Between team augmentation and dedicated product team: tailor-made mixed IT outsourcing model

Day and night. Black and white. Good and bad. Our lives seem to be filled with opposites, don’t they? In fact, according to the Saussurean structural theory, the binary opposition is what gives our language – and thus our entire existence – meaning and value. For instance, it would be hard to define what being good means if we didn’t know what being evil entails.

In theory, such an approach makes the perception of the world around us easier and more organized. The issue is that our reality is rarely about polar opposites only. Between black and white, there are countless shades of grey. Between day and night, there are hundreds of minutes and positions of the sun.

The binary opposition theory – with all its shortcomings – has its application in the software development world as well. When deciding to outsource the development of your digital product, you can usually choose from two strikingly different cooperation models: team augmentation and dedicated team. As your priorities and needs change, however, you should be able to slide across the cooperation spectrum, moving more or less away from the extremes.

In this article, we will show what such a mixed cooperation model can look like and how valuable a mixture of team augmentation and dedicated team can turn out.

IT outsourcing models: three types of relationships

Although outsourcing has been around for years, it has recently grown to be fundamental to driving innovation quickly and effectively. The numbers are here to support this claim. For instance, according to Deloitte, the amount of organizations betting on outsourced services has grown from 20% to almost 50% between 2016 and 2018 – and the trend seems to stay with us for longer.

Since the main advantage of this business model implemented in any industry, including software development, is flexibility, it shouldn’t come as a surprise that IT outsourcing takes so many forms. Bearing in mind the distance between the client and the tech partner, we can distinguish onshoring (hiring a team from the same country), nearshoring (collaborating with a company located nearby, e.g., in a neighboring country), and offshoring (transferring activities to remote locations).

📚 Keen on IT outsourcing? You might be interested to learn how nearshoring and offshoring compare.

We can also divide IT outsourcing services according to the client-tech partner relationship and the level of ownership taken by either of the parties over the project. Having these criteria in mind, we distinguish three models of cooperation with a software house: team augmentation, dedicated team, and the mixed model.

Team augmentation

Sharing economy has become all the rage recently. Instead of making lifelong commitments and buying apartments, people rent flats that suit their current needs best. Rather than purchasing cars, more and more individuals decide on long-term rental. In either of the scenarios, there are a couple of undeniable benefits: little commitment, smaller investment leading to cost-saving, flexibility. Can you see where we’re going?

Team augmentation works similarly. It’s an IT outsourcing model whereby you look for a tech partner who’ll “lend” you their first-rate talent so that you can accelerate the time to market for your product. In this scenario, the vendor’s experts become a part of your in-house team for a definite amount of time. You’re in charge of onboarding and introducing them to all processes, best practices, as well as nuances of the project. This way, you remain in control of the development process – which can be an argument both for and against this solution, depending on your objectives and capacity.

Other benefits of team augmentation include not having to deal with lengthy hiring processes, not having to worry about training and retaining talent on your own, and having the freedom to scale the team up or down depending on your current needs. To learn more about this IT outsourcing model, read our complete guide to team augmentation.

To cut a long story short, you need to have in-house development talent to benefit from team augmentation. As the very name implies, this cooperation model is all about augmenting or, in other words, scaling up your team – and you can’t expand a non-existent team. Another prerequisite is having in-house technical leadership skills which will come in handy when onboarding and managing the vendor’s team.

Dedicated team

Regardless of its advantages, sharing economy is not for everyone, and neither is team augmentation. After all, if you don’t have a core team that satisfies at least some of your needs, this IT outsourcing model simply won’t do the trick.

Having said that, it’s high time we discussed team augmentation’s polar opposite: dedicated team. In this cooperation model, you approach the software house with an idea and let them bring it to life. After discussing your vision and expectations, the tech partner provides you with a blend of qualified IT professionals who are focused on quick wins and delivering results week by week. As it’s the only team working on your product from A to Z, it usually includes people with varied competencies, such as a business analyst, UX/UI designers, front- and backend programmers, QA specialists, and DevOps engineers.

