Quick Summary:

Outsourcing is an instrumental business strategy allowing companies to leverage external talents and expertise. Dedicated team vs. Staff Augmentation vs. Extended Team Model – are the three most popular outsourcing models in offshore talent hiring. Today we will cover everything you need to know about them to choose the right outsourcing model for your offshore talent requirements.

Building an in-house team can be time-consuming, tedious, and often – expensive. If you already have an existing in-house team, you might have experienced some level of bottlenecks or issues when it comes to scaling your developer team or matching some specific project requirements. While an in-house team works fine for local to medium-scale projects, looking outward or outsourcing IT talents can be helpful when you want to truly scale your business, expand your capabilities and get access to global talents.

What is IT Outsourcing, and Types of IT Outsourcing Models

IT Outsourcing is when you partner with specialized professionals or companies to handle various aspects of your IT requirements, such as technical support, software development, IT consulting, infrastructure handling, or full-stack project outsourcing.

What is IT Outsourcing?

IT Outsourcing Stats and Figures:

  • IT outsourcing makes up 72% of all Global outsourcing contract values – ISG
  • India is the most appealing outsourcing country in business service – Kearny

There are three major IT outsourcing approaches:

IT Outsourcing Approaches Quick Description
Dedicated Team Model Companies that provide a group of dedicated remote talents that work dedicatedly on client projects but are on the provider’s payroll. You only pay the fixed price of hiring these talents for the duration discussed in your hiring contract and requirements.
Staff Augmentation Model Hiring external developers or developers on a contractual basis to work remotely in collaboration with your in-house team to identify and fill the gap between your project requirements and the skill set of your workforce.
Extended Team Model Hiring external developers or developers on a contractual basis to work remotely in collaboration with your in-house team to identify and fill the gap between your project requirements and the skill set of your workforce.

Types of IT Outsourcing Models

Outsourcing Model #1 – Dedicated Team

  • What is a dedicated development team?
  • What are the benefits of a dedicated team?
  • How do you create a dedicated team?
  • How do I hire a dedicated team?

These are the general questions asked on Google when searching for a ‘dedicated team.’ Let us break them down one by one.

What is a dedicated development team?

A dedicated development team is an outsourcing model for establishing a continuous and long-term collaboration between the client and the dedicated remote developer team provider to work upon agreed projects or duration.

What is a Dedicated Development Team

What are the benefits of a dedicated team?

Dedicated development teams work exclusively and delicately on your project but on the provider’s payroll. This means you get round-the-clock dedicated developers working on your project without you having to manage their payrolls, hiring and screening process, yearly increments, or even infrastructure costs. It is all managed by the dedicated team provider.

Benefits of Hiring a Dedicated Team

Other benefits of hiring a dedicated team include the following:

  • Access to top talents
  • Expertise & specialization
  • Proven track records
  • Reduced overhead & infrastructure costs
  • Scaling Flexibility
  • Dedicated resources & commitment

How do you create a dedicated team?

Creating a dedicated team from scratch can be challenging and confusing if you need a basic understanding of your project requirements and what you expect of your remote developers for hire. Here is our ultimate guide – How to extend or build an app development team, that will address all your questions.

How do I hire a dedicated team?

Hiring a dedicated team can be tricky as multiple dedicated team provider companies worldwide exist. However, reviewing their pricing models and previous work experience and scheduling a free consultation call with a trustworthy company can help you assess their skills and capabilities.

Address your dedicated team hiring concerns today!

Get in touch with Aglowid IT Solutions

Outsourcing Model #2 – Staff Augmentation

  • What is the staff augmentation process?
  • Why choose staff augmentation?
  • Is staff augmentation good?
  • Who needs staff augmentation services?
  • How do you manage staff augmentation?
  • What is staff augmentation vs consulting?

These are generally the questions people have about staff augmentation models. Since we have been providing reliable IT staff augmentation services to our diverse clientele for a while, we will address these questions for you.

What is the staff augmentation process?

