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Mar 16, 2021
Andrew Romanyuk
Andrew Romanyuk
15 min read

Dedicated Software Development Teams: the Tell-All Guide

Hiring a dedicated software development team allows organizations to solve numerous challenges and achieve specific business goals effectively and cost-efficiently. In this regard, it's important to understand what a dedicated team model is, how it works, and how it compares with other models.
This article provides details to help you make the right choices, covering topics that include:
  • Advantages of a dedicated software development team
  • The main approaches to dedicated software development
  • What is an offshore dedicated team?
  • The best countries to find an offshore dedicated team
  • The legal aspects of working with a dedicated software development team
  • How a dedicated software development team works in practice, the workflow: from an initial discussion with a dedicated development team vendor to continuous delivery of your goals and objectives
  • Myths and fears about dedicated software development
  • Examples of successful companies that relied on dedicated software development to fuel their growth

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Today, a growing number of companies hire a dedicated development team (also referred to as a dedicated software team or a dedicated team) to build their products and services:
  • According to Statista, 35% of companies outsource IT services to let their staff focus on the core business.
  • 24% of businesses outsource to increase efficiency, and 18% to receive assistance from an expert.
  • In 2019, the global market of outsourced services amounted to $92.5 billion, showing a considerable growth from $85.6 billion in 2018.
  • In 2021, spending on IT services is expected to increase by 6%, reaching $1 trillion worldwide.
What are dedicated teams?

What is a dedicated team?

Before COVID-19, it was argued that physical co-location and face-to-face communication was required to build an atmosphere of trust in the workplace. The idea doesn't seem so valid anymore, and a growing number of companies leverage outsourcing to access global talent from anywhere in the world, without all the expenses and risks associated with in-house staff.

A dedicated team (also known as outstaffing) is an outsourcing model of collaboration between a client and a dedicated development company where:
  • A client hires a team of professionals, a dedicated software development team, from a software development company to satisfy the client's business needs.

  • The dedicated software development team works as part of the client's in-house team and focuses exclusively on the client's initiatives, projects, and tasks at hand.

  • The software development company takes care of all recruitment, administrative support (salary, PTO, sick leaves, etc.), equipment, and other items the dedicated software development team might need.

Dedicated software development team provider – role and responsibilities

Let's discuss the role of the dedicated software development team provider in the dedicated team model:

The company providing a dedicated software development team:
  • Gives your company access to top engineering talent in any part of the world.
  • Removes the need to pay for vacations, PTO, health benefits, etc.
  • Understands how your people, processes, and technology work before the dedicated software development team is brought in.
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    Bear in mind that only first-class dedicated software development team companies always perform this step. Low-quality vendors just bring in a team without any preliminary research or preparation and hope for the best.
  • Supports a streamlined entry of the dedicated software development team into your workforce.
  • Reduces distractions for your current staff related to the dedicated software development team's onboarding.

Client's role and responsibilities

The role of the client hiring a dedicated software development team comprises the following responsibilities:
  • Provide guidance for the dedicated software development team on initiatives and high-level workstreams
  • Provide necessary technical access to lower-level (non-production) environments for the dedicated software development team
  • Provide access to logging/debugging information when needed for the dedicated development team
  • Provide access for the dedicated development team to production environments if/when needed, with the proper approvals process, when regulatory conditions permit

When hiring a dedicated software development team is your best option

Hiring a dedicated software development team from a reliable provider can help you achieve your business goals in a highly effective and cost-efficient manner. Here is when you would need a dedicated software development team:
  • It's too expensive for you to hire the needed professionals in-house
  • You can't hire and onboard an in-house development team fast enough to meet objectives set out by management
  • You need to free up resources to concentrate on your company's core business
  • Your company requires specialized skills not available in-house
  • You have a long-term project whose requirements are not precise, and the scope changes frequently and unpredictably
  • You don't have enough staff to meet your project's deadlines
  • Your software project is encountering an increasing number of issues, and you promptly need a dedicated development team of highly-experienced professionals to fix them

Pros and cons of dedicated teams

The benefits of a dedicated software team

Cost-efficiency and immediate access to top-notch talent

In most cases, it's considerably cheaper to hire a dedicated team than to hire in-house. Adding new employees to the payroll means additional cost—both in the time it takes for new staff to join and the indirect costs listed below:
  • Vacations/paid-time-off (PTO)
  • Benefits (healthcare, vision, dental)
  • Payroll tax
  • Workers' compensation and liability insurance
  • Risks commonly associated with the workforce (conflicts, injuries, lawsuits, etc.)
  • Sick days (especially due to COVID-19, considering that in-house staff may co-mingle in one location)
  • Bonuses
  • Shares/equity in the company
  • Providing office space for staff (hot desks, etc.)
When you hire dedicated developers, the company providing the dedicated software development team takes care of all the costs above while providing reasonable rates.

