IT Outsourcing and Staff Augmentation
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- Defining Staff Augmentation and Outsourcing
- Staff Augmentation Considerations
- Outsourcing Considerations
- Software Development Life Cycle
- Roles and Salaries in a Software Development Team
- Client Relations Frameworks in IT Outsourcing
- Onshoring, Offshoring and Nearshoring Models
- Agency VS Freelancer (Pros and Cons)
- Where to Find a Reliable IT Outstaffing or Outsourcing Agency?
- How to Hire Remote Team or Developer?
In the XXI century, almost every business, no matter how small or big it is, at some point needs the custom software services. One of the ways to solve this problem is to hire software developers outside of your company. This guide will help you to understand why outsourcing is good, how to outsource web development as well as will present you with a brief introduction about all the important details about this practice.
Defining Staff Augmentation and Outsourcing
Nowadays, companies often find themselves in the situation when they decide to attract third-party employees for the new product development process. In this scenario, there are two options ‒ outsourcing and staff augmentation.
Outsourced software product development is the practice of hiring the remote software team for your needs. In this case, the whole team is staffed, managed, controlled, and maintained by the outsourcing company.
But sometimes the company does not need the whole team but the expertise of a few IT specialists. Staff augmentation (also known as outstaffing) is the best decision for team extension. This means that the company already has a dedicated team of specialists, and you can hire a remote developer to expand your team for a certain project.
Each of these practices has advantages as well as disadvantages. They should be considered when you’re deciding if you should choose outstaffing services or software development outsourcing. For instance, outstaffing is better for small projects while outsourcing is usually chosen for large projects. With staff augmentation, you will pay for resources (meaning that the good outcome is not guaranteed). On the contrary, with outsourcing you pay for the end result, so you can make corrections and adjustments until you are satisfied.
Evaluating all of the pros and cons is necessary to choose the practice that will suit you better. After all, you can choose to combine both practices for the best results.
Staff Augmentation Considerations
You should choose outstaffing if your project is relatively small and you do not want to hire more in-house experts. It is also good if you are looking for an expert with a very specific set of skills and a deep knowledge of a narrow field.
Staff augmentation (it’s also known as “team extension”) involves hiring contractors to fill staffing gaps and ensure your current project stays on track. Specialized IT staff augmentation providers focus on helping you find developers suited to your specific field and tech stack. This minimizes adaptation periods and drives progress forward.
Staff augmentation is not to be confused with classical software outsourcing. The augmentation model is centered around effective cooperation with your core team. The new employee should fit in seamlessly and complement your existing workforce.
Staff augmentation has numerous advantages. Among them are fewer expenses, easier recruitment process, and the personal approach of a developer to your project. Nevertheless, there are a few disadvantages as well ‒ possible issues with training and possible problems with team integration.
Outstaffing services are the best choice for you if you are looking for a cost-effective option. Hiring software engineer in Eastern Europe, for example, is usually cheaper than in the US and may help you save a part of the budget. However, if you pay a fixed rate to in-house staff, the costs of IT outstaffing may fluctuate and change. Therefore, you should be ready for some unexpected expenses.
Outsource is a good decision if you have a large project but do not want to hire more in-house specialists. It also gives you an opportunity to work on more important business questions while experts work on your IT project.
One of the greatest advantages of outsourcing is its cost-efficiency, especially if you choose nearshore software outsourcing or offshore software development. Hiring remote software team also lets you focus on your business while a dedicated team is developing your project. Also, looking around the world for specialists gives you an opportunity to find the best team of highly-skilled experts.
But you should also consider the drawbacks of outsourcing. Among the most important are possible issues with security (you risk losing sensitive data), possible problems with communication (because of cultural differences), possible problems with quality (your developers may work on a few projects simultaneously).
If you need constant IT support, you can use managed services. In this case, a remote company manages all your IT infrastructure on a regular basis for a monthly fee.
Software Development Life Cycle
There is a common widespread misconception about IT product development. People that are not familiar with programming and software development usually think that creating the IT product requires only writing numerous lines of code. However, it is not true. Just like any other business project, creating an IT product requires similar phases and processes. In general, software development life cycle consists of the next steps:
- Analysis ‒ just like with any other product, it is necessary to review the market and competitors in order to create a high-quality product with unique features that will attract users in the future.
- Planning ‒ this step includes budget and cost estimations, creating road maps and schedules, deciding on the team structure and the number of necessary employees for the project.
- Design ‒ during this step, designers work on patterns and components as well as design documentation.
- Software development ‒ coding, in other words. Functioning software or app is the result of this step.
- Quality assurance ‒ this includes testing and debugging to ensure the product is working well.
- Deployment ‒ it is an automated process that means placing the app/software into a production environment.
- Maintenance ‒ it includes post-production improvements and corrections, updates and bug-fixing.