IT staff augmentation is an outsourcing approach where you find and hire remote developers with specific skill sets and technology expertise to help your existing team reach the result or project success they’ve been struggling with.

What is the Staff Augmentation?

Why choose staff augmentation?

Staff augmentation can help you drastically minimize the time to hire new resources as you won’t have to go through the traditional hiring process of talent hunting, interviewing, conducting background checks, and more. You need to select from a pre-vetted certified list of developers available at 1/3rd or lesser price of a full-time developer.

Benefits of Choosing Staff Augmentation

Other benefits of choosing Staff Augmentation for your project:

  • Instant access to specialized talents
  • Scalability and Flexibility of Hiring Options – Part-Time, Full-Time or Hourly
  • Faster Time to Market and Onboarding (Aglowid Assurance of 48 hours)
  • Strategic Division of Work between In-House and Remote Talents
  • Knowledge sharing with in-house team

Also Read: – IT Staff Augmentation vs Managed IT Services

Is staff augmentation good?

Who needs staff augmentation services?

Staff augmentation can be beneficial for many differing organizations of different scales like:

Who needs Staff Augmentation Services?

  • Startups and SMEs
  • Enterprises and Large-Scale Organizations
  • Government Bodies and Non-Profits
  • Project Based Contracts
  • Remote Work Culture

How do you manage staff augmentation?

A general set of rules or guidelines to keep in mind when preparing for staff augmentation is to:

  • Establish clear goals and objectives
  • Finding any talent or skill gaps in achieving the target
  • Reviewing available IT staffing agencies before selecting one
  • Defining engagement terms
  • Communicating expectations and roles
  • Onboarding remote talents
  • Setting up clear communication channels
  • Providing proper documentation and guidance to onboarded talents
  • Evaluate and track the performance of the onboarded developers
  • Utilize project management tools to handle their tasks, deadlines, and duties
  • Conduct regular assessments and reviews of their performance

What is Staff Augmentation vs Consulting?

Staff augmentation refers to hiring remote experts to fill talent gaps or matching an approaching deadline. Consulting is when you hire an IT consultant to provide guidance and insights about creating your project software or addressing a specific problem where you’re stuck.

What is Staff Augmentation vs Consulting?

Outsourcing Model #3 – Extended Team

  • What is core team and extended team?
  • What is the role of the extended team?
  • What is an extended development environment?
  • What kind of work can an extended team do?

What is the extended team model?

The extended team model is an outsourcing model where instead of outsourcing the entire project to a remote team or hiring remote developers as an extension to your development team, you hire a remote dedicated team that helps your core (in-house team) achieve its targets and solve its challenges.

What is the Extended Team Model?

What is core team and extended team?

The core team refers to your in-house strategy builders and decision-makers. In contrast, the extended development team refers to outsourced talents with specialized skills that can support your core team in achieving its mission and vision.

What is the role of the extended team?

The role of the extended team is to help the core team reach their targets and deadlines by providing their specialized skills, talents, and expertise for carrying out any specific task, working on a project, or matching any requirement the core team raises.

What kind of work can an extended team do?

Depending on your project requirements, the extended development team at Aglowid can work on various project types like:

What kind of work can an Extended Team do

  • Software Development
  • Quality Assurance & Testing
  • Data Analysis and Business Intelligence
  • Project Management and Coordination
  • UI/UX
  • Technical Support and Maintenance

Challenges with Dedicated Team Vs. Staff Augmentation Vs. Extended Team

When choosing the right IT outsourcing model, it is important to know all the challenges associated with each approach. A dedicated Team, Staff Augmentation, and Extended Team provide great benefits and ease of outsourcing for your project requirements. But this doesn’t mean they don’t come with their challenges. Properly understanding these challenges will help you make a better-informed decision and proactively address these challenges for a seamless outsourcing experience.

