting a new project, that requires more human resources than you can have internally. In such cases, the dedicated development team is the best solution. You already know how to work with the developers and can easily manage new ones.
You have a long-term project
Long-term projects need a lot of flexibility. As the technologies are changing, you will need to stay flexible and make adjustments on the go. None of the other models offers the same degree of flexibility, as the dedicated team model. It is especially true for the complex projects that come with multiple tasks.
Your project has a fixed workflow
When you decide to go with the dedicated developers, you need to make sure that there is enough work to keep the developers busy. If you do not do so, you might have days when some of the developers are not working, because they do not have tasks. It is an unfortunate situation because you still have to pay for them. Hence, it might not be cost-effective if you do not have a considerable workflow. On the other hand, this model is the best for the projects with a fixed workflow.
When the dedicated development team model is not effective
Apart from the situations, when the other models work better for the company, there might be reasons when this model is not working effectively. Let’s take a look at them.
You do not have a trusted software development vendor
Any type of cooperation is doomed to fail if there is not trust. However, the importance of it cannot be stressed enough when talking about the dedicated development team. When deciding to go with this model, it is crucial to approach to the outsourcing vendor that you can trust.
Your project scope is small
The dedicated model does not work well with a small, short-term project. If you have this kind of project, it would be more cost-efficient to find a software development company that can build it. The dedicated model is for more complex projects where the company needs several developers.
You have a strictly limited budget
If you want to stick to the pre-defined scope and budget dedicated software development team will not work for you. Usually, the team changes and grows as you work on the project. Sometimes you will see that you want to change the functionalities of the project, or add new ones. Thus, you will need more people with different knowledge and expertise. It is impossible to do if you have a pre-defined and strictly limited budget and are not willing to make any changes in the scope.
The bottom line
In this guide, we tried to provide all the necessary information about the dedicated software development team and answer all questions you might have.
Here’s a recap of some of the main points:
- The dedicated team is one of three outsourcing models. The other two are time & material and fixed price.
- With this model, the outsourcing vendor provides a team of developers to the client on a long-term basis. The dedicated software developers work full-time and solely for the hiring company.
- The outsourcing vendor is responsible for recruitment and administrative work.
- The company is paying a monthly fee to the outsourcing vendor. The fee covers the salaries of the developers and the vendor’s service fee.
- The dedicated development team model works best when the project is long-term and with a fixed workflow.
If after reading this guide you still have questions about the dedicated development team or are not sure which model is the best for your company, contact us. At Flat Rock Outsourcing, we will gladly answer your questions and provide a comprehensive consultation for your business.