Hiring Strategy for IT Outsourcing: Which Approach to Choose in 2023?

You have come up with a great tech idea and are all set to execute it. All that is left now is to hire a team to work on the project.

Well, how do you hire a team in the first place? Let us tell you that there are numerous ways to do so. If we were to categorize these ways, we could say that the two primary approaches are IT outsourcing and hiring an in-house development team.

Further, IT outsourcing can be subclassified into hiring an independent contractor and augmenting tech staff from a development outsourcing agency.

All this information can be a bit tricky for businesses to understand. However, it is essential to know the nits and grits of each option to determine which of them is the right choice for your project.

In this blog, we have thoroughly discussed each of these approaches for your easy understanding. By the end of the blog, you will be able to decide which of these hiring strategies is ideal for your IT project.

Let’s start the blog with the basics, i.e., by discussing the importance of choosing the right hiring strategies in detail.

Hiring Strategies and Business Success: What’s the Fuss About?

In lay terms, a hiring strategy is an approach, methodology, or plan a business adapts to get a particular task done. As we mentioned earlier, there are numerous hiring strategies in the market to choose from.

Each strategy is unique in terms of its advantages and limitations, and therefore, there is no one solution here that fits all requirements.

To elaborate, a hiring strategy that is ideal for business A might not be suitable for business B. This is determined by various factors, such as:

• Project’s size and complexity
• Business’s requirements
• Capital availability
• Communication requirements, etc

Therefore, you, as a business, must be aware of all the different options that are available in the market to make the right choice. Moving further, we will individually discuss each IT hiring strategy in detail to find out which of them is the best option in which case.

The first hiring approach we will look into is independent contractors.

Independent Contractor

Also known as freelancers, independent contractors are individuals that are not associated with any organization or business and work in a nuclear setting. Today, independent contracts hold a 15% share of the employee market. In terms of IT projects, Independent contractors can be freelance developers specializing in one or more technologies, tech stacks, etc.

Generally speaking, most independent contractors charge on an hourly basis for the services they are offering. These charges usually vary with the type of technology they hold expertise in, their experience, the region where they are located, etc. Let’s take a look at the pros and cons of hiring independent contractors for your IT project.

Pros

1. Easy Onboarding

Many businesses suffer from missed project deadlines and extended timelines because of various crucial yet unproductive activities that come with hiring an employee. One such activity is onboarding, where employees undergo induction and orientation before actually starting to work on the project.

Businesses that hire independent contractors gain the upper hand in this matter. This is because a business hiring freelance developers is not responsible for conducting any onboarding, induction, or training activities.

Resulting from this, hired independent contractors can immediately start working on the project as soon as they are finalized for the deal. This directly nurtures speedy development and ensures time-bound product delivery.

2. Hiring Flexibility

Flexibility in teams is an essential factor for businesses, especially when it comes to IT requirements. It is through flexibility that a business can ensure optimal quality and requirement-focused development for its project. Hiring freelance developers is an ideal approach in this matter and enables businesses to practice out-and-out flexibility.

Simply put, you can fire a remote developer as easily as you can hire one. Resulting from this, if at any point you find the hired independent contractor to be unfit for your requirements, you can fire them and hire a new one. Businesses often do this when the hired developer is not delivering the desired results.

3. Low Rates

As the global IT sector is booming, software development rates are skyrocketing. This factor limits the possibility of digitalization to certain businesses with adequate capital availability. However, this does not have to be the case in all scenarios, thanks to independent contractors.

It is a commonly known fact that hiring independent contractors is one of the most cost-efficient approaches when it comes to IT product development. Speaking in numbers, freelance software developers can charge as low as 15/hr, or even less, depending on where they are located.

This way, you can significantly reduce the overall cost of your project by simply choosing to hire independent contractors for your project.

Cons

1. High Abandonment Risk

We discussed earlier how businesses that hire independent contractors benefit from the exquisite flexibility that this hiring approach offers. Let us tell you that this is a two-way road, and independent contracts are as flexible as businesses while working on projects.

In simple words, there are many cases where the hired independent contractors end up abandoning the project amid the development process. This can be due to various factors, such as the hired developer finding another project with better pay, work boredom, personal conflicts, etc.

Because of this factor, businesses are left with no choice but to either start the project all over again or find a developer who is willing to work on an incomplete project. Either way, it is the business that suffers from an extended development timeline and compromised code quality.