Challenges with Dedicated Team Vs Staff Augmentation Vs Extended Team

Challenges with Dedicated Teams

Hiring dedicated teams comes with many benefits. However, it also has some unavoidable limitations you should consider. They are:

  • Higher cost since maintaining a long-contract team can be expensive regarding salaries and other overhead expenses.
  • Resource allocation since scaling a team up or down can be rigid and require additional resources, which can take more time.
  • There might be problems with cultural fit into the organization
  • Team project success relies on the efficiency and performance of the dedicated team, so there is a high dependency

Challenges with Staff Augmentation

Staff Augmentation provides great flexibility in scaling and descaling talents per your project needs. Yet, there are certain challenges when dealing with staff augmentation that you should know about:

  • Skill alignment since it can be difficult to match the exact skill requirement you have with the available talent pool
  • Integrating external resources in your ongoing workflow can be time-consuming and require adjustment.
  • Establishing effective communication and collaboration mechanism can be challenging if the outsourced talent isn’t experienced.
  • The immediate nature of hiring or releasing staff augmentation talents can take a heavy toll on tracking and handling the logistics of the processes.

Challenges with Extended Team

Extended teams help you significantly increase your development team’s strength at 1/3rd or lesser prices of hiring in-house developers and bearing their overhead costs. However, there are some challenges with the extended team as well –

  • Managing the distributed teams and implementing communication & collaboration protocols between them can be challenging.
  • Coordinating activities between core and extended teams can be complex, requiring you to spend more on project management and communication channels.
  • Ensuring the developers in the extended team understand and align with the business requirements of the project
  • Differences in cultural backgrounds challenge a cohesive working environment leading to more conflicts and inefficiency.

How to assess the right IT talent outsourcing strategy?

Before you step out and try assessing the best talent outsourcing strategy, evaluating your IT hiring requirements and organizational goals is important. If you are certain about your talent expectations and objectives, you will be able to find the right outsourcing partner for your project.

Here is a quick self-evaluation process to identify the right outsourcing model for your project:

Process to Identify the Right Outsourcing

  1. Define Your Objectives Clearly
  2. Evaluate Internal Skills & Availability
  3. List down the Required Skills and Expertise
  4. Estimate Project Complexity and Duration
  5. Conduct Cost and Budget Assessment
  6. Evaluate Resource Scalability
  7. Check their Communication and Collaboration Channels
  8. Risk Mitigation Strategies Analysis
  9. Clear Project Ownership and Accountability
  10. Consider Hybrid Engagement Models

Define Your Objectives Clearly

What is the need for IT talent outsourcing? Do you have particular goals in mind that you want to achieve, such as reduced project completion time, cutting down on costs, and accessing developers with specialized skills? Make a list of objectives sitting with your team, and also make sure to give them priority rankings.

Evaluate Internal Skills & Availability

Next, if you have an in-house team, check their skill range and availability and match it to the project requirements. If there are any skill gaps, capacity constraints, or other such problems, hiring external help through outsourced talents might help resolve such issues.

List down the Required Skills and Expertise

Jot down the required skills and expertise you need to match your objective. Next, try looking for related skills, certifications, or domain knowledge regarding that particular field to screen better candidates.

Estimate Project Complexity and Duration

Get a base estimate of the overall project complexity and the duration it might take to build your project. By evaluating the nature and complexity of your project, you can figure out the right outsourcing model for your project.

  • If you require close collaboration, ongoing communication, and strong integration with the existing team, you can go for Dedicated Team.
  • If your project benefits from external sources for working on specific tasks or bridging talent gaps in your team, you can go for IT Staff Augmentation.
  • If you need to scale resources dynamically with your project’s changing requirements, you can go for Extended Teams.

Conduct Cost and Budget Assessment

Costs and budgets are the driving force behind most managerial decisions. You can compare and contrast the cost considerations of setting up a dedicated team vs an extended team vs. hiring talents through staff augmentation. Assess each model’s cost factors like salaries, benefits, and other overhead cost-efficiency.

Also Read: – How to Hire Offshore Developers Without Risk?

