In the world of rapidly developing technologies and business practices, more and more companies are facing the issue of choosing between independent product development and outsourcing. According to the research results of the Kazakhstan Association of IT Companies I-half of 2023, the growth of IT services amounted to 476.8 billion tenge, which is 56.4% more compared to 2022.
In this article, we'll look at how to determine if your company needs an outsourced team.
What are outsourcing and outstaffing?
Outsourcing is the transfer of certain business processes or functions to a third party. In this case, a company engages external service providers to perform certain tasks, which may include development, accounting, marketing, etc.
Outstaffing is a process whereby a company hires employees through a third-party intermediary, usually a personnel outsourcing firm. These employees work within the company but are formally employees of another firm.
Let's look at an example:
Let's say we have a clothing store that is building its marketplace and in the course of development decides to outsource to hire a front-end developer. Since one of the developers leaves the company before the release of the platform, it is not easy to replace him in the office.
To solve this problem, the company turns to Sailet, which provides an hourly development service and can provide the right person. Sailet provides an experienced frontend developer with five years of experience in React. A project manager is also attached to him. The manager compiles a BackLog, gives the programmers access to the site, and allows the customer to monitor the creation process every two weeks.
Now let's look at the pros and cons of outsourcing a team in this context:
Outsourced development
Pros
1. Resource Savings:
One of the major benefits is the ability to reduce personnel maintenance costs. A company can avoid the cost of training, insurance and other social benefits associated with hiring employees.
2. Specialization:
Allows companies to utilize the services of experienced professionals in a particular field without building their own team.
3. Flexibility and scalability:
Companies can easily scale their operations by leveraging additional resources from outsourcing partners when needed.
4. Focus on key tasks:
Enables you to focus on your core functions and strategically important tasks by delegating operational and support issues to external vendors.
Minuses
1. Loss of control:
The company may have difficulty managing external vendors and ensuring compliance with standards.
2. Data security issues:
Outsourcing sensitive data to external contractors can pose security risks, especially in areas where it is important.
3. Communication difficulties:
Differences in time zones, cultural differences and language barriers can cause communication difficulties between the company and the outsourcing partner.
4. Dependence on external factors:
The company depends on its outsourced team and their problems can badly affect its business processes.
When might outsourcing be appropriate?
Focus on core competencies:
When a company wants to focus on key tasks, outsourcing can be the ideal solution. By outsourcing routine work, a company frees up resources for important goals.
Seasonality and design load:
During periods of high workloads, outsourcing helps teams quickly augment their workforce as needed, minimizing financial and time risks.
Resource Conservation:
If a company is facing financial difficulties or looking to reduce operating costs, outsourcing can provide access to quality services at a lower cost than maintaining internal departments.
Global work:
For companies focused on global markets, outsourcing can be an effective way to maintain operations across time zones and ensure continuity of operations.
Self-development
Now let's break down the pros and cons of self-development:
Pros
1. Total control:
The team has the ability to shape strategies, make decisions, and change the direction of the project without the constraints of external parties.
2. Flexibility and quick adjustments:
Self-development allows you to respond quickly to changes in requirements, technology, etc., minimizing time costs and providing flexibility in project management.
3. Complete understanding of the product:
In-house developers have a better understanding of the company's goals, which helps in creating products that are precisely tailored to the requirements.
Minuses
1. limited resources:
The possibility of facing limited resources in the form of time, experience and personnel. This is especially critical when a large amount of work needs to be accomplished in a short period of time.
2. Risk of malfunction:
Without the support of specialized experts, a company may face risks in the form of technical issues that can slow down the development process and affect the stability of the product.
3. responsibility for all aspects:
When a company develops a product on its own, it is responsible for every step of the process, from ideation to support. Which can be difficult and risky, especially for large projects.
When you can develop a product on your own
Long-term projects:
If your project has a long-term perspective, such as developing a product with a long-term lifecycle, an internal investment in the development team may be justified. This will provide a sustainable basis for the success of the product and allow you to respond flexibly to changes in strategy and market requirements.
Critical Confidentiality:
In case your project requires a high level of confidentiality, in-house development can provide a higher level of data protection. Working within your own team, you can more effectively control access to sensitive information and manage the level of security, which is especially important in sensitive industries such as medicine or finance.
Project complexity and unique requirements:
If your project is characterized by high complexity or unique requirements, in-house development can be a good alternative. It allows you to manage the development process more flexibly, adapt to changing conditions and respond faster to customer requests.
Process Control:
When full control over the development process is important to you and you want to avoid dependence on external suppliers, in-house development may be the preferred option. Which gives you more flexibility in managing time, resources and priorities, tailored to the specific needs of your project.
How do I figure out if I need an outsourcing team?
To make the final decision between building your own team and outsourcing, you need:
1. estimate the timeframe, budget and level of expertise required for your project.
2. Analyze whether your company has the necessary competencies or whether you will have to create them from scratch.
3. assess your readiness for risk management and remote team management.
After collecting and analyzing all this information and reading our article, you will be able to make an informed choice. If your choice is outsourced development, we are ready to provide you with hourly development..
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