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FINDING THE RIGHT BALANCE BETWEEN INHOUSE AND OFFSHORE IT DEVELOPMENT RESOURCES

September 4, 2018
ALEX SLOBOZHAN
CSO
Finding the right insourcing-outsourcing balance can solve many problems for IT vendors. The sweet spot will vary depending on the industry and clients you handle. Below, we summarize preferable ratios to satisfy different requirements.

HOW TO BALANCE INSOURCING VS. OUTSOURCING

Considering current human capital trends and the significant benefits of IT outsourcing, more businesses prefer mixing in-house resources with offshore employees. The businesses that make the most out of maintaining distributed teams are:

  1. Custom software development companies;
  2. Digital marketing agencies;
  3. Marketing agencies;
  4. International enterprises;
  5. Startups;
  6. Telecommunication and entertainment companies;
  7. Financial and insurance institutions;
  8. Data analysis companies;
  9. Healthcare institutions;
  10. Retail and hospitality vendors.

Today we will share the most efficient methods of outsourcing and ratios of in-house and offshore resources for some of these industries. If you do not find the ideal solution for your business, contact FreshCode, and we will help you establish a manageable distributed team.

Digital Software Agencies

Many digital software agencies of different sizes successfully employ IT outsourcing services. They slowly build trust with an IT vendor through small projects without tight deadlines to assess the potential for a successful long-term cooperation.

Strategic outsourcing begins with in-house tech lead (TL), project manager (PM) and product owner (PO) with one or two offshore senior to middle-level developers. After six to nine months of fruitful cooperation, the outsourcing team grows and uses an offshore PM, while PO and TL roles stay in-house.

As a result, digital software agencies can reduce the number of in-house project managers and tech leads, each of whom can work on multiple projects simultaneously. In-house PMs work with new outsourcing vendors and coordinate small projects involving both in-house and outsourcing developers.

In-house tech leads can focus on several medium-scale projects or one or two complex projects at a time, coordinating the distributed team and assessing its results. Tech leads oversee the offshore web development services while outsourcing project managers perform day-to-day management and coordination of the team. PMs should provide tech leads and product owners with regular progress reports, presentations and updates on the project's implementation.

To ensure successful and profitable operations, digital software agencies should employ experienced tech leads, senior developers, and project managers, as well as business analysts and product owners. The roles of PMs, junior to senior-level developers and testers can be securely outsourced.

Marketing Agencies

Large marketing agencies that can afford an in-house IT department manage software development outsourcing the same way as digital software agencies. However, smaller companies usually hire individual contractors (middle or senior-level developers, designers, project managers) or small teams comprising software engineers, testers, and PMs of different experience levels. In this case, agencies require an experienced in-house product owner. Senior-level marketing specialists or business analysts can take on this role and oversee the project's implementation.

By outsourcing software development, marketing agencies cut the human capital budget and employ experienced specialists on demand, without the need to maintain an in-house team with varied expertise.

The impact of outsourcing solutions on digital marketing agencies can be increased by broadening the scope of their services and offering turnkey software products. However, it is crucial to select a reliable IT vendor that possesses experience in locating clients' pressure points and alleviating their problems. Check out one of our successful outsourcing examples of turning a failed project into a success story.

Enterprises

Along with developers, quality assurance (QA) specialists, PMs, designers and other IT experts, enterprises require outsourcing companies to offer a dedicated account manager. This role is necessary to establish efficient communication between the enterprise and the IT vendor. The in-house part of the distributed team should include a variety of managers to provide technical and administrative oversight of the project's implementation.

Startups

For non-IT startups without proficient technical background full-spectrum outsourcing is the best option. IT vendors offer a variety of services from business analysis to development and ongoing maintenance of the finished software.

We do not recommend hiring individual freelancers for small businesses and startups. Offshore companies offer higher quality and guarantees even if their rates are a little higher. You can learn more about promising examples of outsourcing companies in our previous post.

Other Businesses

If your company provides IT services, successful global outsourcing hinges on the expertise of in-house tech lead or senior developer. They should provide technical and administrative management of the project from start to finish. If your company offers other digital services, the best approach to outsourcing is to hire an experienced offshore company that can handle all stages of software development from architecture design to quality assurance and ongoing maintenance.

HOW TO CHOOSE THE RIGHT TEAM FOR YOUR PROJECT

Hiring individual freelancers is an excellent choice if you have in-house experts that can evaluate the quality of their work or you can perform the technical checks on your own. Due to the advantages of employing freelance developers, you will:
  • Get the required results promptly with no strings attached;
  • Quickly locate many qualified experts at a freelance marketplace;
  • Save the development budget, as the freelancers' rates are low

On the other hand, you will face significant risks. You should be ready for:
  • Complete lack of quality and compliance guarantees;
  • Missed deadlines, miscommunication, and unmet expectations;
  • Troubles with future updates in case the freelancer is occupied with other projects;
  • Zero leverage over unconscionable freelancers that fail to meet your requirements.

If you are developing a new project and do not possess the required technical skills or the necessary number of in-house specialists to do the job, hiring an IT offshore company is the best option. This approach is also suited for the development of complex solutions within tight deadlines and further maintenance. If you require expert consultation on project implementation or updates, IT vendors are the right choice. With their cooperation, you will enjoy:
  • Guaranteed results;
  • Leverage over the vendor should any problems occur;
  • Ongoing maintenance of the project after its completion and launch;
  • A variety of resources and specialists for the efficient implementation of the project.

On the downside, IT outsourcing companies have higher rates compared to individual freelancers.

If you realize that your project requires a professional development team, but your budget is tight, check out our previous article. We have shared the main criteria for selecting an affordable, yet reliable IT vendor.

Was this overview useful? If so, share it on social media and subscribe to FreshCode blog. We will send the latest IT insights your way, but you can find more helpful tips on our blog right now. If you have more questions on business process outsourcing trends, project management and all things IT, ask them in the comment section! We are always on the lookout for more exciting topics for our future posts.
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