Hiring in-house also means incurring additional costs from:
  • Recruiting
  • Performance reviews and salary increases
  • Exit interviews
  • Project management staff
  • Training
When you work with a dedicated software development team provider, you get access to top-notch engineering talent in any part of the world.

Greater focus and productivity

A dedicated software development team works as part of your in-house team and is 100% focused on your projects and initiatives. Having a fresh look at the tasks, the dedicated software development team can provide more innovative and practical solutions for the project's challenges.

Being thankful for the opportunity to work with your company, the dedicated software development team is more motivated and will strive to perform better than your in-house team. The dedicated software development team knows intrinsically that if they don't perform better, they may eventually be let go, and this drives a portion of their desire to succeed and excel.

Also, the dedicated team tends to improve the client's processes and ways of working because it impacts them first and foremost. Where necessary, the dedicated software development team will introduce best DevOps practices like continuous integration and continuous delivery (CI/CD), which greatly improves the way the client delivers software.

Because of their remote-working nature, the dedicated software development team tends to write things down, in effect building the client's knowledge base, wikis, and work processes.

The short-term and long-term benefits that a dedicated software development team brings can help the client stay competitive even after the dedicated development team is gone.

Adaptability

The dedicated team model implies increased flexibility. Whenever the current needs and requirements of a project change, the dedicated software development team vendor can quickly reconfigure the dedicated development team to accommodate change:
  • Increase or decrease overall size of the dedicated development team.
  • Increase or decrease the dedicated development team members in a given role. For example, add more QA engineers for a period when more testing is needed.
  • Dynamically allocate dedicated development team members to different projects within the client's company.

Clear visibility and control over processes

From a practical standpoint, a dedicated software development team is just like your in-house team, with the only difference being that it works remotely. A good dedicated software development team has no problem working independently. The dedicated software developers will ask questions or schedule calls with your in-house staff only when needed to minimize distractions.

On the other hand, if you need to work more closely with your staff, you can manage the dedicated software development team directly or via a team leader appointed from among the dedicated development team members. Such management often implies day-to-day communication with the team, including daily standups, sprint planning and review activities, demos, and PoC presentations. As a result, you can closely align your internal team and a dedicated software development team to deliver on the target objectives in a given month or quarter.

When hiring a dedicated team is not a good idea

Apart from many dedicated team model's advantages, it's essential to understand when you shouldn't use the model.

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You don't have time to find a good dedicated team company

Investing time in finding the right dedicated software development team vendor is extremely important. Otherwise, you might bring in a vendor that doesn't deliver on expectation, which can be quite frustrating. A poor-quality dedicated software development team vendor can totally undermine your project and cost you a lot of money.

In your search for a good dedicated software development team company, look for the following qualities:
  • Extensive industry experience and a good track record. Evaluate the dedicated team company's portfolio and scrutinize their references.
  • Deep technical expertise in the tasks you're outsourcing.
  • Brilliant communication. Things to assess: English proficiency, time-zone difference, Internet connection, and cultural differences.
  • Attention to detail. The dedicated software development team company's staff are not afraid to ask questions to understand your needs and requirements.
  • Desire to do it right for the long haul. A good dedicated software development team vendor's staff think of the long-term impact and possible risks. They properly document their code, choose the right tools, take proper care of security processes, and deliver solutions that bring long-lasting benefits.
  • No fear of raising objections. A good dedicated software development team vendor's staff are not afraid to object when they see half-baked solutions that pose short- or long-term issues. They will often suggest an improved architecture and/or a way of completing the tasks, such that it doesn't take longer to implement but will overall be better for the client's organization.
  • Team lead. Finally, a good dedicated software development team vendor will provide excellent team leads who have a strong programming background. The team leads combine a software developer's role with that of a business analyst, project manager, and development manager to ensure timely delivery from the dedicated software development team and efficient communication with stakeholders of various backgrounds at the client organization.
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The case against business analysts (without a software engineering background)
Although business analysts without a software engineering background seem "cheaper" because of lower rates, here is why you pay more for the lack of software engineering experience:
  • They distract your in-house staff for longer
  • More round trips between engineers and your in-house staff
  • More implementation mistakes made
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The case against project managers (without a software engineering background)
Ideally, project managers and software developers should speak the same language. If they don't, it may lead to the following issues:
  • A lack of software engineering background increases communication overhead, which results in a broken telephone game where a non-technical project manager:
    • Won't be able to ask stakeholders the right questions on the fly
    • Will return to engineers, who will ask more detailed questions
    • Will go back to stakeholders to re-ask those questions
    • And so on...
  • A project manager without a programming background will likely annoy engineers and not have their respect as a leader, which can result in poor team output.
  • When deadlines slip, a non-technical project manager typically fails to understand why it happened.
    In a similar situation, a project manager with a robust software-engineering background is able to see whether the team or an engineer is demotivated, lazy, or simply incompetent. Ultimately, such a project manager is able to get to the root cause of the problem and ensure it does not happen again.
  • Can't appreciate or assess engineering effort and when the dedicated software team goes above and beyond.

