It is a big challenge to find a reliable dedicated development team to fulfill your business vision within a strict timeline and budget. We at SPD Group are helping companies to do that for 15 years, and continue to gain more experience in this. If you are a CTO, CEO, or Chief of Innovations of a startup or product development company, you may find this article useful, as we share our thoughts on adding remote experts to your project. SPD Group has successfully adjusted to the demands of Covid-19 restrictions and continues to deliver great software solutions for our long-term partners.

What are the options for forming a Software Development team?

We live in unprecedented times when the world is trying to adapt to the new normal. Many businesses had experienced a screeching halt in their growth as a result of the Covid-19 pandemic, some had significant financial losses, and some closed their operations. It is safe to say that all organizations received damage, and we are still not fully aware of the extent of it for the global economy. Businesses are forced to work remotely and outsource their jobs to survive. According to the Capital Counselor, the IT industry is a leader in outsourcing, having over the 50% of the market.

Global IT Outsourcing Market Statistics

Technavio predicts that in the next 4 years the IT outsourcing market will grow at a 5% rate and will reach almost $500B. What does that mean for your business? How to hire a development team for your project? What collaboration model will help you achieve your goals? This article will provide answers to these questions and more, but let’s start with the basics.

What is a software development team structure?

Here is how the typical team might look:

Typical software development team structure

Key software development team roles include:

  • The Project Manager (PM) is in charge of planning and execution, overseeing all processes, delegating tasks among team members, and communicating with the client.
  • Business Analysts (BA) are responsible for setting goals, analyzing and documenting core processes, and making sure that everything is aimed at achieving business goals. In some of our projects at SPD Group, our partners delegate the right to be Product Owners on the side of the outsourced development team to our Business Analysts. This allows our partners to delegate the creation of project requirements of a business solution to a dedicated team, setting only high-level business goals.
  • Designers are in charge of how the product will look and how users will interact with it.
  • Developers do the actual heavy lifting by writing the code. Front-end engineers are focused on a customer-facing part of the product, while back-end engineers take care of the elements that users don’t see.
  • Quality Assurance Engineers (QA) are testing the product and making sure it meets set requirements.

Other important roles that could be required in a project:

  • Tech Lead is often the most skilled software developer in a team that drives the development process and is responsible for the technical decisions of the team.
  • The Team Lead is also a technical expert but with a focus on the management process.
  • Solution Architect is building architectural solutions for all teams of the project to follow. This expert is overseeing the entire process.

Local product development teams

Having your entire team in-house is a great option. There is a great chance that most of your team members will speak the same language, have similar backgrounds and beliefs. This cultural fit is definitely a plus for a project and will help new people integrate faster into your processes.

The second main advantage is that having the entire team available on-site helps to connect everyone better, reduce misunderstandings and solve unconstructive conflicts fast, or even prevent them. All the changes and adjustments to the projects can be done faster because everyone is not only in the same time zone but also often in the same office.

Among the drawbacks is the fact that the cost of an in-house team is much higher than collaboration with an outsourcing company because you don’t only need to pay salaries, but also your cost expenses will include overhead salaries, benefits, training costs, etc.

The IT industry is evolving very rapidly, the scope of your project might change according to the market demand, but not all of your current experts are ready, willing, and able to upgrade their skill sets quickly or change their professional focus. The solution is to hire a development team of more proficient local talent with the required skills, but they can ask for a higher price. Your budget is limited, so this option will only work to a certain extent. Also, keep in mind that there is a tendency in the USA and Europe for top experts to switch companies due to high demand and better money offerings. So, you will be always in danger of losing your full-stack development team member, for example, during a crucial stage of a project. Who needs that to happen? Additionally, it may be hard to keep your team up-to-date with the required people without having a big pool of experts in-house.

There is an option of hiring developers as separate freelance experts, but you will still have hiring hassle, a limited pool of experts, and the possibility of long-term relationships will be uncertain. With freelance, you will usually receive just an implementer team and not active participants of your business processes.