2. Lack of Integrity

Integrity and honesty are critical values that businesses expect from their team. This is especially the case among businesses dealing with unique ideas. However, it is a commonly known fact that this freelance development often comes at the cost of limited integrity and honesty.

Usually, many freelance developers resort to malpractices like reusing old codebases, selling ideas to other businesses, reselling a project’s codebase to another client, etc. These factors can, by large, be detrimental to your business and can result in tremendous losses.

3. Compromised Supervision

Businesses supervise their employees throughout the projects for optimal delivery and efficient development. However, it is always a challenge for businesses to supervise the work of independent contractors.

Since most freelance developers work remotely, there is no accountability for the work that they are delivering to the outsourcer business. Moreover, it is always difficult to coordinate the project between the team of hired freelance developers as, in many cases, businesses hire developers from different countries and, therefore, different time zones.

All of this directly compromises the final quality of the output and creates hurdles in the development process. This is usually not the case with other approaches, where supervision is a seamless process.

That’s it for the pros and cons of hiring independent contractors for your project. Let’s move further with the blog and take a look at the second hiring strategy, which is staff augmentation.

Staff Augmentation

Staff augmentation is another outsourcing approach where businesses hire additional staff from an external agency based on their current business requirements and staff limitations.

In terms of IT projects, tech businesses can follow this hiring strategy to hire dedicated developers to work on their projects. The hired developers work as an extension of the current workforce on a temporary basis. More than often, the developers working on this project work with an on-site development model. Let’s take a look at the pros and cons of IT staff augmentation.

Pros

1. High Expertise

In today’s world, it is essential to create a competitive product that is capable of standing out in the market. Of course, this requires hiring developers that hold the best-in-class experience and world-class expertise in the technology they specialize in.

When you augment your staffing requirements through a development agency, you are certain to get the best and most experienced talent. This is because most development agencies focus on building long-term partnerships and recruit and deploy only the best talent.

You can easily leverage this exquisite expertise of the augmented IT staff and build a world-class digital product with a competitive edge.

2. Exquisite Team Scalability

The entire concept of staff augmentation focuses on enabling businesses to hire additional human resources to meet the limitations of the present ones. In this aspect, you can not only hire more developers through this approach but also easily scale your team.

To explain, staff augmentation gives businesses control to easily add or remove developers from the supplementary team as per their demand. This factor enables businesses to efficiently utilize their human resources and optimize capital investment.

Moreover, a business can also change the developers working on the project as per its changing requirements and satisfaction with the developer’s services and output.

3. Less Training Requirements

Many times, businesses end up investing a lot of time and resources in providing training to their employees. This often results in delayed timelines. However, a business can easily reduce the requirement to train its employees by augmenting its staffing needs.

Speaking factually, most businesses augment their staffing requirements to overcome the limitations of their existing workforce. You can choose from a plethora of developers that such agencies have to offer and can select the one with the best-fitting skills and expertise.

To add to that, since most agencies deploy their most skilled and talented staff, you will not need to provide any training. This way, the selected developers can almost immediately kickstart your project’s development.

Cons

1. Increased Supervision Work

Employee supervision forms an integral part of project management. The better supervision you provide to your employees, the better output they will deliver. However, providing adequate supervision can be a challenging task among businesses with enormous team sizes. This is usually the case when businesses augment their staffing requirements.

In case you choose to hire an on-site team through the staff augmentation strategy, there is no doubt that you will have more employees to supervise and take care of. Naturally, you will be investing more time managing the expanded workforce instead of focusing on core business activities like strategic planning and business management.

2. Limited Business Familiarity

It is essential for all employees to be familiar with the core values and missions of the organization they are working with. To add to that, in many cases, the developers working on the project must also be aware of the projects that a business has previously worked on to understand the quality and standards that the brand strives for.

Achieving this objective is highly difficult with staff augmentation. Since the new staff is hired only on a temporary basis, it is impractical for the business to train each and every employee on its values, projects, and standards.

Moreover, as you rotate the staff, you will have to provide this training over and over again in order to achieve similar results from the developers.

3. Diluted Control

Businesses practice control over the hired employees in various aspects. This usually includes control over leave policies, notice periods, employment dissolution terms, performance appraisal, etc. However, this type of control can only be practiced over one’s own employees and not over the augmented staff.