2

Short-term projects

The dedicated team model really shines for long-term projects with a vast scope and requirements that are prone to change. In projects like that, a dedicated software development team is in a better position to demonstrate its strengths, such as focus and adaptability.
Using the dedicated team model for a short-term project is hardly reasonable, considering the time it takes to onboard a dedicated development team, learn your processes and ways of working, get all the technical access permissions, and so on. Moreover, some amount of time is needed for the dedicated software development team to adopt the culture of your company. In the case of a short-term project, another collaboration model should be used.

How dedicated teams work

Ways of working


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What are the main software development methodologies?

The two main methodologies are:
  • Waterfall. This methodology follows a specific sequence of phases—each phase must be fully completed before the next phase is started. The software can be used by stakeholders only when all phases of development are complete.
  • Agile. With Agile, a software product is developed in a series of iterations. The software can be used by stakeholders at the end of each iteration, long before all development is complete.
In principle, the dedicated team model can be used with both Agile and Waterfall software development methodologies. Both methodologies can be effectively used to produce high-quality software.

To choose the right approach for building software in your organization, it's essential to understand how both methodologies work, their advantages and disadvantages. After a methodology is chosen, it's easier to understand the benefits a dedicated software development team may bring to the project. Let's discuss the two methodologies at length:

Waterfall methodology

The Waterfall methodology is highly-sequential in that it follows a specific sequence of stages or phases. Each phase below must be fully completed before the next step is started:
  1. System and software requirements: gather and document requirements.

  2. Analysis: determine business requirements and current ways of working.

  3. Design: craft the software architecture.

  4. Coding: develop and create unit tests, integrate modules according to the determined software architecture.

  5. Testing/verification: test the software system-wide (integration testing, system testing, user acceptance testing).

  6. Operations: installation, migration, support, and maintenance of the finished product.

Waterfall benefits

  • Clear understanding of the scope, deliverables, and project timeline.
  • Each stage is documented in detail.
  • Smaller time commitment from the customer on a regular basis. Deeper customer involvement is only required at the System and software requirements, Design, and Testing/verification stages.

Waterfall drawbacks

  • Insufficient customer involvement. If you need more involvement in the project at each stage, the Waterfall approach is not your best choice.
  • Higher risk of building the wrong thing. Because the requirements may change over time, you can end up with a product that doesn't correspond to the latest requirements.
  • Difficult to introduce changes. Once the requirements phase is complete, it's very difficult to make any changes to the agreed scope, requirements, and deliverables.
  • Rushed testing. With the Waterfall methodology, the coding activities tend to run behind schedule. As a result, the final testing phase is often rushed.
  • Long time to deliver initial, working software. For instance, if you want to deliver a minimum viable product (MVP) as quickly as possible to get prompt feedback from the customers, the Waterfall approach is hardly the best way to go.

Agile

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The Agile methodology is designed to accommodate the need for software development to be more in tune with the business's ever-changing needs. The overall goal for a dedicated software development team is to deliver working software as quickly as possible.

The Agile iteration workflow

Within the Agile software development cycle, a software product is developed in a series of iterations, also known as sprints. The goal is to produce a working software product at the end of each sprint. A sprint typically lasts two weeks, sometimes three weeks, if the testing phase takes longer.

A sprint workflow follows these steps:
  1. Requirements: define requirements based on discussions with stakeholders.

  2. Development: design and develop software based on the requirements.

  3. Testing: perform QA testing to ensure the software is free of bugs, has no issues when interacting with other parts of the system, and the integrated software product works as expected. This stage may include integration tests, functional tests, non-functional requirements (NFR) tests, and user acceptance tests.

  4. Delivery: integrate and deploy the software into a staging or production environment. Perform internal and external training on software usage when needed.

  5. Feedback: review progress toward requirements and make suggestions on how to resolve the found issues. Get feedback from stakeholders and iterate.

Each phase individually and the process on the whole can be repeated multiple times until all the backlog items have been fulfilled.

Core principles of Agile

  • Adaptability: introduce change at the start of any sprint in the software development process.
  • Customer involvement: maintain close collaboration between the customer and the development team to accommodate constant changes.
  • Lean development: strive to make the end software product and the development process itself as simple as possible.
  • Teamwork: perform a continuous assessment of teamwork and how it can be improved, use pair-programming whenever desired.
  • Time: break large workstreams and tasks into sprints.
  • Sustainability: set a sustainable pace rather than pushing for a faster deadline.
  • Testing: test through every phase of the project.

