Team Extension vs Dedicated Development Team: Pros, Cons, and How to Choose

A Quick Overview: Making the right choice between various outsourcing strategies can significantly impact your project’s success. Two such critical approaches in the world of software development are the team extension and dedicated development model. This blog extensively contrasts both models, spotlighting their advantages and considerations. By the end, you'll have better knowledge to decide which strategy aligns with your project goals and business objectives.

It's wild to think about how much the world has changed with technology. Software has become the backbone of pretty much every successful business out there. It's like having a supertool that boosts your efficiency, productivity, and customer satisfaction all at once. And who wouldn't want that?

As Gartner predicted, the global spending on IT and software development services will reach $4.6 trillion, an increase of 5.5% from last year. Moreover, 91% of businesses have invested in some form of digital transformation.

Hence, the market is becoming increasingly saturated with software applications. Organizations have no option but to build better apps within tighter timeframes, because if you're not on board, you're going to get left in the dust.

To address this challenge, IT outsourcing to a third party comes up as a viable solution.

There are two options available here – the software team extension model (one that supplements the in-house team with outsourced members) or the dedicated development team model (one that solely works on a specific project).

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For companies new to outsourcing, understanding the advantages and disadvantages of both models and determining when to use each can be confusing. So, to help CTOs make informed decisions, we have created this comprehensive guide as it aims to clarify the distinctions between team extension vs. dedicated development team.

Overview of the Software Team Extension Model

First things first, let's start by understanding what an extended development team is and how it works, followed by the benefits and drawbacks it offers.

What is the Extended Team Model?

The software team extension model involves bringing in external professionals who fully dedicate their time and expertise to your company.

The extended team seamlessly integrates into your company, embraces its culture, and works towards shared goals as an integral part of your core team.

Since they’re the added members of your own team, you’ve the responsibility of leading the entire process, including overseeing, coordinating, and evaluating tasks assigned to them. This, however, depends on whether you directly hire them from recruitment platforms or consult IT staffing firms for outsourcing. In the latter case, you can collaborate with an IT consulting company to handle recruitment, onboarding, and alignment with your organizational culture.

The extended software team model is the ideal solution if you have to expand your development capabilities or need developers with specific skills. Another term commonly used in conjunction with team extension is "IT staff augmentation," a model frequently adopted by companies for small to medium-sized projects.

How Does Team Extension Work?

An extended software development team differs from project-based teams in that the engagement doesn’t end once the project gets completed. Instead, it represents a continuing partnership between your in-house team and an extended team located offshore.

How an extended team works may vary across different companies, as they offer different engagement models. However, some key characteristics set it apart from others:

• Team extension is to complement your existing workforce, not to replace them.
• While your core team remains onshore, the extension team works from offshore locations.
• You retain complete control over the project.
• Regular communication between your in-house staff and the off-site developers,
• The extended team operates as a unified and tightly-knit unit.
• Constant and direct interaction ensures everyone is on the same page.

In short, every team member is equally dedicated to the software development process and accountable for its ultimate success or failure.

Benefits of the Software Team Extension Model

So, what are the advantages of adding complementary skill sets to your current team while still keeping your core competencies in-house? Let's explore the benefits of team extension services!

• Access to Global Talent Pool

Another great advantage of outsourcing IT team extension is the support you gain from a talent pool offered by an external partner. This allows you to quickly recruit specialized talents without incurring additional recruitment costs.

• Flexibility Without Compromising Control

One of the key benefits is the flexibility it gives while you maintain complete control. You get to manage the extended team’s workflow according to your needs, prioritize tasks, and define project goals based on your business requirements.

• Knowledge Sharing

When it comes to innovation, it's crucial to have a motivated team that thinks outside the box and propels your digital transformation journey. The knowledge exchange between two parties adds immense value to your project and ensures that you efficiently tackle any challenges encountered along the way and bring innovative solutions to the table.

