Project-Based Outsourcing vs. Dedicated Team Model: Pros and Cons
Every business strives to maximize efficiency with minimal costs. The traditional approach would be to do everything in-house, but today’s technological innovations have proven to provide alternative methods that are often more economical.
Outsourcing is the practice of transferring some work to a third party service provider rather than doing it internally. When used properly, it can offer great improvements in business efficiency and dramatic reductions in costs. In this article, we take a look at two business models under outsourcing: project-based outsourcing and the dedicated team model.
Project-Based Outsourcing vs Dedicated Team Model
Outsourcing is a broad concept that can be implemented by businesses in a variety of ways. In the case of IT outsourcing, for example, a software or web project can be developed by a third party through different methods. Two popular IT outsourcing models are project-based outsourcing and the dedicated team model.
With project-based IT outsourcing, you delegate the completion of an entire project to a third party. This typically involves having to first explain the full requirements of the project to members of the outsourcing company, such as project managers and business analysts, and they will then be responsible for forming the development team and seeing the project through to its completion.
Pros. Project-based outsourcing takes a large bulk of the work off your hands, as the outsourcing company will be largely responsible for the development of the entire project from start to finish. They will form the development team, carry out project management, and implement quality control.
Cons. This method gives you limited control over your project and developers. With extra services such as project management, business analysis, and quality assurance, this model can also cost a lot. It also requires that you define the full specifications of your project at the beginning, which may be very hard. Moreover, misunderstandings with project requirements can lead to significant mistakes that can delay project completion.
Dedicated Team Model
With the dedicated team model, you hire remote developers who will report directly to you and work for you full-time but will remain in the dedicated team provider’s office. They may form your entire development team, or they may collaborate with your in-house developers. This model is also known as IT staff augmentation or IT outstaffing.
Pros. Hiring dedicated developers gives you full control over your project. It also gives you more flexibility with your project costs, as you can easily add or remove developers as your requirements change. Moreover, it does not require you to define the full set of project requirements at the beginning, and you can immediately detect and correct mistakes as they appear.
Cons. Staff augmentation requires constant communication and collaboration with your remote dedicated developers, so when hiring from a distant country, time zone differences and language barriers may pose challenges. Though this is also true for project-based outsourcing.
Which one’s for me?
If you’re having trouble deciding which of the two models to go with, here are some tips:
Project-based ooutsourcing is recommended for clients who:
- Have a small, short-term project they want to be completed as soon as possible
- Have all the requirements of the project set in stone
- Don’t need or can’t monitor the project progress too closely
The dedicated team model is recommended for clients who:
- Have a large or long-term project they want to work on
- Want the freedom to change project requirements as they please
- Prefer close monitoring of their developers and project progress
- Need flexibility in extending their existing development teams
Outsourcing/Offshoring in Different Countries
The Global Location Services Index (GLSI), conducted by international consulting firm A.T. Kearney, ranks countries based on their credibility as an outsourcing location. Below are the 2016 GLSI results:
The above data show that Ukraine ranks 24th worldwide and 6th in Europe. In terms of financial attractiveness, Ukraine ranks 14th worldwide and 1st in Europe. Ukraine’s IT industry is definitely flourishing, with over 90,000 IT professionals and 1,000 IT companies, of which over 500 are IT outsourcing companies. Ukraine is undeniably among the most practical options for IT outsourcing and offshoring.
Project-based outsourcing and the dedicated team model are two outsourcing models, each with their own benefits and drawbacks. Ukraine is among the best countries to outsource from, so if you’re scouting the global IT market to outsource web development, be practical and hire developers from Ukraine.
Mobilunity is a Ukrainian provider of dedicated development teams. It was founded in 2010 with its delivery center in Kyiv, Ukraine. We provide a wide array of cutting-edge technologies to our clients across various industries. Our diverse team of experts offer full cycle custom solutions, focused on accelerating the growth of each and every client. From Startups, to Large Enterprises, Mobilunity offers the best in Ukrainian Development, the flexibility of results-driven Western Management, and the successful Global Delivery of dedicated teams and software solutions.
We recently have helped a larger German customer setting up a successful nearshore initiative. We made a fitting longlist, spanning numerous Eastern European countries by using our free B2B Marketplace (https://www.gsp-client.de/marketplace/). The RFP included the “standard service provider model”, with the team members well defined and also providers offering the dedicated team model with personnel costs directly charged to the customer plus a defined surcharge. The customer volume allowed for two providers to be selected, one as full-service provider, the other offering the dedicated team model. Both providers were from the Ukraine, both with impressive offerings and competences.
Later on, the customer experienced higher costs in the service provider model, which we think can be mitigated. More important was the fact that in the dedicated team model it was difficult to get important specific skills on a temporary base (e.g. specific knowledge in tools used). One lesson learnt: The customer needs to exactly know what he can manage, expertise he can spend himself and what he needs from the provider. Joerg Stimmer, .
Thanks for sharing the blog. In my opinion outsourcing, a project is the best option because it gives you more flexibility and you can manage projects within your budget. If you want to outsource your project hire the best staff augmentation services.
Thank you for sharing …about Project-Based Outsourcing vs Dedicated Team Model