Agile benefits

  • Quality: higher-quality and user-friendliness of the product.
  • Flexible deliverables: faster delivery of working features to stakeholders and customers.
  • Adaptability: the team can adapt to the customer's changing needs.
  • Commitment: there's typically intense commitment from the dedicated software development team.

Agile drawbacks/challenges

  • Because agile projects require a high-level of collaboration, communication must be frequent between a dedicated software development team and in-house staff.

Outsourcing vs consulting

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Outsourcing, also known as body shopping, is the practice of using outside service providers to deliver all or part of an IT function. Outsourcing can enable organizations to optimize costs, reduce time to market, and take advantage of external expertise, assets, and intellectual property.

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Consulting is the practice of using outside providers of advisory services to assess various technology strategies and align the strategies with the business or process strategies of the client. These advisory services may include:

  • Strategic planning: advisory services that help clients assess their IT needs and create system implementation plans.
  • Architecture planning: advisory services that help clients create the logical design of the system and the supporting infrastructure.
  • Operational benchmarking: assessment of the operating efficiency and capacity of an IT environment.
  • Implementation planning: advising customers on the rollout and testing of new solution deployments.

When you consider hiring a dedicated software team, it's important to differentiate between IT outsourcing and IT consulting to be able to choose the right dedicated software team vendor. The table below summarizes the functions of both IT outsourcing and IT consulting to help you understand the difference:

Outsourcing vs Consulting
Outsourcing
  • Carry out specific tasks only as explicitly defined by your in-house staff.
  • Drain your staff's time by forcing them to define tasks at a very granular level.
  • Lack of raising objections when technical or strategic decisions could be improved based on detailed data seen in the development & testing phases.
  • Little critical thinking of how to improve processes and ways of working overall.
Consulting
  • Think through and constantly improve ways of working, including:

    • Suggesting and implementing enhancements to software release processes and DevOps strategies
    • Refining and improving branching strategies to increase collaboration across teams
  • Break down abstract, complex challenges into specific tasks.
  • Perform day-to-day software development, testing, and quality assurance tasks, taking on both leadership and implementation roles.

If you managed to find a dedicated software development team vendor that truly embodies all traits described in the Consulting column above, you'll reap the following benefits:

  • You'll be able to deliver high-quality software in the most efficient way.
  • You'll get long-lasting benefits by improving your processes and ways of working.

There is a whole spectrum of dedicated software team vendors who lie somewhere between Outsourcing and Consulting. Most vendors claim they belong to the Consulting column, whereas in reality, they fall more into the Outsourcing column.

Onshore vs offshore dedicated team

Let's compare onshore and offshore dedicated teams and discuss their advantages and disadvantages.

An offshore dedicated team is located in a country different from the client's location. For example, for a company in the US, an offshore dedicated team would be a team located in Belarus, India, or Brazil.

An onshore dedicated software team, on the other hand, is located in the same country as the client. When a company in the US hires a dedicated software team located in the US, such a team is called an onshore dedicated team.

Let's review benefits and disadvantages of onshore and offshore dedicated teams.

Local Team
Offshore Dedicated Team
Cost

For a US based company, hiring an onshore dedicated software team costs considerably higher than hiring an offshore dedicated team.

With an offshore dedicated team you get more value for your money.
Communication

In terms of language and cultural compatibility, an onshore team is likely to be a better fit than an offshore dedicated team. In some cases though, the communication experience working with an offshore dedicated team matches or exceeds that of an onshore dedicated software team.

Depends on the country where an offshore dedicated team is located. For Western clients, an offshore dedicated team located in Eastern Europe is often the best fit in terms of communication.
Availability of skilled staff

Because the global pool of IT talent is considerably larger than in the United States alone, an offshore dedicated team is more likely to provide you with the needed skills for your project.

An offshore dedicated team provider lets you access high-quality engineering talent in any part of the world.
Time difference

Because an onshore dedicated software team is located in the same country as the client, there is little to no time-zone difference.

With a good offshore vendor, technical leads bridge the time zone communication gap to cover the customer's local business hours.

Geo considerations

Great countries to find dedicated software development teams

The global IT-services outsourcing market is growing at a remarkable pace. Driving this growth is the need to reduce operational costs and the lack of IT engineering talent. And this is precisely why more and more organizations, including Fortune 500 companies, are working with outsourcing providers to increase efficiency and the bottom line.

