Software Development Outsourcing is Risky, Outsourcing Talent Recruitment is Not

Software Development Outsourcing is Risky, Outsourcing Talent Recruitment is Not

by Maria Gomez   |   November 21, 2019   |     9 min read
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Owning a business comes with inherent risk, but running a technology company in a world where innovation and change occur at a phenomenal pace is definitely riskier, as decisions must be taken rapidly with little information. So how do tech companies mitigate this? They build a creative, adaptable, and innovative workforce that will keep their company adaptable and current. As John F. Kennedy once said, “there are risks and costs to action. But they are far less than the long-range risks of comfortable inaction.” In the world of technology, inaction means stagnation, and while some risk is necessary, knowing what works and what doesn’t will help companies make better decisions in this fast-paced industry. Here at CodersLink, we have spent a lot of time researching risks associated with building creative teams vs. software development outsourcing, and what works and what doesn’t for tech companies across the United States. Our goal as a hiring partner is to help companies reap the fruits of outsourcing talent to their maximum potential. 

So while company owners understand that innovation means taking chances, no company will take unnecessary risks that have proven to be counterproductive. After years of tech companies engaging in software development outsourcing, we’ve learned that this model has inherent risks that provide little return on investment. What’s more, when it comes to companies looking to grow and offer quality products or services, outsourcing of talent recruitment is a much more stable, reliable, and beneficial model. 

Outsourcing as a Common Model for Reducing Costs & Improving Innovation

If you are involved in the tech industry, you’ve most likely known the concept of outsourcing. Tech companies especially have found that hiring remote workers to help with a variety of tasks helps productivity and even enhances company growth. Different companies and businesses engage in this business strategy for a variety of reasons.  

Reasons companies outsource remote workers:

  • Reducing costs
  • Access skills unavailable locally
  • To accelerate business goals and objectives
  • To enhance in-house productivity 

As more and more companies engage in some form of outsourcing, different models and approaches to the strategy have proven more beneficial than others. 

Outsourcing Models — Explaining the Different Approaches to Hiring Outside Talent 

Not all outsourcing happens the same way. It comes in different shapes and sizes. Successful outsourcing, however,  is all about relationships. The hiring company should understand the different benefits of each model and decide what is in their best interest based on their objectives. It’s about finding ways to hire talent outside of the local area to increase productivity, creativity, innovation, and profits. Over the years, different models of outsourcing have developed. Here are just a few:

Software development outsourcing or project outsourcing. 

It’s perhaps the model most people think of when they think of outsourcing. With this approach, companies will hire outside talent on a project-by-project basis. This model works best if the kind of work you are outsourcing does not make up the core function of your company or business, and if the project does not require high levels of team engagement.

Workforce augmentation or staff augmentation. 

Also, possibly known as talent recruitment. This model is a highly effective strategy to fill skill gaps that allow businesses to hire top-level specialists for short or long term projects. The term ‘augmentation’ is not accidental. It refers to the very deliberate augmenting or increasing in value of the overall staff. By adding top of the line employees and creative talent, there is an enhancement of productivity and value. At the same time, companies avoid the costs and commitment of hiring a full-time employee before they have a chance to see the way they work. 

Dedicated development center is another type of outsourcing model. 

This one refers to when a company locates its dedicated resources in a different country to gain access to larger talent pools; when company resources are in nearby countries, it’s called nearshoring, but when they are overseas, it’s called offshoring. This outsourcing model also allows a company to benefit from lower taxes and labor costs while benefiting from the expertise and talent. A company can open up its own dedicated development center in another country, but this usually requires massive resources and time. An alternative is partnering with a third party or vendor like CodersLink that has roots in the locale and already vets the candidates. 

What Model Fits My Company? — Weighing the Different Options 

So you’ve got a list of the different models, but how do they play out in the real world? How will talent recruitment actually benefit you in the short and long term? How does software development outsourcing put you at risk of investing time and money in a final product you don’t have full control over?

All great questions. 

Understanding how these models work differently both in the short and long term will help you make a better decision about which one is right for you.