This is because, in most cases, it is the development partner that practices such control over the augmented staff and not the outsourcer business. This dilution of control can often result in reduced productivity from the hired developers and limited accountability, significantly impacting the development process.

These were a few pros and cons of staff augmentation. Coming next is in-house staffing, which is the third and last hiring strategy in this blog.

Hiring an In-house Team

As the name suggests, this hiring strategy focuses on recruiting a complete team of employees for your company to work on your requirements. In terms of IT projects, this means hiring a complete team of specialists in every stage of the development process, like business analysts, UI/UX designers, programmers, QA engineers, etc. This approach is commonly adopted by large-scale businesses. Let’s take a look at the pros and cons of hiring an in-house development team.

Pros

1. Easy Communication

Developing a digital product requires out-and-out communication with the development team working on the project. This often involves communicating feedback, project changes, ideas, etc.

Achieving this objective is easy with in-house developers. This is because most in-house developers are available in an office’s premises during work hours unless working with the off-site model.

Moreover, since the in-house developers are often aware of the standard operating procedures of the company, coordinating project specifications with them is a hurdle-free process at most times.

2. High Trust

Employee trust and confidentiality are essential factors when recruiting a team to work on your project. The more trustable the employees are, the better collaboration will be between them and the management. The in-house employees have the upper hand in this aspect and benefit from tremendous trust.

Since, in this approach, the employees are hired through a fair hiring process and are working in the company’s premises on the company’s terms, it is easy for the management to trust the employees.

Additionally, these in-house employees hold high accountability and answerability for their work, resulting in increased trust as compared to the other two approaches.

3. Value for Investment

When a company hires an employee as a part of its in-house talent, it invests additionally in polishing the skills of the employee by giving them ample exposure and hands-on experience. It is essential for a business to ensure that it gains optimally from such investments.

In-house employees often prove to be worthwhile in this aspect. Most in-house employees stay in a single company for up to many years, therefore giving back for the value that the business has invested in them. This factor nurtures mutually beneficial collaboration between the employer and the employee and sustains a healthy work environment.

Cons

1. Cost-intensive

Hiring an in-house team means that you, as an employer, are responsible for providing adequate infrastructure and facilities to the hired employees. The better infrastructure and facilities you will be able to provide to the hired developers, the better results they will deliver.

However, this can often place a business under a tremendous financial burden. Simply put, providing adequate infrastructure and facilities to an entire team of developers is not easy and requires businesses to spend additionally on such facilities.

To add to that, these facilities are not only limited to providing a great workplace setting to the employees but also include employee recreational activities. The final figure can be astonishingly high for most businesses and can make the entire project unfeasible.

2. Team Rigidity

Hiring an employee is a time taking process. In this scenario, if a business is building an entire team by hiring in-house employees by itself, it is commonly understood that there the business wants to retain its employees and reduce the employee turnover rate.

A few ways to do so is to bind the employment for a certain time period, an approach that most companies follow. However, doing so adds a great deal of rigidity and makes it almost impossible for a business to scale the created team.

Therefore, if you find out that the hired developer is not providing adequate performance, you will have to go to great lengths to take corrective measures or eliminate the developer from the team.

3. High Training Requirements

When a business hires an in-house team to work on its requirements, it also becomes responsible for providing adequate training to the employees. This training forms an integral part of the employee’s career development and helps them leverage their skills.

However, doing so will mean that your employees will have to take time out of their daily schedules and attend training sessions. Moreover, you will also have to invest additionally in establishing a learning and development department, based on the type and extent of training you will be providing to the employees.

All these factors can extend the project’s timeline and can turn out to be unfeasible for many businesses, proving to be a significant limitation of the in-house development strategy.

These were the pros and cons of hiring an in-house development team for your project. We hope that by now, you are clear on which approach is ideal for you based on your business’s objectives and goals.

Summing It Up

In order to efficiently leverage technology, it is essential to use the right and the best available resources. This includes choosing the right development team to work on the project. In this blog, we discussed three core hiring strategies that businesses can choose from when hiring a developer for their project.

We hope that by now, you are aware of which approach to choose- an independent contractor, staff augmentation, or in-house development team. All you need to do is select the approach that you believe is ideal for you and conduct a well-planned hiring process for your project.