When it comes to choosing locations that provide high-quality IT talent and dedicated software development teams, in particular, consider the following aspects:
  • Technical education quality in the country/region
  • English language level and pronunciation
  • Cultural differences and similarities
  • Availability of skilled IT professionals
  • Outsourcing vendor rates
  • Time difference

Where can you find great dedicated software development teams?

The most popular destinations for hiring an offshore dedicated team are:
  • Asia-Pacific, including India, China, Vietnam, and Philippines
  • Latin America, including Mexico, Brazil, and Argentina
  • Eastern Europe, including Belarus, Poland, Russia, and Ukraine

Considering the factors above, here is a list of the most popular outsourcing destinations:

  • Asia-Pacific region (India, Philippines, China, Vietnam)

    Advantages. Because of a large population, the countries in this region have a large number of specialists working in the IT sector. These countries offer some of the most competitive rates in comparison to other outsourcing destinations. On average, the rates range from $20 to $40 per hour.

    Disadvantages. However, substantial cultural differences between these countries and the Western culture may lead to certain communication issues. From the Western clients' perspective, the following issues exist when working with dedicated software development teams from the Asia-Pacific region:

    • Poor English. It mostly applies to staff from China and Vietnam. But even specialists from India often have a very strong accent, which may impair effective, brisk communication.
    • Lack of creativity. Very often, instead of custom, well-thought-out solutions, they use code created by someone earlier. This can cause issues with intellectual property rights and have a substantial negative impact on the final product.
    • Will say 'yes' to everything. In some countries from this region, like China or India, frankness can be regarded as rude rather than honest. For example, if you are promised that a task will be completed by the end of the week, it might not necessarily mean that the task will be completed by then. It can mean just that your request was heard.

    Summary. You should consider this outsourcing destination whenever you need to outsource simple tasks at the lowest price. But if you're looking to develop a business-critical software system requiring strong software-engineering skills, you are better off hiring a dedicated software development team elsewhere.

  • Latin America (Mexico, Brazil, Argentina)

    Advantages. Because of a convenient geographical location and time difference, this destination is growing in popularity among the US customers. Good English proficiency and a decent level of IT education enable the outsourcing vendors to provide a wide range of IT services.

    Disadvantages. On the downside, outsourcing software development to vendors from this region can be quite expensive due to relatively high rates and taxes. The average rates range from $40 to $80 per hour. Additionally, some customers complain that Latin American software developers often lack discipline and punctuality, which can lead to subpar performance and delays in project delivery.

    Summary. The bottom line is, you should carefully weigh all the factors before deciding to outsource to one of the countries in Latin America.

  • Eastern-European countries (Belarus, Ukraine, Russia, Poland)

    Advantages. The countries in this region are known for their high-quality IT education system and cutting-edge IT competencies, including software engineering, quality assurance, database, and data-science skills.
    In the Coursera Global Skills Index 2020, Russia and Belarus are the top 2 countries in the world for technology skills, i.e. creation, scaling, and maintenance of computer systems and software. For their data-science skills, Russia, Belarus, and Ukraine are ranked among the top 10 globally.
    Apart from that, IT specialists from this region are known for their high English proficiency and cultural values that closely match those in the West.

    Disadvantages. However, even with the governments backing the IT sector, the IT services rates might seem relatively expensive in comparison to the Asia-Pacific region. You can hire professionals from Eastern Europe for $30-$70 per hour.

    Summary. On the upside, you can get dedicated software development teams of top-notch IT professionals who give you the best value for your money. The outstanding quality and timeliness of the development services make the Total Cost of Ownership (TCO) substantially lower compared to that of inferior-quality services from other regions.

Given the above-mentioned facts, as well as a convenient geographical location and comparatively small time-zone difference, the Eastern European region is becoming an increasingly popular outsourcing destination among the companies that operate in Western Europe, the US, and Canada.

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So what is the best software outsourcing destination?

If you need to hire a highly-skilled dedicated software development team to build complex or business-critical software systems with tight deadlines, Eastern-European region (Belarus, Ukraine, Russia, Poland) is exactly where you can find it.

Cost

The difference between price and cost

When you are looking to hire a dedicated software development team, it's essential to understand the difference between price and cost. Price is the amount you pay per hour or per week for the dedicated development team. Cost is your total cost of ownership (TCO) that includes all other expenses. These expenses include indirect and hidden costs, including:
  • Loss of reputation. Includes costs related to a damaged brand and loss of goodwill.
  • Customer dissatisfaction. Includes refunds issued to customers.
  • Lost revenue. Costs related to lost opportunity for upselling or getting more customers.
  • Increased development time. Costs occurring when software development takes much longer than agreed upon.
  • Poor quality. Costs related to subpar quality of the software.
  • Increased downtime. Costs related to excessive downtime caused by low-quality development and/or DevOps processes.
  • Fines paid to regulators (in regulated industries). Includes fines paid for poor compliance with data protection regulations worldwide:
    • GDPR (General Data Protection Regulation) in the EU
    • DPA (Data Protection Act) in the UK
    • CCPA (California Consumer Privacy Act) in the US
    • PIPEDA (Personal Information Protection and Electronic Documents) in Canada
    • and others in the process of being written into law
You should always estimate the total cost of ownership and risks when you hire a dedicated software development team.