• Complete Transparency

The hiring strategy for the extended team model focuses on a transparent time and material basis. This means you can easily determine the costs based on the expertise and experience of the developers you hire. You won't have to worry about additional expenses like equipment facilities, allowances, salaries, or unexpected costs. The financial part becomes straightforward and clear.

Drawbacks of the Software Team Extension Model

In any software development outsourcing model, there are potential roadblocks that can slow down work progress and lead to increased time and costs. Let's take a closer look at these challenges:

• Communication Problems

Although your core team may be working together seamlessly, extended team members require some time for them to learn the communication practices in place. This includes familiarizing themselves with processes for updates, meetings, and communication channels.

• Collaboration Hurdles

Similar to communication, building effective collaboration within the team may also take some adjustment time. Both existing and new team members need to develop a sense of trust and understanding before they can collaborate closely and efficiently.

• Increased Management Needs

To expedite the establishment of communication, collaboration, and other essential aspects, more proactive management may be necessary upfront. Managers play a crucial role in creating the right conditions for both existing and outsourced development teams to work in harmony.

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Overview of the Dedicated Development Team Model

Now that you know what it means to extend your team, let’s go through the basics of a dedicated software development team.

What is a Dedicated Software Team?

In the dedicated team model, clients who lack their own development resources can get comprehensive support from experts, including developers, project managers, UI/UX designers, business analysts, QA and testers, etc.

If you hire a dedicated software development team, they’ll understand your objectives and take full responsibility for the project. You work with specialists with the right skills and experience who handle project management, pricing, analysis, and ultimately build the desired software.

As Deloitte stated in its 2022 global outsourcing survey, there are two categories of third-party services:

1. Managed services: Volume-driven engagement with skill levels.
2. Traditional outsourcing: Cost estimation by delegating non-core tasks.

In this regard, the dedicated model goes beyond these two approaches and fosters a high level of collaboration, a focus on skills, technology empowerment, and a results-driven approach.

How Does the Dedicated Team Model Work?

So, how does the dedicated development team service actually work?

Well, it forms a strategic partnership between an organization looking for specific skills (the demand side) and a software development company (the supply side). Both parties collaborate to create an optimal framework for working together, with shared and individual areas of responsibility.

The development partner commits to continuously sourcing suitable talent based on the roles and qualifications required by the client. They may also have specific commitments related to talent retention, team performance, and candidate replacement.

On the client's side, they take charge of managing the process. This includes incorporating the dedicated team into their business processes, sharing product plans, ensuring daily task allocation, and leading the overall project.

Based on the contract, the development team may also help with other areas such as optimizing the development process, team infrastructure setup, operational alignment, etc.

For example, at Radixweb, we support our clients in adopting Agile project management practices and implementing effective CI/CD solutions for faster and more efficient software engineering.

Benefits of a Dedicated Team

With cost efficiency, easy access to IT expertise, direct communication, and seamless team monitoring, having a dedicated team comes with multiple advantages. They are:

• No Project Responsibility

Firstly, there's no need to worry about the complexities of your digital journey. When handing over a project to a dedicated team, you can leave the concerns of team structure, tech stack selection, project planning, software architecture patterns, hardware setup, and so on. They take on full responsibility for these aspects so that you can focus on your core business activities with confidence.

• Complete Ownership

The dedicated development team model means that you fully own the final product. Although the outsourced team writes the codebase and builds the product from scratch, you’ll get all project artifacts, along with proper documentation, upon completion.

• Experienced Management

A dedicated team comes with a project manager who takes charge of overseeing and managing the day-to-day operations. They report directly to you, allow you to stay in the loop, and ensure full transparency with your project progress.

This hands-on approach gives you the peace of mind to focus on your business while the software product development process progresses smoothly.

• Business Orientation

You need a reliable partner who’s familiar with your business needs, industry niche, and understands what your product requires. Hiring a dedicated development team model enables you to select a partner who not only provides developers but also offers skilled solution architects, project consultants, and testing specialists. These experts ensure comprehensive and successful project implementation.

