Several companies claim to get higher benefits in hiring dedicated development teams, while others keen on in-house development. Let’s discuss the pros and cons.
Applying mobile app development or website development tends to be indispensable for the entire business across sectors. These internet applications act like the bridge connecting companies with their audiences.
As technology products, both mobile apps and websites challenge enterprises in developing processes due to the requirement of a software development team, who takes control of the development process.
Unfortunately, developer shortage in number challenges most of the companies in building an in-house development team. In the 3rd quarter, 2019, there were approximately 910,000 available IT vacancies in the US, which urgently need developers. As a result, software outsourcing or hiring dedicated team seemingly refers to the favourable alternative forms of in-house software developers. So, when should companies choose the dedicated software development team instead of in-house developments and vice versa?
What is a dedicated development team and in-house development team
Firstly, let discuss the dynamic definition of the in-house development team and dedicated development team in the context of software outsourcing services.
In-house development team
In-house development teams are constructed among the company’s employees, which directly work under the control of leaders in the company. To be specified, when you want to build a team of in-house developers, the first thing should focus on the recruitment process. After the interview and contract signing, you will be responsible for providing the salary and welfare to each team member, including requirements of the labour law.
If companies focus on products or services in the technologies sector, which contains consecutive tasks, they need an in-house team. In particular, in-house developers carry more value to companies investing in producing digital products (Uber app for example). It forces them to own at least one internal developer team with adequate capacity for building, running, and maintaining this product. It is due to the fact that the in-house development team will rapidly adapt to the main changes enclosed with the priorities of this business.
Software outsourcing development services
An alternative form of in-house development team tends to be the outsourcing development team, which provides human leasing services without any direct wellness commitment. Basically, companies hire IT, staff, from external firms to performing their tasks, and pay the contract value to the corporations instead of every single developer.
Indeed, companies also have the right to manage the outsourcing development team but they are not responsible for any arisen workers’ issues, including illness, disease, and even death. There are two common types of outsourcing, which are nearshoring and Offshoring. Typically, nearshoring refers to outsourcing activities to other companies within the same country or area, while offshoring development process requires partners coming from oversea countries.
Dedicated development team
The dedicated team model commonly uses in software outsourcing development companies, which includes three parties. The first one is clients, who want to implement projects of mobile app development or web application development. The second one is IT development companies regularly in low-cost areas, which is seemingly a middleman connecting clients and developers.
For long term projects, clients have a high incentive to use dedicated development services instead of contract-based models. Especially, for those projects with some ambiguous aspects, which need to be constantly changed, a dedicated team will work as part of the client’s in-house team to deliver value to the projects.
Benefit and challenges of building in-house software developers
Obviously, having a development team working inside your office might pursue you regarding management aspect. However, there are various hidden sides you might miss.
Companies’ benefit in using in-house teams
- Management advantage: Companies have full capacity to access to the in-house team, while a dedicated development team will work independently most of the time. With the in-house team, leaders tend to be comprehensive understand the strength and weakness of the team’s members. In case of urgent tasks, in-house members tend to react quicker than outsource teams. With leading concentration, in-house development teams will be suitable for high tech firms, which focus on developing their own products.
- Eliminate culture gap: In-house teams commonly work together in the same offices, which means that they share a similar local culture. Team members have more space to solve conflicts through direct communication. Additionally, without geographic barriers, companies would build their culture handily to promote working experience from the whole brand.
- Enhance internal powers for companies: Due to dedicated team only work for projects, they cannot count to be the official staff of a company. In other words, the in-house team can be seen as the asset of companies, who represent its power and value in the market.
Companies’ challenge of building in-house teams
- Relatively high cost: having in-house employees means that companies held responsible for paying them on a monthly basis, regardless of how much value they create. Additionally, the in-house staff has the right to receive wellness follow labour law, which are insurance, healthcare policy, annual breaks, vacation days, etc. Generally, companies’ owners need to invest a huge amount for taking care of in-house developers.
- Recruitment hassle: the fact that the process of collecting recruitments will eat the time and effort of companies, which consists of several phases and steps. While talent staff might be available, finding the one that fits with companies’ spirit is not an easy task. In practice, start-ups face with painful reality when most of the skilled developers want to join big firms for more promotion opportunities.
- Lack of flexibility: Companies and their in-house developer have tired with labour contracts’ terms. It is impossible to instantly terminate the contracts in case of any conflict. On the other hand, one staff cannot be master of all programming tools. They might have experience in some areas and lack of abilities in others. In which, if companies need to develop a project covering several aspects, they have to build a really great in-house team. However, when the projects end, the redundant developers will burn the companies’ budget.
Hiring a dedicated development team: Should enterprises outsource software projects to the dedicated development team?
If you are confusing about whether to go with an in-house team or the dedicated team, we will show you some ideas.
Advantages of a dedicated team
- Cost-saving: obviously, hiring a dedicated development team relatively cheaper than recruiting the in-house developer group. You only pay for working hours directly to software companies, which provide dedicated team services. Additionally, software development companies have available developers, who are ready to start a project without any downtime. Additionally, the specification allows developers in IT firms to get familiar with several types of projects. Leverage practical experiences, the dedicated team might help their clients limit the possibility of over budget.
- High flexibility and adaptability: Since a dedicated development team model is a service, enterprises might replace anyone in the team simply by asking their software development provider. Clients could not bear any recruitment costs. Alternatively, they suffer lower barriers in raising the scale of the development team as the developers have already there, inside the IT partners. Furthermore, clients have full control over the dedicated team, including selection, management, and communication with the team members.
- Time effective: If speed is the fundamental criterion, you should go with dedicated development services. Software outsourcing companies tend to familiar with Agile and Scrum methodologies, which are powerful tools for project management to cut down project time. Clients will take advantage of these professional performances to speed up their works.
- Integrations and collaborations: The dedicated development team model promises to simulate the tire collaboration among the party, consist of clients, development companies, and team members. Even though with offshore development services, clients can easily manage a dedicated team via internet communication on a daily basis.
Disadvantages of hiring a dedicated team
- Not proper for the short-term projects: As mention above, a dedicated team works effectively with the long-term project instead of short-term projects. If enterprises want to pursue a short-term project, they should consider a cost-based contract.
- Time-consuming of searching for the appropriate dedicated team: Clearly, the dedicated team model offers time-saving, but it takes time in the stage of browsing dedicated software providers. In fact, clients might lose in the matrix of IT outsourcing companies, since the options are enormous. Currently, companies in the US or EU choose to outsource their software development to Asia, which turns the Asia Pacific to be the largest software outsourcing destination in the world. In which, software development companies in Vietnam can be considered as the prospective candidates due to cost advantage and abundant talent pools from the Vietnamese young generation.
In conclusion, depending on the nature of each project, enterprises will go with the in-house development team or outsourcing development team. Each model has its own pros and cons that companies’ leaders should consider in the selection process.