Dedicated team vs fixed price

Fixed price model

The total budget on the project, the scope, and the deadlines are approved before development starts and remain unchanged regardless of how much time and expense will be actually spent by the outsourcing vendor.

Fixed price tradeoffs: If the work takes developers less time to complete than what was agreed upon, the client will overpay. On the other hand, if the agreed deadlines are too tight, the outsourcing company will rush the work, which will compromise the quality of the final software product.

Downsides of fixed price: Once all the requirements are agreed upon, the client cannot introduce changes, even if user expectations or market conditions differ.

The fixed price model is more appropriate for short-term projects, where it's easier to calculate all costs upfront correctly, and scope changes are less likely to occur.

Dedicated team model

When you're working with a dedicated development team, the software requirements, scope, and deadlines may change over time. The company providing the dedicated development team can quickly adapt to changes by:
  • Reconfiguring the dedicated development team: increasing or decreasing overall team size or the quantity of team members in a given role

  • Dynamically allocating dedicated development team members to different projects within the client's company

Dedicated team vs fixed price model - tradeoffs

Let's compare the dedicated team model with the fixed price model in terms of responsibilities:

Fixed Price
Dedicated Team
Who's responsible for figuring out what we're doing and, more importantly, why?

Your organization

Dedicated development team
Who defines the tasks and backlog?

Your organization

Dedicated development team
Who performs business analysis?

Your organization

Dedicated development team leads [1]
Who carries out project management activities?

Outsourcing vendor

Dedicated development team leads [1]
Who performs QA activities?

Outsourcing vendor

Dedicated development team
Who is responsible for the development team's loyalty and cohesiveness?

Outsourcing vendor

Dedicated development team leads [1]
Who takes care of HR and performance reviews related to the outsourced team?

Outsourcing vendor

Dedicated development team provider
Who is responsible for the risk of the team falling apart, conflict resolution, etc.?

Outsourcing vendor

Dedicated development team leads [1]

[1] A good dedicated software development team vendor will appoint a team leader with a strong technical background, who will act as a business analyst, project manager, or product owner based on the various needs of the project over time.

Dedicated team vs staff augmentation

The dedicated team model and staff augmentation model, though very similar, are quite different when it comes to responsibilities:

Staff Augmentation
Dedicated Team
Who's responsible for figuring out what we're doing and why?

Your organization

Dedicated software development team
Who defines the tasks and backlog?

Your organization

Dedicated software development team leads [2]
Who performs business analysis?

Your organization

Dedicated software development team leads [2]
Who carries out project management activities?

Your organization

Dedicated software development team leads [2]
Who performs QA activities?

Your organization or outsourcing vendor, if they provide QA services

Dedicated software development team
Who is responsible for the development team's loyalty and cohesiveness?

Your organization

Dedicated software development team leads [2]
Who takes care of HR and performance reviews related to the outsourced team?

The Staff Augmentation vendor

Dedicated development team company
Who is responsible for the risk of the team falling apart, conflict resolution, etc.?

Your organization

Dedicated development team leads [2]

[2] Depending on the project needs, good dedicated software development team vendors will assign technically experienced team leads to act as a business analyst, project manager, or product owner.

Common myths

Myths about dedicated software development teams

It's a proven fact that dedicated software development teams have helped many companies achieve remarkable results. Whether you're looking to hire dedicated programmers or considered doing it in the past, you may have encountered some myths or had some fears about the dedicated team collaboration model. Let's look at some of them in-depth.

"All talent must be in-house"

Some people, including VC investors, have an opinion that "all talent must be in-house." However, when reality strikes and you have to ship what you promised to the board (whether your company is public or private), you have to look outside your organization for help. And this is where a dedicated development team can help you deliver on your promises in a productive and cost-efficient way.

"All talent must be in one physical location"

The global situation with COVID-19 has proved that many companies can operate efficiently with the majority of their staff working from home. Because of the many benefits of working remotely (no stress of commuting, no workplace interruptions, more flexibility, and so on), this way of working is likely to stay with us even after the COVID-19 crisis. A dedicated software team is just like your in-house team, where both work remotely.

"We are not good at outsourcing"

An experienced dedicated software development team lead will do this:
  1. Understand current processes/ways of working
  2. Set up DevOps infrastructure to make it:
    • Easier for engineers at the client company to work
    • Possible for dedicated software development team engineers to work well
  3. Suggest improvements to the ways of working and processes
Overall, it's great for the client—it's like having a free consultancy built-in.