Much like its opposite, a dedicated team model is recommended in a couple of situations. One of them is you needing skilled employees but not wanting to spend a little fortune on hiring them – especially if it’s challenging to find talent locally. This scenario applies whether you’re a technical or non-technical founder who prefers to operate in a business environment – although it's even more common in the latter case. Another situation worth mentioning is that of you needing to build a product ASAP and not having any time to waste on looking for local talent. That being said, however, remember that there are dozens of scenarios in which a dedicated team model will work equally well.

Speaking of testing ground, here are our guides to MVP and PoC development:
🔸 Minimum Viable Product uncovered: what it really is and how to make the most of it
🔸 What is Proof of Concept and when does your business need one?

In case you’re more of a visual learner, here’s a brief comparison of the two opposing IT outsourcing models:

Mixed cooperation

So far we’ve discussed the polar opposites which might have led you to think What if neither IT outsourcing model fits me? Luckily, when it comes to cooperation with a software house, the sky's the limit.

Think of IT outsourcing as of a spectrum with team augmentation on the one end and dedicated team on the other. If you’re not comfortable with the extremes, you can move between them, picking the elements you like the most and creating a unique mixed cooperation model.

Since this spectrum is wide, we’re not going to list all the qualities of mixed cooperation – it would be an impossible task, to be honest. Instead, we’re going to introduce you to some real-life examples of how you can mix and match the best parts of team augmentation and dedicated team depending on your needs – even if they change over time. Ready to jump in?

Sendinblue: team augmentation with an extra touch

First comes Sendinblue: an email, SMS, CRM, and more, all-in-one platform that helps grow businesses of all sizes through strengthening customer relationships. Although it might resemble other SaaS services at first glance (we get you if Mailchimp comes to your mind), it’s uniqueness has been proved more than once. In 2019, the Financial Times called it the 14th Fastest Growing Company in Europe, and in Autumn of 2020, Sendinblue raised $163M in Series B funding. Pretty impressive, isn’t it? Let’s see what our mixed cooperation with this innovative company looked like.

The mixed IT outsourcing model and team composition

When we first met Sendinblue, they were already a grown-up startup looking to grow their product and service range. The challenge for us was to support them in this rapid scale-up by providing top-notch talent and aligning ourselves with the client’s in-house and outsourced teams.

On our part, we composed a dedicated team including front- and backend developers, QA specialists, a UX designer, and a PM who had quite an impact on the project backlog. During our engagement, the headcount varied between 7 and 10 due to the changing project needs, e.g. the need to audit the client’s designs and perform automated UI tests, which influenced the composition of the UX and QA teams.

Although our team was dedicated indeed, we followed some team augmentation best practices as well. Since our task was to develop selected features of a large system, close cooperation with the client’s team was essential. As part of the onboarding process, we needed to learn the in-house procedures and understand all the dependencies – and because of the size of the product, there were quite a few of them.

In the development process per se, the client assigned a Product Owner and a Tech Lead to supervise our actions as well as an internal developer and a QA specialist to support our squad. We ensured the efficiency of our collaboration by harnessing the best Agile and Scrum communication practices, such as conducting daily meetings, setting up several Slack channels, and arranging regular reviews.

In Sendinblue’s case, we went for a mixed model because the client needed an all-around team that was both independent and able to collaborate closely with an in-house squad. A simple team augmentation wouldn’t but so wouldn’t a pure dedicated team model – all due to the scale and complexity of the application as well as a number of inherent dependencies.

Lessons learned

Let’s now summarize what this project’s story has taught us and what it can mean to you, an entrepreneur looking to outsource software development.

• If you’re a mature company with a product already present on the market, a model leaning towards team augmentation will be a natural choice for you. This way, you’ll get access to experienced talents and freedom to scale up or down the outsourced team.
• When augmenting the in-house team, make sure that your onboarding processes are impeccable and that the outsourced team has enough time to get acquainted with the documentation. It’s also a good idea to add one or two of your internal specialists to the vendor’s squad to facilitate understanding of requirements and make communication more efficient.
• Growing a product like Sendinblue’s SaaS with a tech partner’s help, it’s advisable to assign an in-house Tech Lead who knows how the tech-oriented decisions influence the product roadmap. At the same time, it won’t hurt to give some degree of freedom to the outsourced team. This way, you might benefit from their suggestions and reap the benefits of an even higher quality.

