3 ways to extend your software development team

Most software development businesses sooner or later face the challenge of increasing their team. The business grows, the product becomes too large for the existing team, the investors demand a more rapid growth – there may be multiple reasons for the need to get extra development brainpower on board.

If you need to hire just a couple of developers, you will most probably hire them in-house to work next to your current colleagues. If, however, you are planning a massive team increase, there may be different options depending on your situation – hiring freelance developers or outstaffing.

Before we go on, let’s get our terminology right. Outstaffing and outsourcing are often mixed up and thought to mean the same thing, while they are, in fact, different models of getting qualified personnel.

Outstaffing vs outsourcing

In both cases, you will be engaging remote developers for your project. However, there is a major difference:

• With outsourcing, you assign an entire project or a functional component to a remote development company. Your outsourcing partner will be responsible for delivering the entire project or module within the agreed time and according to the specification. At the same time, the outsourcing agency is also responsible for organizing the work of its team, their salaries, and benefits.
• In outstaffing, the remote developers practically become a natural part of your team. The team management is on your side. The remote colleagues will not necessarily be assigned a whole project or module, they can just work along with other team members. For example, you may have two JavaScript developers on your team, one in-house and one remote.

In the outsourcing model, the cooperation between the client and the development company or agency is focused on the completion of a particular project. When the project closes, the cooperation may stop or, if the contract includes post-launch support and maintenance, the team may continue working on the product according to the contract conditions.

In the outstaffing model, however, the cooperation is about hiring remote employees without any reference to a particular project.

Usually, outsourcing is the perfect solution for companies having no own R&D capacities. For example, a company may produce certain hardware, such as door locks or electric outlets. If the company decides to explore a new direction and produce smart locks or outlets, this requires software development for which the company has no resources whatsoever. In this case, a good idea will be to outsource custom software development. Outsourcing will allow quick implementation and short time-to-market, as no time will be wasted for putting together the team and researching the technology.

Outstaffing, in its turn, is the model for companies already working in the software development industry but wishing to extend their software development team. The remote employees join the team to work on the projects that the company is developing or about to develop.

We have researched the benefits of outsourcing software development in the context of hiring freelance developers or offshore software outsourcing companies in our blog. Today, we will compare three ways to extend your team by outstaffing – in-house hiring, engaging freelance developers or cooperating with software development agencies that offer team extension as a service.

In-house hiring

As we mentioned already, you can hire developers in-house when you are not planning massive team extensions that may require renting a larger space. This model has quite a lot of advantages:

• Better management possibilities. When your entire team is within the same space, it is much easier to manage and control the work progress and respond proactively to any problems or issues.
• Easier communication. Holding daily meetings or discussing issues is no problem when you can physically gather people in one room. Besides, developers can talk about their work right at their workplaces. There is no need to set up special meetings or use communication or screen sharing tools – they can just walk to the colleague’s desk to chat.
• More effective replacements in the event of force majeure. The manager of an in-house team immediately knows when anybody is sick or has some family emergency. The manager can then quickly decide whether the work can be assigned to somebody else or wait until the colleague is back to the office.
• Friendlier environment in the team. When people do not limit their communication to work-related matters, their productivity grows. Many people working in-house together find friends among their colleagues. Having lunches together, going to a movie, a board game session or a gym after work creates stronger bonds between colleagues that have a positive effect on their work.

On the con side, however, there are quite a number of factors:

• High costs. Even if you do not rent a larger office, you will still need to provide the workstation for the new colleague as well as the other benefits of in-house employment. We are talking about paid vacations, sick leaves, mobile phones, lunches, and many other things companies use to attract employees.
• High salaries. The salary is another consideration that you should factor in. In the US, for example, the paycheck of a software developer may reach as high as $100,000 per year. Of course, the salary of an in-house employee includes all periods when they are lawfully absent – on vacation, on sick leave or during public holidays.
• Lengthy hiring process. When you start looking for a developer to join your in-house team, the process can be lengthy and costly. You need either to post a vacancy and monitor the responses or browse the platforms where you can find developers looking for jobs. In this case, you will definitely need to have an HR professional on your payroll and, in addition, to schedule the time to interview and test the candidates. Testing a software developer usually includes practical skills testing, thus you will need to invite your team lead to check them. Needless to say, you may have to repeat the process a dozen times before you find the perfect candidate.
• Complicated termination. A full-time in-house employee is usually protected by a lot of labor laws. If you decide to reduce the team again for whatever reasons, you will not be able to terminate their contract at any time. Even if you do terminate the contract, the dismissed employee is still entitled to unemployment benefits.