Outsource development teams

The two biggest drawbacks of outsourcing are the lack of control and concerns about communication. Yes, it is harder to keep track of the progress and make quick decisions when experts are not in the same building, but the Covid-19 pandemic made companies switch to remote work anyway. Fortunately, with a reliable software development partner and a clear understanding of the business objectives, your company can be even more successful and turn an obstacle into an opportunity with a proficient dedicated software development team.

What are the benefits of remote development teams?

Saving costs

According to a study by Deloitte, 59% of companies consider outsourcing as an effective cost-cutting tool. Indeed, a company from the United States can reduce over 50% of IT costs by hiring a dedicated development team.

Access to the expertise

Sometimes the necessary experts are just impossible to find locally, or you have to pay them a salary way beyond your limit. If you choose to hire a development team that operates remotely as an option to expand your existing team, you will have access to the best experts all over the world.

Greater flexibility

You can change the team composition according to the current business goals as fast as needed.

Fast scaling

If you need to grow your team fast, outsourcing is a great option too. Hire as much talent as you need immediately to complete your objectives and fulfill the business vision!

“Do what you do best and outsource the rest!”
— Peter Drucker

What are the main types of engagement models for hiring remote software development teams?

While the names may change, and every IT company has its own way of collaborating with partners, SPD Group offers three main models to cover the most popular scenarios. If you want to learn more about IT engagement models, read this article.

Managed Product Model

This is a perfect choice if you want to have full control over the entire process with maximum predictability. In the scenario where you know exactly what you want from a project, you can visualize the final product, estimate the deadlines and the budget, Managed Product Model is the way to go. The company will be a partner from the very beginning to the release, maintenance, and ongoing improvement stages. This is how stages of this model look:

  • Defining business objectives
  • Project Evaluation Workshop and Proof of Concept (PoC) are needed in some cases
  • Research and design
  • Development
  • Post-launch maintenance and support

The team composition for building a product from scratch might include Business Analyst (BA), Project Manager, Designer, Solution Architect, External Technical Lead, or Consultant.

In case you don’t need help with building an entire product from scratch, but rather you need to boost your capabilities with additional experts, take a look at the following models:

Extended Team Model

This model fits when you know your business goals and how to achieve them, and you already have a development team to work on your project. All you are lacking is additional experts for the job. Extended Team Model is the option for Chief Technological Officers that are looking for a team of particular experts for a specific period of time. It could be a web development team, for example, complete with web/mobile software developers and QA specialists to build a sub-project. You can also hire a Project Manager, Business Analyst, or Team Lead, but you will maintain the responsibility for the strategy of the project. The time and cost savings are the main reasons to choose this model over the hustle of hiring software developers as short-term employees locally.

Dedicated Development Team Model

In times when the final goal is unclear, but you have a general direction this model might be the most suitable. It is also a great fit when you already have an in-house or outsource team of software developers building a project, but you need a workforce boost. It could be that your project may change dramatically on the next iteration, and you don’t have the luxury to hire a development team locally. The Dedicated Development Team Model (also known as Managed Service Model) allows your in-house team to join forces with the remote team of specialists for the best results. In this article, we will focus on this model and provide a detailed explanation of its value for businesses.

The benefits of the Dedicated Development Team Model

More delivery with the same budget

Previously it was mentioned that outsourcing is popular as a cost-cutting measure. With a dedicated team model, we can consider your project to be cost-efficient, hiring more proficient talent for the same money, and getting greater results.

Full control of the project’s delivery with daily updates

You will receive regular updates on each step in the development. You can share the decision-making or delegate some decisions to the dedicated teams.

Agile development team

The main difference between traditional and Agile approaches lies in the collaboration between experts. The chances are that the Dedicated Software Development Team will adhere to the Agile standards, so here is a quick comparison:

Traditional teamAgile development team
Top-down project management structureSelf-managed team, with PM in a coaching role
Working on multiple projects simultaneouslyExperts are focusing on one project at a time
The individual's performance is evaluatedThe performance of the team is evaluated
Distinct roles and positionsSkills are valued more than titles
Any team size6-8 people in a team
The employees are human resourcesThe employees are talent

The Agile approach is the heart of flexibility of this model, meaning that you can adjust conditions when you need it.

