Outsourcing continues to evolve with the worldwide shifts in economic conditions. Technology is advancing and so are business needs.
Implementing effective operational practices is not only desirable – it’s a top priority.
Yet many people still struggle with understanding different outsourcing strategies.
Why?
Because they don’t have a clear notion of how they work.
In this article we’ll talk about dedicated teams and project-based outsourcing, and what the difference between the two is.
What are Dedicated Development Teams?
Dedicated software development teams are composed of professionals exclusively assigned to work on a specific project or task for a company or client. They act as an extension of the client’s company.
The teams work closely with your in-house team. They provide specialized expertise and are focused solely on the project’s goals.
Benefits
Now that we have understood the essence, let’s look at the benefits.
The most significant ones are:
- Exclusivity – team members’ focus is only on the project at hand and there are no distractions or additional responsibilities.
- Flexibility – as the project progresses, teams can be adjusted in terms of size or skillset to better meet the requirements.
- Long-term focus – usually, the teams are engaged for extended time periods, which fosters continuity and a deeper understanding of the project.
- Expertise – the teams consist of specialists with a large field of expertise and a skillset that aligns to the project’s needs.
- Cost-efficiency – costs are often predictable and transparent, the overheads are significantly reduced, and there is better resource allocation.
Sounds perfect, right?
Sure, it is, but there is something else that must be taken into account:
Drawbacks
All things have their shortcomings, and this is no exception.
Here are a few drawbacks that may arise at some point:
- Higher initial costs – although dedicated development teams can be cost-efficient in the long run, the initial cost for recruitment and setup may require significant time and investment.
- Communication challenges – if the dedicated team is geographically dispersed, communication can become a challenge, and the lack of internal coordination could impact the work quality.
- Risk of team burnout – if the focus of the team is on a single long-term project and there aren’t new challenges or adequate breaks, members may experience burnout, which will lead to fatigue and reduced productivity.
- Short-term projects incompatibility – building a good team cohesion requires time if you want full efficiency to be achieved. Also, the chance of underutilization of resources can lead to inefficiencies in the end.
- Knowledge transfer issues – after the project is done, transitioning the knowledge back to the broader organization can be difficult. Also, if team members leave or the project is discontinued, knowledge may be permanently lost.
You needn’t worry about these too much, though.
After you’ve familiarized yourself with the specifics, it becomes clearer.
What is Project-Based Outsourcing?
Project-based outsourcing is when you hire an external company to manage a specific project or set of tasks within a defined timeframe.
This type of outsourcing is focused on achieving particular goals or deliverables for a limited duration, and the external team is more autonomous in their way of work.
It ranges over a large number of services across different industries. Here are some of them:
- Software development
- Business and management consulting
- Marketing and advertising
- HR and recruitment
- Event planning and management
Now, let’s talk business:
Benefits
Here are the main benefits of project outsourcing:
- Clear outcomes – the results are easily measurable, and they align with business goals, which makes tracking progress and evaluating success easier.
- Defined scope – both parties understand the project’s boundaries, which reduces misunderstandings and makes planning and execution more straightforward.
- Predictable costs – with clear deliverables and no overhead costs, it is easier to budget and avoid unexpected expenses.
- Short-term engagement – it lets businesses address specific tasks without any long-term commitments and helps with seasonal workloads management.
- Simplified contracts – contracts are usually tied to specific milestones, so they are easily managed and tracked.
As you can see, the advantages are numerous, especially for businesses that aim to efficiently complete specific projects without building internal capacity.
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We at Expert Allies can help make your projects come together seamlessly.
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Drawbacks
All things have a negative side, and this is no exception.
Why?
Because having an understanding of what might become a problem for your business is the key to prevent it from happening.
When it comes to project-based outsourcing, these are the main ones:
- Limited flexibility – projects that have defined scopes can lack flexibility and adjustments can lead to delays and additional costs.
- Communication gaps – because most projects are short-term, a full understanding of the company’s ecosystem may not be reached, and communication can become a challenge. This may create misconceptions in the long run.
- Difficulty of measuring success – when it comes to more complex projects, defining success becomes harder, which can lead to potential arguments about whether expectations are met.
- Cultural differences – differences in work culture, values, or habits can create misunderstandings and tension during the project’s execution.
- Additional costs – there may be a customization cost if the project scope changes, or if after it’s completed, there is a need for ongoing maintenance or updates.
Don’t worry though, it seems frightening only in the beginning. Once you get the hang of it, everything will fall into place.
Dedicated Teams vs. Project-Based Outsourcing - Which is the Better Choice?
You now know the differences between dedicated development teams and project-based outsourcing.
But:
Which one is better?
At the end of the day, you know your business needs best.
And if you are yet to decide – take your time to think it through.
Both work models have their specific benefits and drawbacks. They stand apart mainly in their:
- structure
- goals
- work organization
Dedicated teams usually work on long-term projects, and the client has more control over the process. They are quite flexible when it comes to scaling and they work closely with the in-house team.
Project-based outsourcing is for short-term projects, and it has strict timelines. It is more autonomous when it comes to the way it operates, and it has a defined scope.
There is no easy answer to this – every business is unique and has its own needs. Think about what goals you have, consider your budget, and ask yourself what your end game is. After you’ve done that, you will have the right answer.
Wrap Up
Maybe it is no surprise, but there isn’t a “better option” in this case.
Both dedicated teams and project-based outsourcing can be the correct answer, depending on the case in question.
And while the business outsourcing process may be straightforward, each company benefits from different models of work. The point is to have a clear understanding of what those models are, how they help you, and how to realize their full potential.
FAQ
What are the different types of IT outsourcing?
Each industry has its own specific types of outsourcing. When it comes to the IT field, there are a few methods for outsourcing a project. Two very popular ones are through dedicated teams and through project-based outsourcing.
How to choose a dedicated development team?
Define your project goals, look for exclusivity, be transparent, and verify support for long-term commitment. Think about your business’s needs. Look into both the benefits and the setbacks so that you’re certain you are making the right choice.
What are the pros and cons of project-based outsourcing?
Some pros are that the outcomes are clear, the costs are predictable, and the contracts are simplified. Some cons are that the flexibility is limited, there may be gaps in communication, and there sometimes are additional costs.
