Why Outsourcing Development Teams Can Be Better| Squadrity

If you’ve found this headline interesting, you’ve probably checked the arguments of freelance vs employee hiring models and learned that employing in-house developers might be costly for your business. Thus, you must be considering the other two ways of cooperation with programmers: hiring freelancers or outsourcing a dedicated team.

This article will advise you on these cooperation formats’ main pros and cons. And we hope it’ll help you choose the right option.

Differences Between Freelancers and Outsourced Coding Companies

Let’s check the main organizational and document-related differences between the two cooperation plans. When you work, for instance, with a team of Salesforce consulting freelancers, legally, they’re individual entrepreneurs. So you:

Search for, select, and interview candidates
Sign a cooperation agreement with each developer
Pay monthly remuneration to every team member and bear transfer costs
Onboard your consultants
Handle all organizational issues.

Once you, for example, outsource a dedicated SaaS cloud services team from a provider, you:

Stay away from recruiting
Sign one contract with the outsourcing vendor
Pay one invoice per month
Delegate onboarding of developers
Refrain from dealing with administrative tasks.

So an outsourcing company will save you time and help you focus on project-related tasks. Add its cost-effectiveness, and the popularity of this approach to building developers’ teams becomes obvious. Statista forecasts that by 2027, IT outsourcing will gain a market volume of $587.3 billion, boasting an annual growth rate of 8.07%.

However, Forbes states new tech companies prefer hiring freelance coders as it’s more budget-friendly. At the same time, Glassdoor reports that a US freelance software developer earns around $86,762 a year. But let’s check other benefits and risks of working with outsourced and freelance developers.

Pros and Cons of Hiring Freelance Coders

The cost-effectiveness of hiring a programmer working in freelance vs temporary employee can be impressive. But let’s check other pros and cons of taking freelance software developers on board.

Advantages

Owners of tech startups and new companies are ready to sacrifice their time and effort to cut costs. Below you’ll find more details about this benefit, plus two more advantages of contracting freelance engineers.

Lower project cost. Since you can contract individual developers outside the US and Western Europe, you can save on their remuneration. But lower salaries won’t mean you’ll contract less qualified specialists. You can hire even more experienced coders for the same money. That’s possible because of the lower living indexes in offshore destinations and minimal organizational costs.

Flexibility in project scope and timelines. Projects rarely go as you plan. So the response to unexpected changes in scopes or deadlines is vital. Freelancers are the most prepared for this due to their work style. They often have 2-3 customers and perform several tasks simultaneously. This helps freelance developers quickly adapt to adjusted requirements.

Direct communication with coders. When you contract freelancers, you become their direct manager. This means business or project owners can communicate the requirements, discuss plans, and get feedback directly from the developers. This can save hours of work done according to misinterpreted specifications and streamline the workflows. As a result, your team is efficient and synchronized.

Disadvantages

Hiring freelance coders promises effective communication and the possibility of finishing your project within a limited budget and on time. However, there are several risks your freelance software development team can bring:

Potential for unreliable or inconsistent quality of work. Top freelance platforms try to secure both parties, so customers can see previously done jobs and check reviews of each software developer. But since that’s the only information you can rely on, you’ll never know if your new team member will meet deadlines and perform tasks effectively. For instance, beginners can make wrong delivery estimates.

Limited availability and scalability. Earlier, we noted that freelancers gain flexibility because of multiple projects. But the other side of the coin is that different clients’ tasks can make this specialist unavailable for you (in case of urgency). Moreover, once the project scope grows, your freelance engineer can be unable to commit to more workload.

Limited expertise. When you assemble a team of individual freelancers, picking the exact skill set for a limited budget can be challenging. This way, you may have to hire two people instead of one, while outsourcing companies Europe, the USA, China, or Asia-based can offer experts with diverse expertise. For this purpose, vendors usually have talent pools and can quickly find top experts.

Benefits and Drawbacks of Outsourcing Development Teams

Outsourcing consulting firms or remote software development companies offer more reliability than cooperation with freelancers. Moreover, you’ll be able to get your team ready within weeks and with no effort. Still, let’s consider other arguments for and against outsourcing.