Predictable costs

You will be aware in advance what the hourly rate of each expert is, helping you to plan the budget rigorously for the entire length of the project.

No hiring hustle and paycheck pain

Software development companies have their own recruiters and HR experts. You don’t have to worry about all HR-related activities, paying only the hourly rates.

Fast and easy start

All you need is to know what you are lacking for the project, how the scope has changed and what the new requirements are. Then you can go directly to the interviews and find the right dedicated software developers.

Quick time to market

When the time to market is crucial, you can adjust your strategy accordingly, hiring developers, the most fitting people right from the start to achieve this goal. The Dedicated Development Teams are great for startups on their way to the fast launch.

24/7 Office: Time differences as a benefit

Different time zones are not always a bad thing, because you can plan the operations in a way that your operations will be going on 24 hours a day.

Ability to focus on your business operations

Having additional dedicated development teams, without a recruitment hassle and with the option of shared decision-making will free up time and energy for running core business operations and allow you to come up with more plans for your project, improving the overall vision.

Dedicated Development Team structure

The founder of Amazon, Jeff Bezos, coined the term “two-pizza team”, and it came from the phrase “If you can’t feed a team with two pizzas, it’s too large”. The same can be applied to the dedicated development team. As mentioned previously, according to the Agile approach 6-8 experts in dedicated development teams works great, and can include:

  • Project Manager
  • A team of 100% dedicated software developers of the tier and expertise you need
  • UI/UX Designers
  • Quality Assurance Engineers/QA Automation Engineers
  • Additional experts like Data Scientists, External Tech Leads, Solution Architects, Consultants, or Business Analysts are optional

How do you build a Dedicated Development Team?

Defining requirements

Contact your development partner and present your business idea to get the requirements and tech stack for the solution. Requirements document along with general information about your company will help a vendor to find dedicated software developers that will be a great fit both technically and culturally.

Interviews with experts

The teams are usually formed from scratch according to requirements. You may be lucky enough to get experts that worked together on a similar project, but that’s not the case most of the time. In case you already have a trusted software development company as your partner, you can let it hire a development team for the project. If you want to get involved with the hiring process more, you always have an option to conduct interviews with candidates. You will get multiple rounds of interviews during the hiring process. All candidates are approved first by the vendor after technical and HR interviews, to confirm the required skills and motivation to take on the project. Only after verification by the vendor, will you receive a list of candidates that might fit.

The hiring process is also an excellent opportunity to recheck whether you partnered with the right software development company. You can evaluate how they managed to meet your expectations and requirements, what style they use for internal communication, and what company culture they have in general. These details will help you to make a more informed decision, and you will be able to evaluate the potential of future collaborations. Don’t pay before you hire the first expert, and insist on signing NDAs before the interviews.

Launching a team

If interviews went well, you will already have a group of people who are able to get the job done. The launch will be fast and easy and will let you focus on other goals.

Managing a team and receiving updates

You can pick your own style of management: some will choose daily updates with more control and others will give more power to the Project Managers and experts. Receive as many updates as you need to follow your business goals.

Release and contract renewal

After the experts will finish their part of the job you can draw some conclusions on how this model worked for your business. Hopefully, with the next contract, you will trust more responsibility to the remote experts, increase the scope of your projects and make more money as a result.

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Things to know before hiring a dedicated development team

Understand the software development processes

You must be fully aware of all the small details in the software development process. Understand clearly the responsibilities of the vendor and on your side to avoid any conflicts or misunderstandings on a high level.

Learn what your experts can do

During the interviews and actual work on the project find out the abilities of your remote experts. Just like your in-house team, they could be useful in other projects, and knowing the secret talents of your team members can save time in the future!

