Hiring external development teams has emerged as a hidden tactic for businesses aiming to speed up their software creation process and, crucially, hasten the journey to realizing value.
The concept of time to value refers to the duration required for your customers to begin gaining benefits from your digital offering.
An outsourced development team can act as a genuine partner, guaranteeing that the products you create not only resonate with your customers but also align seamlessly with your business strategy.
What Does an Outsourced Development Team Entail?
An outsourced development team, provided by a third-party agency, specializes in software development services. These teams come in various models, primarily aiming to deliver tailored software development solutions.
The Growing Significance of Outsourced Development Teams in Today’s Economy
Amid economic uncertainties, leveraging outsourced software development teams becomes a pivotal strategy.
Currently, software development is the IT function most frequently outsourced, with 60% of US companies planning to delegate a portion of their development work.
Despite economic challenges, the global market for software application outsourcing is anticipated to grow from $116 billion in 2022 to $145.7 billion by 2027, marking a 4.7% growth rate.
Why do businesses increasingly rely on outsourced development teams, especially with economic downturns looming?
Cost Reduction and Operational Efficiency
The most apparent advantage is cost savings. Outsourcing negates the need for typical full-time employee benefits, such as healthcare, insurance, and taxes, not to mention the expenses related to training.
Enhanced Project Flexibility and Speed
Outsourced teams offer the significant advantage of being able to quickly adapt and start delivering results, bypassing the lengthy process of recruiting and onboarding an internal team. These teams often come pre-equipped with experience and cohesion, allowing for immediate high-performance collaboration.
Additionally, there’s the adaptability in adjusting team size according to project demands, economic conditions, and strategic objectives, avoiding the negative impact of downsizing internal teams on morale and company culture.
Access to Specialized Skills and Global Talent
Outsourced teams provide access to exceptional talent and, depending on your outsourcing partner, a worldwide talent pool. This obviates the challenges of establishing your company’s presence abroad and navigating the complexities of international business operations.
Beyond general talent, the specific domain expertise these teams bring—be it in technology, industry, or development methodology—is invaluable and often underappreciated. This specialized knowledge can significantly enhance the development and implementation of software projects.
Top-tier outsourced development teams ensure accountability
Accountability stands as a crucial, perhaps the most critical element when collaborating with an outsourced team. The ideal partnership will facilitate accountability seamlessly through the adoption of Agile methodologies and regular updates on your project’s progress.
In the realm of software development, adaptability to change is paramount. A reliable partner will ensure transparent communication about adjustments needed as your requirements, customer demands, scope, and the market landscape shift.
Choosing the Appropriate Outsourced Development Team Models
The effectiveness of your engagement with an outsourced development team largely hinges on selecting a model that aligns with your organizational needs and the specifics of the project at hand.
There are three primary models for engaging with outsourced development teams:
This model is optimal for supplementing your current development team. It involves your internal team collaborating closely with the software developers from your outsourcing partner to form a unified team. You will generally be responsible for directing the partner’s engineers and overseeing the project’s success. Contracts in this arrangement are typically based on time and materials or a fixed monthly fee per team member.
Dedicated teams offer a comprehensive, ready-to-go development resource.
This model leverages the partner’s history of successful project delivery as a cohesive team, providing immediate momentum for your project.
Embracing the principle of assigning tasks to established teams underscores the Agile philosophy of fostering a focused and efficient development environment.
With a team tailored to your project’s specific needs, the primary advantage lies in the turnkey nature of a dedicated software development team. This setup allows you to accelerate from the outset without needing to allocate your resources or distract essential personnel from other pivotal projects.
Contracts in this model are often set at a fixed monthly rate for the entire team, simplifying budget planning for your initiative.
This approach affords you the flexibility to adeptly navigate your project’s development, adjusting scope as necessary without the hassle of negotiating change orders for every modification in requirements.
At HatchWorks, we advocate for this model because it’s designed with you, the client, in mind. Discover more about our method.
Outcome-Based Fixed-Price Model
This final approach modifies the dedicated team framework slightly.
Rather than compensating based on the team’s monthly capacity, this model revolves around paying for the specific results or the completion of a set scope that your partner commits to deliver.
In this arrangement, your oversight of the project is minimized as your partner operates independently to achieve the agreed-upon results.
This setup can be mutually beneficial, provided there is a mutual comprehensive understanding of the project’s scope and the specific outcomes both parties aim to achieve.