"We lack documentation"

Good dedicated software development team leads will help get the information out of the client's subject-matter experts (SME) and write down all their discoveries, in effect, building the client's knowledge base.

"We don't have well-defined chunks of work to give out"

It's dedicated development team leads' responsibility to flesh out the backlog and write up the user stories, tasks, tickets, etc. When a team lead is highly technical (7+ years of programming experience) and does the role of a business analyst (who at other companies is not very technical), this process is MUCH more efficient. When a team lead is not doing a business analyst's work, they are programming or leading programmers. And that's why a good dedicated software team provider always uses highly-technical team leads for business analysis tasks.
Legal considerations

Legal aspects of working with a dedicated software development team

Non-Disclosure Agreement (NDA). If your project involves confidential or sensitive information, and you are planning to share it with a dedicated development team, you should execute an NDA with the dedicated software development team company. It is typically done before going into a discussion of the project details. An NDA is a legally binding contract that stipulates what information is considered confidential and requires the contracting parties (the dedicated software team provider and the client) to not disclose confidential information, with substantial financial penalties and other legal remedies for failing to do so.

Statement of Work (SOW). SOW specifies project-specific activities, requirements, timelines, deliverables, standards, acceptance criteria, and other important items pertaining to the work to be performed.

Master Service Agreement (MSA). This agreement regulates the relationship between your company and the dedicated software development team vendor. Typically, an MSA includes generic terms such as service overview, payment terms, dispute resolution, intellectual property ownership, and indemnification.

Working with a dedicated team - the workflow

Once you've selected your dedicated software development team vendor, it's time to start the collaboration. These steps outline a sample of what the process looks like with a reputable vendor.
  1. Initial discussion. At this stage, you get acquainted with the dedicated software team vendor, see their portfolio, get to know their areas of expertise, and scrutinize their customer references.

  2. Sign a Non-Disclosure Agreement (NDA), a legally binding agreement that stipulates which information is considered confidential and requires the parties (the client and dedicated software team provider) to not disclose confidential information for a given period of time.

  3. Discovery phase. At this stage, the dedicated software team vendor will work with you on refining the following:
    • Technical roadmap
    • Your business objectives for the next quarter and year
    • Things promised to the leadership team/board of directors

  4. Technical kick-off phase. In this phase, the dedicated software development team vendor aims to understand your ways of working:
    icon

    To gather the necessary knowledge about your company's workflows and processes, the dedicated development team vendor may require technical access to lower-level and non-production environments, repositories, file systems, and other systems.

    • People
      The dedicated software development team vendor tries to get to know what departments you have, your organization layout, the responsibilities of key staff, and so on. Here are some questions the vendor will try to find answers for:
      • Who's the product owner?
      • What are the different products or systems, and how is ownership/responsibility broken down across department leads or other key staff?
      • Is there a shared team for enterprise architecture and/or where do critical technical decisions get made?

    • Processes
      Here the dedicated software team vendor tries to understand the following:
      • What environments exist
      • How the environments are created
      • Who has access to the environments
      • How and where artifacts are built
      • Whether there is continuous integration and continuous deployment (CI/CD) in place
      • What the testing process is like
      • Where the testers are located (offshore or co-located with your team)

    • Technology stack
      The dedicated software team vendor works with architects to find out as much as possible about technical infrastructure:
      • Frontend
      • Backend
      • Which cloud(s) or data centers are used
      • Networking technologies (if applicable)
      • Firewalls and security infrastructure
      • DDoS mitigation layers (if any)

      If new systems are going to be built, the dedicated software team vendor starts proposing target architecture.

  5. The dedicated software team vendor gathers strategic and technical requirements.

  6. Sign an MSA and SOW. Good dedicated software development team providers will delay this phase until all the requirements have been gathered.

  7. The dedicated software development team's work begins. Team leads start working with the client's staff. Software engineers begin working on features and bug fixes.

  8. Continuous delivery of your key goals and objectives.
Success stories

Companies that used dedicated teams to great success

The popularity of IT outsourcing and dedicated software development teams is continually growing due to enormous long-term and short-term benefits, including access to a vaster range of expertise and removing the need for daily management of non-core activities. When done properly, outsourcing helps companies small and large drive growth and create a competitive advantage.

Even though many successful companies hide the fact that they use outsourcing/dedicated software development teams for the core build-out of their products, we've managed to gather a number of inspiring success stories that should help sweep away any doubts about whether or not to hire a dedicated software development team. These companies have relied on outsourcing to fuel their success:
Alibaba logo

Alibaba

Alibaba started in 1999 as a China-based B2B marketplace with a workforce of 17 people.