Always sign an NDA

The protection of intellectual property and confidential information is crucial in 2021. The matter of trust and security is one of the risks of partnering with outsourcing company in general. To make sure this wouldn’t be a problem, review the intellectual property policies and NDA before the start of the processes related to the development. Keep in mind, that there is an option to sign a personal NDA with each hired expert.

Get a detailed and transparent contract

The contract you sign must have a clear description of:

  • The development rates with detailed breakdowns depending on expertise
  • Possible discounts
  • Payment and invoicing protocols
  • Credit periods and limits
  • Warranty conditions and periods

Our expertise in remote development

SPD Group is a technology partner for innovative organizations helping with research, technology consulting, and software product development services. Since 2006 we helped clients in Finance, Fintech, E-Commerce, Tourism, and other industries to build a software product of their dreams. The competence of SPD Group spans from initial Research & Development to implementation of bleeding-edge technologies like Artificial Intelligence, Machine Learning, and Big Data.

SPD Group takes pride in being a trusted development partner, not just an outsource service provider. We are focused on building long-lasting relationships over any short-term gain, taking ownership of the project, and growing with our partners.

We have multiple cases, where our team members fully integrated into the team of a partner and became permanent members of the project. In June 2008, we started our partnership with a startup called NimbleCommerce. In 2016, this startup was acquired by the BlackHawk Network and the team from SPD Group joined new owners. We had almost 80 permanent experts providing business processes and assets consolidation, data transformation/migration, and post-transition support for this financial services, prepaid, payments, and gift cards leader. You can read the full case study here.

In one of our more recent case studies, we partnered up with Poynt, a revolutionary open commerce platform and the inventor of the Smart Terminal. The partnership started in early 2019, the experts from SPD Group worked by dedicated team model and provided software development, software support, maintenance, brand-new features/improvement services. On December 15, 2020, it was announced that GoDaddy signed a deal to acquire Poynt for $365 million. The team from SPD Group, which consists of 25 experts, continued to deliver results for Poynt under the new ownership.

We work with all of our partners 5 years on average, and currently have 400+ certified and award-winning experts involved in nearly 20 projects all over the world. Our partners are always able to communicate not only with management but also with each specialist, to get detailed updates on progress.

Summary

What are the Pros & Cons of Remote Development Teams?

Remote development teams can help you save your money or get more expertise for the same amount, have access to the global pool of experts, and be flexible to change the direction and the project scope without any recruitment hassle. On the downside, there is a risk of low quality, security issues, a lack of communication and control over the development. However, with the right software development partner, the cons are clearly outweighed by the pros.

What are the options for outsource development?

You can hire freelance experts, but you will get all risks of outsourcing. It is better to partner up with a company and engage in collaboration using one of the possible models like Managed Product Model, Managed Team Model, or Dedicated Development Team Model.

Why do you need to choose a Dedicated Development Team Model?

It is perfect for situations where you don’t have a clear vision of the final result of the project. In cases where the scope, budget, and timeline may change it is a way to go. Some projects like Machine Learning-powered, for example, reveal the actual requirements only after time and effort spent on discovery.

Conclusion

Whether you already have a team of in-house software developers or don’t have any at all, a Dedicated Development Team model is a great choice for building your software product. If you are tight on budget, not sure about the technical requirements but still want to take on a journey of a long-term project give this model a try! With a trusted development company you will receive a partner that shares your goals and vision and offers help with the business direction.

Further Reading

  1. Embracing Agile – https://hbr.org/2016/05/embracing-agile
  2. Understanding Team Performance in Software Development – https://www.researchgate.net/publication/49586894_UNDERSTANDING_SOFTWARE_DEVELOPMENT_TEAM_PERFORMANCE
  3. The Pros and Cons of IT Outsourcing – https://www.journalofaccountancy.com/issues/1998/jun/antonuci.html

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Roman Chuprina Technical journalist at SPD Group, covering AI/ML, IoT, and Blockchain topics with articles and interviews. March 11, 2021