IT Project Outsourcing: Team Leasing, Augmentation, or Business Agreement?

Compared to outsourcing, hiring software developers full-time may not be the most time- and cost-effective solution. Which type of IT project outsourcing is the best fit for your company?

Your company has already decided you need additional developers to develop or finish a project, but you can’t hire them conventionally. It might not be feasible for multiple reasons – from the lack of available FTEs (Full-Time Equivalents) to the requirement to start immediately, without the lengthy recruitment and onboarding process, involving more resources to properly verify and assess the candidates.

What Are the Available Models of Collaboration with Software Developers?

Cooperating with a software development company may come in many forms and models. Apart from the obvious time- and cost-effectiveness, they differ in the level of involvement and control you (or your IT team) want over the development process. Before deciding on the collaboration model, consider your business and project requirements carefully. When you have them, check below for the pros and cons of every solution – from hiring external developers to just ordering a finished product from a technical partner.

Team Augmentation

Team augmentation, also known as team extension or staff augmentation, offers the support of an agency or software development company. The company delegates additional developers to join your team, allowing you to quickly scale the team up and down. Team augmentation aims to provide your team with knowledge or capabilities that they currently lack, rather than just filling vacancies.

A software development company will usually offer you a list of already hired, vetted, and tested employees who proved their worth in previous projects for the company. They are still employed and managed by the partner company and will usually return to working for them after completing your assignment. Still, the tech leadership and project management stay on the client’s side.

Staff augmentation offers a temporary solution. The new team member will require time to onboard and gain internal institutional knowledge. It’s not a permanent solution and should not be treated as such. You can, however, use this opportunity to grow your team's expertise and learn from the temporary team members.

Body Leasing

Body leasing (or staff leasing) is usually conducted by specialized agencies or software houses with a wide selection of potential candidates. In this scenario, you receive a list of developers and – if necessary – outsource at least a part of the recruitment process. You have the final say in who to hire; the successful candidate will usually work within your company’s structure (or even in your office space). The agency acts as an intermediary between you and the developers, but the formal employer is responsible for payroll and all other duties.

This is a good choice for companies that are looking for specific requirements to fill positions where the recruitment process would take months. On the provider side, they can move team members between clients and projects efficiently. Depending on the project's scope, you decide how much control to cede to the leased employees. This model can build entire, self-contained teams of developers, including tech leaders and project managers.

On the other hand, it’s hard to motivate and develop rapport between team members, as they all are contractors who will quickly move on after the project.

Dedicated Teams

When leasing a dedicated team, you hire the services of an experienced, cross-functional group of professionals – in this case, an entire group of developers, often with their own supporting and management staff. This could include a tech leader, a project manager, and testers. The team is allocated exclusively to a single client’s project.

These teams usually specialize in a single technology and are experienced enough to build a complex, custom solution. They have worked together before and know each other’s strengths. They are well-prepared to start working immediately, distribute the workload efficiently, and finish the project in the established timeframe.

The partner company ensures the team has all the necessary team members, resources, and infrastructure. Therefore, you can focus on core business while maintaining more control over the project than you would working with an entirely external team.

Project-Based Agreement

Project-based collaboration is the traditional way of doing business with software houses. It’s the most hands-off approach, where you and your technology partner establish the project's scope, milestones, and deadlines. The software company manages its resources and employees, allocating workforce and resources depending on your requirements.

This kind of cooperation requires the least involvement from the client and usually involves projects outside their day-to-day business processes. It also offers the broadest range of services, either within the company or with subcontractors – from UX and UI consulting to hosting and performance optimization. This approach is, therefore, the most suitable for holistic, complex products that are impossible to develop with a small team.