Evaluate Resource Scalability

Consider how scalable you need your resources to be. You can assess which IT outsourcing model better suits your project based on how consistent or fluctuating your resource availability requirement is. For instance:

Dedicated Team: Ideal for projects with predictive and long-term resource requirements. Dedicated teams provide stability to your project. However, when it comes to scalability, it might be limiting as you’re hiring an ‘n’ number of developers for a fixed contractual duration. Scaling up or descaling might need an additional recruitment process or adjustment in the overall team composition.

Staff Augmentation: Ideal for projects with fluctuating talent requirements or companies needing specific talents or expertise to solve their short-term project needs. You can get much better flexibility in resource management with staff augmentation, as you can easily add/remove resources with your project’s changing requirements.

Extended Team: Ideal for projects requiring various developer skills and profiles with dynamically changing scaling requirements. You can scale up and down your resources with the utmost ease in the extended team model and ensure that you only pay for what you use while ensuring talent availability as and when needed.

Check their Communication and Collaboration Channels

Ensure your chosen outsourcing partner has flexibility and expertise in using industry-grade communication channels and collaboration tools. Ensure they have experience working with in-house teams and adjusting to their communication protocols. Also, make sure they update you about their progress periodically. Dedicated teams work fine if you need close communication and seamless integration with your team. Still, if you are okay with setting proper communication channels with external resources, you can use IT staff augmentation or Extended Team models.

Risk Mitigation Strategies Analysis

If you decide to outsource, you should be aware of the risks often associated with it, such as communication challenges, data security, cultural fit, etc. Always look and partner with companies with a proven track record of delivering successful projects on time.

Clear Project Ownership and Accountability

Depending on how sensitive or important the project is, you should determine where the project ownership is important to you and how much accountability you expect from your outsourced talents. If you are okay with providing full ownership and accountability of the project, you can choose a dedicated team, whereas if you want to define roles and responsibilities with external talents, you can go for IT staff augmentation and an extended team.

Consider Hybrid Engagement Models

The best part about these three IT staffing business models is that you don’t need to choose ‘either,’ ‘or.’Β  You can use the right model at the right place and benefit from the pros of all outsourcing models as and where needed.

Dedicated Team vs Staff Augmentation vs Extended Team – Quick Comparison and Selection Guide

Now we better understand what all three outsourcing models are, why they are beneficial, and how to decide between the three outsourcing strategies. However, if you are looking for a quick ultimate dedicated team vs staff augmentation vs extended team comparison table to assess the right fit for your project, here it is:

Factors to Consider Dedicated Team Model Staff Augmentation Model Extended Team Model
Budget Consideration Higher costs Cost-effective Cost-effective with pay-as-you-go options
Flexibility Flexible as per changing requirements Flexible for short-term needs Flexible long-term collaboration
Time Frame Ideal for a long-term project Suitable for short-term projects Ideal for long-term projects
Project Managed By Client Client Collaboration with in-house management
Team Scalability Can be scaled as per project needs Scalable based on changing needs Scalable if project scope extends
Payment Methods Fixed monthly payments Hourly or Sprints Pay-as-you-go, Flexible Hiring Models
Risk Mitigation Lesser communication risks The potential risk with temporary hires A collaborative approach reduces the risk
IP – Intellectual Property Better IP protection Need to bind agreements for protecting IP Can be discussed
Cultural Alignment Better chances of cultural alignment It would depend on the Vendor Can be worked upon
Task Management End-to-end handled by an extended team Client holds management over augmented talents and teams Joint efforts with in-house teams

Still need help choosing the right outsourcing model?

CONSULT WITH OUR OUTSOURCING CONSULTANTS TODAY

Wrapping up

With this, we conclude our ultimate dedicated team vs staff augmentation vs extended team model comparison. If you still need clarity or want to avail yourself of any of the mentioned outsourced services, drop us a line today!

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    Ronak Patel

    Ronak Patel, the CEO of Aglowid IT Solutions, is a NASSCOM member and a published writer in top tech publications like DZone and Hacker Noon. With a background as a full-stack developer, he brings a wealth of technical expertise. Ronak's marketing acumen complements his technical skills, ensuring the delivery of innovative IT solutions that excel in the market.

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