One Journey: from dedicated team to mixed collaboration

The second story you’ll read today is that of One Journey: a complex system that empowers travelers to book and purchase hotel- or spa-related products. Its ultimate goal is to support guests in planning and reduce time and effort by providing one central hub for many premium services. At the time of writing this article, the project is still ongoing and we’re helping to create both an e-commerce portal and a native app – but months of cooperation has shown us how the IT outsourcing model can change with time.

How the mixed model and team composition evolved over time

The client approached us with the task of building a digital product from scratch. At that point, they were a startup with no internal team. Due to difficulties in hiring talent locally and the desire to launch the application as quickly as possible, we decided to begin with a dedicated team that quickly evolved into a mixed model as the project was growing up.

As of today, our team consists of developers (with a frontend Tech Lead on our part), QA specialists, a UX designer, and a PM. We work hand in hand with the client’s team and the Project Manager is in charge of moderate planning meetings, removing roadblocks, and managing our day-to-day communication, to name a few. Nonetheless, backlog management and the decision-making process are carried out by the client’s representatives: a Product Owner and a backend Tech Lead. This way, both parties are sure that the tech-oriented decisions are conscious, well-thought-out, and aligned with the client’s vision.

Speaking of progression from a dedicated team model to mixed collaboration, it’s worth mentioning that it’s quite a common path for startups to take, whether their founders are tech-oriented or not. In the latter case, the engagement of the tech partner will be even greater at the beginning and may involve, for example, holding product design workshops or validating product idea with a prototype.

Once the dedicated outsourced team builds an MVP and your idea gets validated by real users, you can start hiring talent locally and gradually limit the tech partner’s ownership of the project.

Lessons learned

Having accompanied the client on the journey from an early-stage to a more mature startup, we want to draw your attention to the following conclusions:

• If you’re a freshly minted entrepreneur, don’t hesitate to cooperate with a software house. When you’re on a budget and have no time to lose, experience and manpower are two things you need.
• Pay attention to the project management style on the vendor’s part. Regular communication and treating your internal stakeholders as part of the team are the epitome of the tech partner’s maturity.
• As you start building an in-house team, it’s a good idea to do it gradually. This way, the outsourced squad can share their knowledge and best practices with your newly assembled (and still growing) dev squad.
• Although you always have the final say, the more tech-oriented you are as a founder, the greater impact you have on every part of the project – it all boils down to you knowing the nuances of the proposed solutions.

Choosing the best IT outsourcing model

In software development, just like in any other aspect of our lives, there are no universal answers or solutions which fit all problems. The choice of the cooperation model depends on a number of factors and should always be made on a case-by-case basis. However, if you decide on a mixed model, it might be a good idea to take the following steps – if only to make the software development process less troublesome for all parties involved:

• Consider your expertise. The more knowledgeable you or your in-house team is, the more you’re going to lean towards team augmentation. Similarly, the less you know about software development workflow or possible tech stack choices, the more you’re going to need a dedicated team.
• Think about your product’s complexity. An MVP doesn’t require as much commitment in terms of hiring in-house as a growing mature product.
• Build bridges, not walls. If you wish to scale up your team, prepare for an intense knowledge-transfer and ensure the outsourced team can talk to your Tech Lead or a CTO. This way, you’ll avoid misunderstandings and accelerate the work.
• Remember who’s in charge. Regardless of how close you move to a dedicated team, the mixed model assumes that you’re the decision-maker at the end of the day. A software house acts as an advisor but cannot take responsibility, e.g., for you adding new functionalities to the scope without securing funds first.

Ready to take the next step to digital success? See why it’s worth going on this journey with us!

‍