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Drawbacks of a Dedicated Team

While the dedicated team model offers ample benefits, it's essential for you to consider some potential downsides:

• Not for Short-Term Projects

In this model, instead of hiring individual specialists, you're bringing in an entire team. This, in turn, incurs some time and hiring overheads. Hence, although this process is quicker than in-house recruiting, it may still not be the most economical option for short-duration projects.

• Potential Compliance Risks

The biggest con of this model is compliance risk, with around 40% of CTOs acknowledging it as their top concern. Especially, industries like healthcare and finance have strict regulations regarding data storage, information sharing, and overall technology governance.

• Operational Alignment

For any strategic partnership, strong internal support is crucial. Key stakeholders must be on board with the decision to engage the dedicated development team and commit to a high level of collaboration. Constantly changing project scope and requirements can hinder progress and efficiency.

Team Extension vs. Dedicated Development Team: What are the Differences?

Alright, let's break it down! Although both the team extension and dedicated development model are two sides of software development outsourcing services, they’re inherently different on the basis of a few parameters. Here are seven of those critical parameters:

1. Nature of Engagement

Software team extension is more like an ad-hoc collaboration where you temporarily bring in additional resources to augment an existing team for a specific project or task.

On the other hand, a dedicated development team is a well-defined, self-sufficient unit assigned to a long-term project that often works exclusively for a single client.

2. Duration of Collaboration

Extending your software team is a short-term arrangement, which usually lasts for the duration of a particular project phase or until your business needs additional expertise.

Contrastingly, when you hire dedicated developers, it implies a long-term commitment. They remain dedicated to your project for an extended period and ensure seamless project continuity.

3. Team Structure

The team extension partner usually works with your existing team with their specific skills and knowledge.

However, a dedicated software team is a mix of specialists required for the project, and hence, forms a single unit that collaborates closely throughout the entire project lifecycle.

4. Project Control

Between dedicated team vs. extended team, the scope of project control varies.

In the former, the client has full control, and they can delegate more authority to the dedicated team as well. This allows them to make decisions independently.

And when you extend your team, you get to retain more control over the project since the team members usually follow the lead of your core team.

5. Flexibility and Scalability

Team Extension offers greater flexibility in rapidly scaling software development teams based on fluctuating project needs.

On the contrary, while you can scale the team size to some extent, a dedicated team's structure is for a more stable and continuous workload.

6. Communication and Collaboration

An extended team may face communication challenges due to being geographically dispersed and having less familiarity with the client's internal processes.

But a dedicated development team, being a more cohesive unit, usually establishes smoother communication and a deeper understanding of your technical needs, business goals, and team workflow.

7. Resource Allocation

In the software team extension model, businesses are able to leverage specific skill sets for short-term tasks without committing to long-term resource allocation.

The dedicated team model allows clients who have ongoing projects to benefit from a stable, reserved resource pool solely dedicated to their project's success.

Dedicated Team vs. Extended Team: What Should You Choose?

Now coming to the big question – between team extension vs. dedicated development team, what would be the best IT outsourcing strategy for your business?

Allow us to give you a detailed answer:

When to Hire an Extended Development Team?

Adding outsourced software developers to your existing team has proven to be an effective way of tackling project challenges. And there are several scenarios in which team extension services make perfect business sense:

1. You don’t have the needed tech expertise

Firstly, when your in-house team lacks the necessary tech expertise required for your project, or if you're struggling to find specific talent quickly, turning to team extension services is a wise choice.

2. Scaling the in-house team isn’t an option

In case you're not prepared to scale your in-house team due to the costs and time involved, team extension becomes a cost-effective alternative as you can bypass overhead costs and concentrate on specific tasks without the usual overheads.