Advantages

Below are three key benefits of the outsourcing cooperation format.

High level of expertise. Reliable outsourcing companies assemble teams of skilled software developers. This way, they ensure their clients get the work done at a high level and build their reputation. For instance, if you address several best Ukraine app development companies, they’ll equip your project with coders who have 2-3 years of relevant experience.

Possibility to adjust your team size. Scalability is another feature businesses can leverage when working with software development outsourcing teams. When you need more programmers, professional recruiters will find them in a few weeks. They’ll embrace everything from crafting the job description to interviewing and onboarding new team members. And during this time, you can stay focused on project tasks.

Structured project management and quality control. Outsourcing software development services doesn’t mean you pay for the coding time of your team. It also assumes you get professional management solutions and regular quality control. Providers equip their teams with advanced hardware and tools, maximizing their effectiveness and allowing them to get a high-quality end product.

Disadvantages

Despite the several reasons to outsource development companies for your tech project, this way of getting the programming job done has its cons:

Higher cost per hour. Outsourcing helps you hire top specialists and save around 15-20% of costs compared to expenses for in-house teams. However, this model often assumes you have to pay more dollars per hour than if you contracted freelancers. But this price “includes” professional recruiting and administrative services, removing irrelevant workloads from you.

Less flexible project timelines and scopes. With an outsourcing provider involved, you get an additional party impacting your decisions. This process can take a while if you need to extend deadlines or add specific tasks to the agreed project scope. You can commit to new terms with freelancers within a couple of hours.

Limited direct communication with your team. The outsourcing format often assumes you hire engineers from remote destinations. This can bring various communication issues due to poor English, a few overlapping hours, or cultural differences. So you may need to plan joint activities more thoroughly, use relevant communication tools, and set additional rules to collaborate with individual team members.

Contracting Freelance Coders vs. Outsourcing Development Teams

Now, let’s summarize all the information above and compare the two options against several critical criteria. The table below will help:

	Freelancers	Outsourced Coders
Project Cost	Lower. Self-employed individuals will charge less because they don’t need to cover overhead costs other than their payrolls. So you’ll have to pay a net salary plus cover local revenue taxes, resulting in lower project costs for your company.	Higher. Your outsourcing partner will find the best-fitting and most reliable software developers. These experts can have higher salaries compared to freelancers. If your team needs office premises and equipment, you must also cover these expenses. This way, your project will be more costly.
Expertise Level	Lower. If you hire freelance developers to save costs, it’ll be challenging to find top experts with a limited budget. Also, finding a skilled coder who will meet your requirements can take weeks. That’s why you need to be ready for the lower expertise level here.	Higher. Recruiting specialists in outsourcing companies can hire mid-level programmers or skilled experts. They regularly monitor the software development market and create talent pools with contacts of top industry experts. So outsourcing consulting firms can provide coders with extensive expertise.
Team Scalability	Worse. Since you’ll have to monitor freelance platforms and explore tens of profiles, adding a new team member can take a while. Especially if this task will require an hour or two in addition to your usual working hours. So you won’t always be able to grow your team quickly.	Better. Outsourcing companies have a team of professional IT recruiters who can quickly find software developers with the required skill sets. They use advanced tools, apply proven approaches, and use personal recruiting networks to streamline the search. That’s why adding new team members is relatively easy for them.
Project Management	Harder. There are many helpful project management tools. They have to-do lists, offer various project views, allow linking, let your team collaborate, etc. But motivating every developer to check timelines, mark finished tasks, communicate with others, and resolve issues is more challenging.	Easier. Outsourced teams are equipped with all the necessary tools to simplify project management. This way, managers can build the strategy, plan a budget, and ensure every team member’s activity aligns with it. Such instruments help project managers assign tasks to software engineers, monitor their progress, and resolve arising issues.

Summing Up

Freelance programmers cost less and are more flexible, but you cannot guarantee their dedication. Outsourced coding teams boast proven expertise, quality control, and scalability but are more expensive. So whether to contract several freelance engineers or outsource a dedicated software development team depends on your budget and priorities.

However, outsourcing software development services to experienced providers remains a reliable and cost-effective way to bring your tech project to life.