Let’s take a look at a few common scenarios and see how they would play out differently, with the two most common types of outsourcing models in place: software development outsourcing and staff augmentation

You need to hire developers…

With software development outsourcing, you’re simply choosing the storefront. That is, the agency, but you don’t have much say in who will develop your software or website.  You might be getting the A team or the B team or even the C team. 

With staff augmentation model, you work directly with software engineers that have been screened through the hiring partner and that you’ve personally interviewed and vetted through your own hiring process and skills assessments. You know their skill level and style of working because you’ve had a chance to meet and interview them. 

When it comes to project management…

With software development outsourcing, you communicate with the team working on your project through an account manager, a project manager, or a team lead. You don’t always get to talk directly to the people who are hands-on building and working on your project. Ultimately this may cause gaps in communication or the slowing down of communication. 

With staff augmentation model, you eliminate the third party and communicate with your developers directly. This staff augmentation model translates to smoother communication, fewer misunderstandings, and higher efficiency. 

When it comes to skill range…

With software development outsourcing, you’re running a risk on the consistency and degree of quality, and you’ll be limited by the developers working in the agency. You won’t know those limits until you’re in the middle of the project. 

With the staff augmentation model, you’re in full control of the skills that your developer possesses since you get direct contact with the developer as a candidate. 

Software Development Outsourcing — Risks & How This Model Falls Short

So while your company needs might warrant hiring outside talent, the risks of the software outsourcing model are important enough to be mentioned here. Here are some of the most common risks people come across when dealing with software outsourcing:

  • Communication Problems. These issues will be the most commonly cited risk. This model has inherent communication issues built-in due to distance, time differences, and cultural and language differences. 
  • Lack of team engagement. Building relationships amongst your team is key to accomplishing tasks on time, productively, and of high quality. Frequently the lack of structure in the working relationship leads to a disengaged and disjointed workforce. 
  • No partnership contract. You want to look at your outsourcing partners as business partners that are in a type of covenant together. That is, both parties are striving for a shared and common goal that will bring good results to both. 
  • Lack of team interaction. It’s more than just communication; interaction is the reciprocal action, effect, or influence that two parties have on each other. When this is lacking, it reflects greatly on the quality of your output.  
  • Inadequate and varied skills. Software development can be full of surprises. This is because you don’t often know the quality of work that you’ll be getting from the get-go. It can be inconsistent and unpredictable. Companies often find that not all development agencies provide the talent they seek. So what happens with low quality work and coding is that the mistakes and shortcomings must be fixed, which means more money out of your pocket than you would have originally thought. 

Outsourcing Talent Recruitment — An Outsourcing Model Made for Long Term Partnerships

Although it might be remote, outsourcing talent recruitment ensures that you are injecting talent and quality developers into your team on a short term and long term basis. It is an ideal way to slowly incubate your developers and assimilate them to company culture and standards.  Here’s why it’s different:

  • Full control. When it comes to software development, requirements are always changing. This is why you want to know and understand the person behind your code. Knowing their background, skillset, and that they are reliable will go a long way when your project needs to be modified or changed. 
  • Engagement and communication. A developer working directly with your company will be a lot more invested and engaged in the final result and the project as a whole. With staff augmentation, a developer working on a project for your company feels more like part of the team, has direct access to them, and can grow and adapt accordingly. 
  • Getting vetted candidates. One of the main roles of a hiring partner like CodersLink that focuses on staff augmentation is that the candidates that you are interviewing have already been reviewed and vetted. Their qualifications have been verified, and backgrounds checked. 
  • Effective communication. You’re likely not to run into language or cultural barriers that act as an impediment to progress. At the same time, you have the ability to make changes to the project quickly and have direct communication that allows this to flow better. 

Recruit Talent, Grow Your Company With a Staff Augmentation and Trusted Hiring Partner

CodersLink has been scouting developer talent in Mexico for more than five years now. Our goal is to help companies with staff augmentation so they can build on the talent they hire for projects, months, or years to come. The bottom line is, there is a lot less risk when using talent recruitment or hiring partner to enhance your creative tech team. It gives you control and access to an incredible talent pool. So what is your experience with outsourcing? 

If you’re looking to augment your talent team and hire reliable and quality software developers, check out what we do. We do outsourcing right. We search. We vet candidates. We do the paperwork. We let you take over from there, so that you hold the reins to the next great project. 

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