3. You lack hiring capabilities:

For companies with limited hiring experience, finding the right tech candidates can be a daunting task. In such cases, opting for the team extension model offers a way to avoid recruitment headaches.

4. You have short-term projects

Lastly, when you have short-term or one-time tasks, you can hire remote developers instead of in-house employees, and efficiently accomplish the job at hand without any unnecessary hassle.

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When to Hire a Dedicated Development Team?

Time to understand when it’s better to hire a dedicated development team instead of building one from the ground up:

1. You've a small budget

In certain regions like the US and Western Europe, hiring an in-house team might be economically unfeasible for small companies and startups operating on limited budgets. Thus, outsourcing to countries like India or South Asia can offer a more cost-effective solution.

2. You've large-scale projects

For long-term projects with complex needs and potential for growth, the dedicated team model is highly suitable. These endeavors demand a robust team of developers to navigate the challenges and opportunities that may arise along the way.

3. Your project requirements are not clear

In scenarios where project requirements are vague, the dedicated team model becomes an attractive option. Having such a team during the discovery phase in software development allows you to allocate the necessary time and resources without concerns about overspending.

4. You run an early-stage startup

For growing startups aiming to scale, hiring a dedicated software team can be a wise move. This approach allows you to quickly assemble a skilled team and save both time and money that would otherwise be spent on the hiring process.

Tips to Integrate the Team Extension and Dedicated Team Model into Your Organization?

Once you've made the important decision of selecting the right approach to collaborate with external developers, there's another equally vital aspect to consider – hiring an extended team vs. dedicated team with proper guidelines.

So, you've opted for the software team extension model, here's what you should do next:

1. Specify Your Needs: Before you start searching, be crystal clear about what roles you want to fill, and the specific skills required.

2. Look for Relevant Experience: Previous experience in remote work or team extension setups can be a plus since it shows they are familiar with the dynamics of working in a distributed team.

3. Assess Communication Skills: During the hiring process, pay close attention to candidates' ability to express themselves clearly, both written and verbally.

4. Trial Projects: Consider giving short trial projects to promising candidates. This way, you can evaluate their skills and how well they integrate with your existing team before committing to a long-term partnership.

5. Understand Time Zones: If you're hiring team members from different countries, make sure to consider the time zone differences. Having some staggered working hours can provide extended coverage for your business.

And in case you want to hire software developers from a dedicated team, we have compiled the following list of tips as well:

1. Define Clear Objectives: Clearly outline your project's objectives and goals to the dedicated team. This will help them understand the scope of their work and align their efforts accordingly.

2. Communication Channels: Establish effective communication channels to maintain constant contact with the team. Regular updates, feedback sessions, and open lines of communication will facilitate better collaboration.

3. Set Realistic Deadlines: Work together with the dedicated team to set achievable deadlines for each project milestone. Realistic timelines encourage productivity and motivate the team to meet their targets.

4. Encourage Collaboration: Foster a collaborative and supportive environment where team members can share ideas, brainstorm, and problem-solve collectively.

5. Monitor Progress: Regularly monitor the team's progress and provide constructive feedback to identify any potential issues early on and allow for timely course corrections.

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Our Concluding ThoughtsThe key to success, whether you're looking to expand your team or hire a dedicated one, lies in selecting the right people for the job. Working with a subpar team can lead to undesirable outcomes, such as communication issues, unstable products, or missed deadlines.To steer clear of such problems, consider partnering with a development partner like Radixweb. With a proven track record of 4200+ successful projects and 98% client satisfaction, we can offer you the outsourcing solution you truly deserve.Right from our inception in 2000, our custom software developers have been dedicated to supporting both global enterprises and local small and medium-sized businesses through various collaboration models.Whether you’ve a short-term project in mind or planning to hop on an extensive development course, we’ll assemble just the right team for you that supports your business vision and work towards delivering the best possible solution.So, if you're interested in working with us, let's start a conversation and explore the possibilities together!