As you can see, not only developers take part in the creation of the product. Other important positions and their responsibilities are listed below.
Roles and Salaries in a Software Development Team
Obviously, each software development team has a different structure, a different number of participants, and different roles. However, there are several positions in IT that are present in almost every dev team. If one is planning to hire software developers, you should learn something about each of them.
A project manager is a connector between the team of software development engineers and the client. A project manager is responsible for the successful delivery of the project. Therefore, project managers usually monitor every stage of product development ‒ from initiation to closure. The average yearly salary for this position in the United States is $ 75, 500, in the United Kingdom ‒ $ 52,600, and in Ukraine ‒ $ 38,500.
As opposed to the front-enders, back-end developers do the “server-side” job, working on the things that users do not see. Their average yearly salary varies from $ 117,000 in the US, $ 41,600 in the UK, and $ 35,000 in Ukraine.
As it is easy to guess from the title, a person in this position analyses the market and the competitors, evaluates the future of the project and sets milestones for it. Business analysts in the UK earn $ 48,500 on average in a year. Their colleagues in the US can expect an average yearly salary of $ 69,160 while in Ukraine the number is $ 39,600.
Designers define how the app or the product would look like and how the interaction with it will look like. In the United States, the average yearly salary for the designer is $ 90,700, in the United Kingdom ‒ $ 48,700, and in Ukraine – $ 31,200.
QA stands for “quality assurance”. These specialists check the app\software on every stage of development to ensure it runs seamlessly. The average salary of a QA in the US is around $ 54,800 a year compared to $ 41,000 in the UK and $ 25,800 ‒ in Ukraine.
Client Relations Frameworks in IT Outsourcing
If you have never worked with IT outsourcing services companies, the legal part of it may be confusing and challenging. A short review of the pros and cons of different types of software development outsourcing contracts that are commonly used in the industry may help.
Time and Materials
The main advantage of this one is flexibility. As you pay an hourly rate, you may shift and change your project as much as you want. The main disadvantage is that you have low control over the budget. For instance, when your software development engineer team waits for your feedback, they are still paid by you, although they are not actually working at the moment.
On the one hand, this model is very good because of the fixed timing and budget. On the other, this model lacks flexibility as it will be really hard to make changes in the initial project. This model usually turns out to be the most expensive.
You hire a team of dedicated developers and pay them a fixed price for a month. It is quite comfortable in terms of budget. Also, you can be sure that the team is focused entirely on your project. However, you do not choose your developers, so you can not control how good the hired remote developers are.
In this model, you also hire a team and pay a fixed monthly price, but in this case, you have more control over which programmer do you hire. The biggest con here is that with all that control, only you are responsible for the quality of your product, time and budget.
Onshoring, Offshoring and Nearshoring Models
In the modern day and age, plenty of companies choose outsourcing for their IT product development. And their successful example proves that there are a lot of benefits of outsourcing software development. However, there are a few types of outsourcing. In order to choose the one that will suit you better, read the description below.
What is Onshoring?
If you hire software developers in your own country, but they work outside of your company it is called onshoring. This option is good for you if you plan to visit your developers often. Also, you should choose onshoring if being in the same time zone is important for you.
What is Offshoring?
If you hire a computer programmer in the country that has more than four-hour difference with your country, it is called offshoring. Using offshore software outsourcing is the best solution for those who have a tight budget. The reason is that developers from Eastern Europe and Asia usually have lower salaries than experts from the USA or Western Europe.
What is Nearshoring?
Nearshoring is the process of hiring software engineers outside of your country. However, this country either borders with yours or the time difference in not more than four hours. This option is also good when the time difference is a crucial question.
Agency VS Freelancer (Pros and Cons)
Another option for outsourcing or staff augmentation is hiring freelance specialists instead of cooperating with an outsourcing development company. It is obvious that each of the options has its advantages and disadvantages. In order to make the right choice, you should carefully evaluate all pros and cons.
The first advantage of a freelance specialists is flexibility. Their schedule can be adjusted, and if you have tight deadlines, freelancer can do it faster. Also, you are not obliged to hire certain freelancer again if you are not satisfied with the work done.
The second advantage is the cost. You don’t have to organize office desk for another employee, pay for vacations and sick leaves as well as freelancers usually charge less than in-house specialists.
Another pro is the skills. You can find a person with a very specific set of skills that you need for this project.
Nonetheless, the cons of hiring freelancers should also be mentioned. Among the most important are possible issues with security, a long selection process, and less control over the work of a freelance worker.
Working with outsourcing software development companies has a great number of benefits. First of all, when you are working with a software development firm, you can be sure that skilled recruiters and project managers will select the best specialists for you. This will save you plenty of time. The second con is that you can trust a company with a good reputation and consequently build a long-time work relationship with it. The last advantage is legality ‒ if you work with the company, you can be sure that there will be no problems with documents and taxes.
