Success in managing an IT company depends on many factors, and one of the key among them is the level of qualification of your staff. When you have a project to create a website, an app, or to develop new software, it is important to correctly form a team of specialists. Choosing the optimal recruitment strategy in this case allows you to improve business efficiency.
This is where the first difficulties arise. A business owner has a number of questions: outsourcing vs. offshoring — which hiring model is better? Could it be better to hire a freelancer? Or is it worth paying more attention to the choice between insourcing and outsourcing, and choosing between the two? Let’s take a look at which is the most optimal method of recruitment.
So why the name “black box”? The reason is that this model of hiring developers is usually used in cases when a project needs to be realized from “A” to “Z”. In this case, the client rarely has access to the development team itself. Communication about a job with an outsourcing company takes place with the project manager. The service provider uses its own internal resources to work on the project and is responsible for its staff. Since control of the project from the client’s side is minimal, it is called the “black box” effect. So what about pros and cons of outsourcing?
- You are able to focus on your main tasks and simplify management for yourself.
- Responsibility for quality and the final result lies with the outsourcer (attracting an experienced vendor can minimize the risk of a poor-quality result).
- There is a very wide choice of developers.
- Considerable financial costs.
- Difficulties communicating with developers (the client or their team only communicates with the project manager).
- Order status is controlled by a service provider who is motivated to complete jobs quickly, sometimes at the expense of quality. Therefore, you need to choose a reliable partner.
Within outsourcing there are the concepts of “offshore” and “nearshore”. In essence, these are different varieties of the same thing, so there is actually no difference per se between outsourcing and offshoring. However, there is a difference between offshoring and near-shoring. In the first case, the work is ordered from specialists who are based far away from the customer, for example, a client in the USA who hires a developer in India. According to the near-shoring model, the project is handed over to specialists from neighboring states or countries, thanks to which the customer can easily visit their office and communicate with the management personally.
Yes, it is possible to form your own IT development department within your company, but this is a quite expensive decision. After recruiting staff into a team, you have to constantly provide them with working conditions and pay their wages. In this case, it is important to understand what they will do during the rest of the working time, when they are finished with a one-off task of developing a couple of websites, a mobile app or software.
Therefore, before setting up an internal development department within the company, it would be wise to consider how much it is going to pay off and be profitable for your business. Of course, if you already have an IT department, but a new large-scale project comes along, you can expand it with the “in house” hiring model.
Comparing insourcing vs.outsourcing, we can conclude that the first option is optimal for companies that need development services on an ongoing basis and for several projects at once. Another plus of insourcing is that you can control the work process of your project at any moment, because the hired team is always in your zone of influence.
It is the least expensive option, optimal for low-budget projects, which one person can handle. You find a freelancer and order from them. However, there are no guarantees here. There is a risk that the freelancer could disappear without completing the work to the end.
Another option of ordering development is called “staff augmentation”. According to the TrendLine Global team, it is very effective and is definitely deserving of your attention.
Outstaffing is a form of remote work where developers provide services to the client on a constant basis, yet while officially working for an outstaffing company. In this case, the management is carried out completely on the client’s side, and they have access to the development team. In essence, this is part of your company, usually located in another country. Because of this, the costs of your projects are reduced.
The outstaffing company takes care of hiring developers and the communication with them.
- You hire verified specialists from a vendor with a good reputation, and as a result you are guaranteed high quality work.
- These developers are cheaper than regular staff, i.e. you save on hiring staff.
- Flexibility in hiring and dismissing employees; vendors quickly provide a replacement if a developer does not pass the trial period.
- Access to a team of developers, control over their work.
- You save on additional costs: insurance, providing a workplace, other benefits, as they are provided by the vendor.
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Outstaffing has recently gained popularity due to the price, quality, reliability and convenience of the relationship, however the choice of model depends on the specific requirements of the client.