In 2014, Alibaba's initial public offering (IPO) amounted to $25 billion—it was the largest IPO at the time, globally.

Today, Alibaba is an e-commerce giant with a staggering market value of over $545 billion and a huge workforce consisting of 117,600 full-time employees.

Arguably, the company wouldn't take off without outsourcing. According to the book "Alibaba: The Inside Story Behind Jack Ma", Alibaba initially outsourced its development to a US firm. The reason for outsourcing was that development talent was in scarce supply in China, while developers in the US had the skills Alibaba needed. Additionally, Ma was looking for ways to facilitate the company's growth despite the Chinese internet restrictions and firewall.
Skype logo

Skype

A popular telecommunications application, Skype, was created by Niklas Zennström and Janus Friis. It was first released in August 2003. In 2011, Skype was acquired by Microsoft for $8.5 billion.

In March 2020, 40 million people used Skype daily, and a hundred million used it on a monthly basis.

The back-end development of the application was outsourced to three developers from Estonia: Jaan Tallinn, Ahti Heinla, and Priit Kasesalu. With the help of the outsourced developers, Skype was able to enter the market and gain popularity among users and numerous businesses worldwide.
Slack logo

Slack

A business communication platform hosted in the cloud, Slack was founded by Stewart Butterfield and first released in 2013.

In 2013, the development of Slack was outsourced to a design company that created the logo and built the marketing site as well as the web and mobile applications.

In June of 2019, Slack went public via a direct listing, and the company valuation surged to $21 billion. On December 1, 2020, Salesforce confirmed that it would buy Slack for $27.7 billion.

Initially developed by an outsourced team, Slack has grown into highly successful communication software with more than 12 million daily active users.
WhatsApp logo

WhatsApp

Created by former Yahoo employees Jan Koum and Brian Acton as an alternative to SMS, today WhatsApp allows users to send and receive text, documents, photo, video, location, as well as make voice calls.

In 2012, WhatsApp was a small company with only 30 full-time and 5 part-time employees. To keep operating costs down and enable growth, the company outsourced development to Russia. Two years later, in 2014, WhatsApp was sold to Facebook for 19$ billion.

Today, more than 2 billion people in over 180 countries use WhatsApp.
Opera logo

Opera

Opera is a modern and lightweight web browser that was developed and initially released in April 1995 by Jon Stephenson von Tetzchner and Geir Ivarsoy.

Faced with uncertainty and limited funding, it was crucial to launch the product as cost-efficiently as possible. So they decided to create and implement the platform by using outsourced software developers in more than 25 locations globally.
GitHub logo

GitHub

GitHub is one of the most commonly used tools in the coding world. Started in 2008 by Chris Wanstrath, PJ Hyett, and Tom Preston-Werner, GitHub rapidly developed into a highly popular repository for people to host, document, and share private code.

The interesting thing is that in its early days GitHub relied on the use of outsourced consultancy services to further develop the product and roll out new features: Scott Chacon, now the CIO of GitHub, originally worked with GitHub as a consultant on an outsourced basis. Having a deep expertise in Git, an open-source distributed version control system, Chacon worked on development of the backend of Gist, a sharing feature within GitHub.

With just under 50 million users (as of December, 2020), in 2020, GitHub reportedly became the largest host of open-source code in the world.
Summing it up (TLDR)

Conclusion

Here are the key takeaways from this article:
  • Hiring a dedicated software development team is a cost-efficient way to access engineering talent in any part of the world.
  • Dedicated software development teams provide the highest value when hired for long-term projects with a vast scope and fluid requirements.
  • An offshore dedicated software team is a cost-efficient alternative to an onshore dedicated software team.
  • It's vital to invest enough time in finding a good dedicated software development team. Start by narrowing down your search to a region that is most likely to fit with your goals and objectives (hint: evaluate the total cost of ownership).
  • An offshore dedicated team located in Eastern Europe (Belarus, Poland, Russia, or Ukraine) is likely to provide high-quality services at reasonable rates.
  • Here are the traits of a good dedicated software development team:
    • A good dedicated software team is 100% focused on your projects and initiatives
    • A good dedicated software team tends to improve the existing processes and ways of working
    • Because of a more vulnerable position, a good dedicated software team needs to perform better than your in-house team
    • A good dedicated software development team has no problem working independently. They will ask questions or schedule calls only when needed minimizing distraction for your in-house staff. Alternatively, you can also involve a dedicated software team in your daily standup calls and processes
    • A high-quality dedicated software team company can appoint a team leader with a strong technical background, who will act as a business analyst, project manager, or even a product owner (if required)
You can always contact us if you'd like to explore hiring a dedicated software development team.