Among the drawbacks of project outsourcing with the company are higher costs and the fact that the execution of your tasks may take more time.
There is no definite answer about which option is better. Every project is unique and demands careful evaluation of all the pros and cons of both freelancers and IT outsourcing companies.
Where to Find a Reliable IT Outstaffing or Outsourcing Agency?
The IT industry around the world keeps growing and developing, so almost every country has IT specialists and companies that offer their software development services. So which one to choose? A short overview of each region may help you decide.
Usually, software engineering companies here offer onshore services. London, Amsterdam, Berlin, and Paris can be called IT capitals of Western Europe. Because this region is well-developed, the salaries of software specialists here are really high. However, data safety and security are strictly regulated by the government, and the quality of work is usually high.
In the last decade, this region experienced growth of the IT industry. Today, Belarus, Moldova, Ukraine, Chech Republic, and Bulgaria are the most popular software outsourcing countries. Plenty of companies in this region are well-known around the world. The main advantage here is price/quality ratio because highly-skilled professionals here have relatively low hourly rates.
Mexico, Brazil, and Puerto Rico are the countries to look at if you plan to look for software product outsourcing in Latin America. The main advantage of this region is that the IT industry here is supported by the government. On the other hand, outsourcing software development costs here are quite high.
The IT market of Canada and the United States are the oldest, therefore, specialists here are the most experienced. This way, rates of software developers here are the highest in the world. Moreover, companies usually opt for nearshoring and avoid offshore software outsourcing. But if you decide to find developers here, pay attention to companies from San Francisco, Phoenix, Dallas, Seattle, and Vancouver.
With the political and economic stability, this region is one of the leaders of IT development outsourcing. The main outsourcing destination are China, Malaysia, Indonesia, Thailand, and the Philippines. The main advantages ‒ a large market and low wages. The main disadvantage is the poor data safety regulation.
Indian centers of global software development are Mumbai, Bangalore, Chennai, and Hyderabad. Popular because of extremely low rates and a big pool of specialists. Indian software engineering companies often have no experts in the newest technologies.
Oceania and Australia
Because of the remote location, Australia and Oceania are not very comfortable if you plan to travel often to the office of your offshore software outsourcing company. Also, average salaries here are quite high. Nonetheless, this region proved itself to be the best place for start-ups and innovative technologies.
What to Check in a Software Development Company before Signing a Contract
When you’ve finally made your decision regarding outsourcing or outstaffing company, there are a few more things you should review before making a final choice. Check these things:
- Position in the industry ‒ the best choice is obviously the company that has a reputation of outsourcing/outstaffing leaders. Thus, you may be sure that the hired outsourced development team will be dedicated to your goals and ideas.
- Skills ‒ one of the first things you will check are the skills and expertise of the specialists in the company. In order to do this, you may ask for an audit of IT infrastructure before trusting the company with your project.
- Business goals ‒ nonetheless, skills are not the only important thing. Try to find a company values, mission, and goals of which are similar to yours. This way it would be easier to find common ground with your remote software team.
- Portfolio ‒ company that has experience in your field will most likely exceed your expectations. For instance, if you are interested in e-commerce web development, choosing the company that already did e-commerce projects is a good idea.
- References ‒ like in any other field, experience and the comments of the company’s previous clients may be incredibly valuable.
How to Hire Remote Team or Developer?
Some companies hesitate if they should try outsourcing or IT staff augmentation fearing it might be a very complicated process. On the contrary, this process is quite simple ‒ one only needs to take the first step. There are only 7 easy steps in this process. Among the most important things to do if you chose to hire a remote team are:
- Creating an efficient development plan. In order for your project to run seamlessly and follow all the deadlines, you should definitely make a plan (preferably, with your project manager). First of all, identify the responsibilities and roles in your team. Second of all, choose a methodology. In a Scrum team, for instance, everyone has clear roles and the project is developed in iterations with control meetings each week. Agile team, on the other hand, implies no deep planning and cross-functional teams.
- Choosing the right model of cooperation. You may choose outstaffing services, traditional outsourcing, or extended team model. The differences between the latter two are in management and control. While with the classic software it outsourcing you only review the end product, the extended team model offers gives you full control over your remote coding experts from the moment of hire to the post-production maintenance.
Before your team begins work, also try to identify these things:
- The larger team does not mean it will be more productive or that you will get results faster. Usually, the larger the team is, the more communication and management issues there are. Try to hire a coder team of 4-7 people. If you think you need more, it is better to create a few smaller teams and divide responsibilities and tasks among them.
- Which type of team you are interested in ‒ specialists, generalists, or a mix of these two?
- Your management style. Should you control your remote software team or rely on self-management? When you only begin working, it is wise to pay more attention to your development team, and after some time, you may give them more freedom.