Hiring freelance developers

Engaging freelance professionals is becoming increasingly wider spread nowadays. More and more companies recognize the benefits of hiring remotely working independent developers to extend their teams. However, as everywhere, there are both advantages and disadvantages of this model, as well.

When we think of the benefits that the company receives when it hires freelancers, most of them are directly connected to their remote working routines:

• Lower costs. With freelancers, you do not need to expand your office to provide more workplaces. A freelance developer has own resources that they use in their work. At the most, you may need to purchase a license for a software tool for your freelance colleague.
• Lower rates. Typically, a freelancer charges an hourly rate rather than a monthly salary. While a freelance software developer hourly rate may be higher than the average salary of an in-house developer per hour, with freelancers, you do not need to pay their vacations, sick leaves or public holidays. You will pay only for the actual time they work for you.
• Access to the international knowledge base. It does not matter where you freelance worker is located geographically. With this hiring model, you can find freelance software developers in any country – their skills and expertise will be the only criteria. Moreover, since the offshore development rates are often lower than those in the USA or Western Europe, you can hire top developers at relatively moderate costs.
• Easy termination. When you make an agreement with a freelance developer, it is much easier to terminate than an agreement with an in-house employee. If you are not satisfied with the freelancer’s work quality or your project reduces, you can terminate the contract with no further obligations.

However, when hiring freelancers, remember the disadvantages that this model may have:

• Complicated management and communication. When your team is distributed all over the planet, its management becomes an art of sorts. Try to schedule a meeting when all your freelancers are in different time zones, some of them prefer working in the night while others get up early but may leave for the gym in the middle of the day. At the same time, with proper tools, you will achieve a productive atmosphere in your remote team.
• Cultural differences. When your team members come from different cultural communities, this may affect their working style. The cultural background has its influence on the way people make decisions, respect deadlines, treat their colleagues. Still, if you consider all cultural differences and structure your team operation accordingly, you will achieve the necessary effectiveness and a healthy working climate.
• Lower motivation. Freelancers are independent contractors, and their main priority is their own success. Their remote position prevents them from becoming committed to the company’s success. However, by organizing offline events and inviting your freelancers, you can make them feel “part of the crew”.

Outstaffing agencies

If you choose to work with an outstaffing company, this model is likely to offer the most benefits both for you and the employees you recruit. With such an extended team model, you will hire professional developers for your team, while most of the administrative costs will remain with the agency providing the outstaffing services.

The benefits of outstaffing are quite numerous:

• Lower costs. You are getting qualified personnel at the offshore software development rates with no overhead. The outstaffing agency takes over all administrative matters, such as taxes, office supplies, recruiting, while the developers are, in fact, employees of your company.
• Global reach. As with freelance developers, outstaffing allows hiring programmers in any country, thus leveraging the best value-for-money ratio. See our research on the advantages of hiring software programmers from Ukraine showing that this way, you can rely on the best results at reasonable costs.
• Better candidate screening. The agency selects developers on its side proposing the best candidates for your vacancy. This can help to save both time and money for your business.
• Quick onboarding and easy termination. With outstaffing agencies, you can scale your team up or down as necessary without worrying about any unemployment compensations. Once you dismiss a developer, the agency may reassign them to another project or keep them “on the bench” until the next opportunity.

The arguments against outstaffing mainly reduce to those relevant to hiring freelance developers:

• More complicated management. You may face the same difficulties as with your own distributed team, however, the agency may resolve most of them. They usually keep the standard working hours and adhere to the common management methodologies.
• Cultural differences. Of course, certain cultural issues may arise, but with proper organization, they are going to be minor. Besides, outstaffing agencies in Eastern Europe mostly adopt the Western corporate culture while charging quite affordable software development rates.

On a final word

We are very lucky to live in the era when distances do not matter anymore. Global high-speed communication channels allow both the development professionals to use their skills in interesting projects and the tech companies to find the best software developers in the world within a reasonable budget.

We have considerable experience in providing outsourcing and outstaffing software development services and will be happy to share it with you. You have a project – we have people who can do it. Contact us, and together we can make your idea fly!