CIO’s Guide - "Build Your Tech Team" Model vs Project Outsourcing: Which is Better for Your Business?

When modern businesses need to slash development costs and fast-track project deliveries, they often seek assistance from professional software development companies. These software companies may suggest a range of engagement models such as staff augmentation or project outsourcing to choose from. While all these approaches offer the required tech expertise to support your development initiatives, there are some key differences between them that businesses should be aware of.

In this blog, we’ll elaborate on the pros and cons of the two most popular engagement models-staff augmentation and project outsourcing-to help you decide which one you should go for. Keep reading.

“Build Your Tech Team” or Staff Augmentation

In the ‘Build Your Tech Team’. or staff augmentation model, a company temporarily hires software specialists to supplement their in-house teams, typically through a vendor. This is a time-tested model employed by companies to fill talent gaps when demand exceeds supply. Staff augmentation can be a cost-effective solution for businesses that require additional staff on a temporary basis, such as during seasonal spikes or periods of growth.

For a deeper understanding of the engagement model, let’s delve into its pros and cons.

Pros:

• Flexibility: ‘Build Your Tech Team’ model provides the highest levels of flexibility when it comes to scaling your teams up and down. Plus, there’s no hassle of recruiting, training, and incurring administrative expenses involved with full-time employees.
• Control: Unlike project outsourcing, staff augmentation allows businesses to have better control over the hired resources. When hired to fulfill an organization’s ad-hoc requirements, these resources are bound to follow your instructions and adhere to your coding standards and work culture.
• Experienced Resources: Staff augmentation allows businesses to easily and quickly supplement their in-house teams with highly qualified professionals with specific skills needed for a particular project. They can have access to expertise in areas including development or quality assurance that may not be their core competencies.

Cons:

• Integration-Related Challenges: When hiring temporary resources, organizations may face challenges integrating them into their in-house teams, and familiarizing them with their work culture and internal processes. This can lower the overall productivity of the team, and lead to unforeseen project delays.
• Need for Supervision: Temporary hires require much more supervision than in-house employees. As a result, the project manager has to spend a considerable amount of time away from several critical tasks. If external resources don’t have an in-depth understanding of the organization’s goals, it can become difficult for the whole team to deliver high-quality work consistently.
• Project Outsourcing: In the project outsourcing model, a company delegates the entire software development to an external vendor. As a result, they don’t want to worry about managing a team or preparing space and infrastructure for new hires. They can instead focus on their core competencies, while the vendor handles the project. Here are its major pros and cons:

Pros:

• Higher Cost Savings: Cost reduction is one of the most striking benefits of project outsourcing. According to a recent survey, 44% of companies in the USA cited cost outsourcing as their primary reason behind choosing project outsourcing. The onus of setting up, training, and managing the entire team as well as delivering a high-quality product lies entirely with the vendor.
• Focus on Core Business: Project outsourcing provides access to best-of-breed software engineers with highly sought-after skills and knowledge. This is particularly important in scenarios where qualified tech talent isn’t available locally. According to a survey by the CIO Magazine, the most important job roles to fill are those related to cybersecurity, analytics, and AI-ML.
• Reduced Overload: By delegating certain development tasks to an external team, managers are free to work with in-house teams on other projects. They get more flexibility in how they can utilize their on-site employees who can now be assigned to projects falling under the organization’s area of expertise.

Cons:

• Difficulty in Coordination: Coordinating with external teams can be challenging especially if the project demands close collaboration. The challenge gets amplified if these people are working from different cities, countries, or time zones. Additionally, language and cultural barriers may arise, further complicating communication with overseas teams.
• Loss of Quality: Project outsourcing can lead to a loss of direct oversight, which may result in issues related to product quality. Codes written by outsourced teams may not align with your organization’s rigorous software development standards, potentially leading to technical debt. This can negatively impact team morale and overall productivity, as additional hours may be required to address these issues and ensure a high-quality end product.

Staff Augmentation vs. Project Outsourcing: How to Choose

1. Assess the Current Situation

Before deciding on an engagement model, it is crucial to assess your in-house situation. If your organization lacks experts proficient in the required skills or technologies or your existing team is overwhelmed with existing tasks, or you don’t have a tech team at all, outsourcing may be the better option. Staff augmentation is recommended when you only need to augment your in-house team’s skills and capacity.

2. Evaluate the Complexity and Duration of the Project

Staff augmentation is ideal for simple projects with short timeframes since it quickly provides additional workers with the required skill set. On the other hand, outsourcing may be a more viable solution for larger, complex projects with a broader scope, as it offers access to a larger pool of resources as well as managerial capabilities for timely project completion.

3. Determine the Level of Control or Oversight Needed

The desired level of managerial control can also influence the choice between staff augmentation and outsourcing. Staff augmentation offers a higher degree of control since additional members are integrated into an existing team and managed directly. On the other hand, outsourcing demands less control, as the vendor handles the project as well as the team independently.

4. Consider Security Risks

Project outsourcing does involve considerable risk as business-critical information gets shared beyond the premises of your organization. If you are considering outsourcing completely, be sure to evaluate the vendor’s security policies. Conversely, in the case of staff augmentation, the additional team members have to just follow the organization’s existing security protocols. So, if data security is a priority, staff augmentation would be a more suitable model.

Leverage Our Capabilities to Meet Your Project Needs

Now that we have discussed the pros and cons of both engagement models, it’s hard to say if one is better. The choice between staff augmentation and project outsourcing will depend on factors such as project duration, complexity, and the availability of tech talent within your organization.

Damco offers best-of-breed software engineers, designers, and project managers to help you build high-quality solutions quickly and cost-effectively. Our proven competencies in technology offerings backed by over two decades of industry expertise allow you to stay ahead of the curve.

If you have a project in mind, connect with us today. Our experts will walk you through all the available options, and recommend a solution tailored to your budget and needs.