The IT outstaffing model involves hiring remote software developers from another company to work on projects for your business. This model offers various advantages as well as some downsides to consider. Weighing the pros and cons can help determine if and when the IT outsourcing model makes sense for your software development needs.
What Is the IT Outstaffing Model, and How it Works
The IT outstaffing model involves partnering with an external service provider to supplement software development capacity. It entails delegating the execution of select technology projects or functions to a dedicated team of developers from the outstaffing agency rather than trying to staff everything in-house.
This is facilitated through several arrangements:
Dedicated Offshore Development Teams: Primarily, a mixture of developers, testers, graphic designers, and so on works together to assist the client in continuous development as a long-term tech team support.
Project-Based Outstaffing: Similarly, there is a pool of experts dedicated to each client’s project. These experts have niche skills, such as data science and DevOps, on top of their general capabilities.
Client-side management handles the volume of work, while the service provider is responsible for providing staffing, overseeing operations, providing infrastructure and supervising the delivery of work outsourced to an external location. These are compensated on the basis of a labor hourly or material cost estimate given in a fixed bid contract.
Pros of the IT Outstaffing Model
Outstaffing IT is an alternative worth considering for companies due to the range of benefits it possesses, which makes it a great solution for such projects. Establishing the essential points for this model may let you know whether it is fit for your project and organizational goals. It is imperative to consider the merits and demerits of each approach, hence integrating them; that’s where the neat strategy is.
Cost-Effectiveness
Outstaffing through Academysmart can significantly reduce software development costs, as rates for IT specialists are often 30-50% cheaper in certain countries. You save the money you’d spend hiring full-time developers who would do nothing but sit around and wait for days while your project is completed by dedicated employees. Asymmetric samples drawn from a larger pool of applicants result in substantial savings through lesser payments of salaries and on the infrastructure in the long term. The aspect of skill arbitrage is the greatest for non-distinct global programming skills. You can find these skills in the overseas labor market.
Access to Specialized Talent
The global talent pool available via outstaffing partners allows you to find developers with cutting-edge capabilities in the latest technologies, such as IoT, AI, machine learning, etc., that may be scarce or very expensive to hire locally. Leveraging these specialized offshore resources facilitates quicker innovation cycles and building software with future-ready tech capabilities that disrupt markets.
Flexibility and Scalability
The outstaffing model offers immense flexibility to scale developer capacity up or down and change the mix of skill sets needed quickly based on evolving project priorities. Ramping up through local full-time hiring can be much more rigid and time-consuming when requirements shift frequently. This enables the alignment of project capacity and budgets closely with demand.
Cons of the IT Outstaffing Model
Communication Challenges
Collaborating with remote developers in vastly different time zones can pose complications that require mitigation through well-defined processes. Language and cultural barriers may also necessitate extra effort to enable clear communication, which is critical for software delivery.
Hidden Costs
While cheaper hourly rates seem attractive, additional costs like management oversight, operations, infrastructure and travel can diminish net savings substantially over time. The total long-term cost difference may not be as significant as anticipated. Tracking TCO is essential.
Quality Control Issues
Vetting the capabilities of outsourced developers rigorously and maintaining consistent software quality requires very hands-on governance by clients. This offsets some of the model’s cost savings. Lack of visibility can result in shoddy quality.
Security and IP Risks
Sharing access and ideas externally increases the risks of intellectual property theft, cyber attacks and data breaches. Stringent security protocols, such as VPNs, code reviews, strict device control, etc., are mandatory when outsourcing software IP and customer data.
When the IT Outstaffing Model Makes Sense
While cost is a major driver, the decision to outstaff software development involves various other factors regarding project needs, timelines, quality and communication needs. Assessing these elements can determine optimal scenarios where outsourcing yields the highest value.
Early Stage Software
The flexibility to tap into various domain experts and ramp up or down team size helps startups and younger companies that are still rapidly iterating products and validating product-market fit. Outstaffing is well-suited for agile development, while local resources focus on core IP.
Short-Term Projects
Software projects that are short-term in nature, with a defined timeline of 6 months or less, can be good outstaffing opportunities. Clear requirements and a short duration allow for more tightly managed communication needs and risks.
Non-Core Software
Companies can reduce costs substantially on engineering software that supports back-end operations, IT infrastructure or secondary products but isn’t central to the core business offering where proprietary IP is crucial. Quality may be compromised, so diligent governance is key.
Specialized Capabilities
Lacking specialized capabilities in-house for leading-edge technologies like AI, machine learning, blockchain, etc., that are required for short durations is a prime scenario for outsourced development. Access to these scarce experts offsets costs.
Conclusion
The IT outstaffing model offers meaningful cost efficiencies but also has tangible drawbacks in terms of quality, security, and communication. Assessing the stage of software maturity, project duration, resource needs, and required capabilities helps determine optimal scenarios to utilize outsourced developers. A hybrid model balancing both in-house and outsourced talent is ideal for most software companies.