Nowadays, tech talent shortage, recruitment challenges, and time and financial pressure are the most common reasons companies outsource the whole or part of their software development work to an external company instead of expanding the in-house teams. Both models have their advantages and disadvantages. The top-of-mind question for any decision-maker, who decides to build or extend the development team with an external provider, is to minimize the risk of the most frequently indicated potential disadvantages resulting from such cooperation and maximize its advantages. This article describes less obvious criteria worth considering when choosing a software development team provider, helping minimize the risk that the outsourced team will not be involved as in-house employees and reducing the likelihood of high turnover in the outsourced software development team.
One of the cons, the most often mentioned in the numerous comparisons: software house development team vs. in-house team, is that the outsourced team will not get as involved as your employees and won’t treat your project as their own.
It doesn’t mean it might be the rule. It largely depends on the potential of the software house and a good match of its capabilities to your needs and expectations. And this requires going beyond only the assessment of common factors that usually decide the choice of provider, such as rate cards, testimonials, and experience in the project for your industry.
Therefore, if – apart from – software development team members’ knowledge and technical skills, motivation and involvement are essential for you and good communication within the outsourced and in-house team, it is worth taking a closer look at the provider’s organization.
Regardless of whether it is a team extension or a dedicated software development team, it is worth paying attention to the following factors that will enable you to better providers’ evaluation:
Getting the answers to the above questions can help you make the right decision, resulting in a long-term cooperation and eliminating the risk of possible difficulties or unpleasant surprises.
On most software houses’ websites, you can read that they will build a team best suited to your needs, project, and business. What does it actually mean? How can they assure it?
Take a closer look at the provider’s approach to recruitment processes and building teams.
We present how we try to achieve it in Sigma IT, where we put a lot of effort into building teams that:
Building such teams is possible thanks to appropriate designed and conducted recruitment processes ( in which candidates are verified in terms of the above criteria) and our approach to the projects we run for our clients. We usually run projects where our software development teams grow along with the Client project development. Most of our clients have been working with us for several years, gradually building and expanding their cross-functional teams according to their current needs.
Scaling gives time to get to know each other and introduce the client to our project management methods and best practices. For team members, it’s a chance to deeply learn and understand the specifics of the client’s business, project, in-house team, and organization. It makes our development teams feel like part of the Client company and treat the project as their own.
Long-term and good relationships affect the expansion of cooperation to other units of our client company. It gives them strong arguments to recommend our services internally within the group or to an external company.
Our Clients appreciated the strong commitment and identification of team members with projects in our recent Customer Satisfaction Index 2021. Particular team members received high scores for clients’ business and industry interest and knowledge (average rate: 4.8/5) and cooperation (4,8/5).
One of the benefits of working with a software house is that you don’t have to worry about recruiting the specialists you need for the project and the recruitment costs. The provider takes this task off your shoulders and is responsible for candidate search, profile evaluation, contact with candidates, and process and pipeline management. However, it does not mean that you shouldn’t involve in it at all – if you want to have a good software development team, make sure you communicate and cooperate with the provider at an early stage of the recruitment process.
In Sigma IT, we know that candidate motivation and engagement in the project make a healthy team with the highest retention. Thus promoting our partner’s project and company culture even at the early stage of recruitment is one of the success factors for us. We share our client goals, mission, and ambitions with candidates and find those who will enjoy the product as much as the Client team. Before starting the recruitment process, we do everything to understand the project, client business, organizational culture, and company values to ensure that candidates present the required technical skills and fit our company culture and client organization.
See example video for recruitment campaign promoting our Client project: Software Factory project in automotive industry
Cooperation with a software house also significantly reduces the time needed to build a team compared to the time you need to develop your in-house team. According to numerous research, acquiring an IT professional for the in-house team takes around 40 days. However, suppose you’re looking for specialists with rare technological competencies and the appropriate seniority level. In that case, you have to reckon that it can take up to 2-3 months or more depending on the country. Working with a software house, you can have your team up and running in a much shorter time. Although a lot depends on good cooperation between the software house and the client, already at an early collaboration stage.
Your commitment and responsiveness have a significant impact on the success of the recruitment process. Your quick feedback and ability to conduct final stage interviews with proposed candidates are critical factors in attracting suitable candidates and how quickly the team will be ready to start your project.
Many of our clients come to us with the need to expand their teams with senior roles. We always emphasize the importance of communication and fast feedback at an early stage of cooperation, especially if it concerns senior positions with rare competencies because their availability decreases with increasing recruitment process length.
One of the often indicated benefits of working with software houses is cost-effectiveness. It results from potentially lower employee costs – depending on the chosen provider’s market and the lack of the need to invest in costs related to the acquisition and retention of employees. The expenses don’t end at the developer’s salary and include all employee-related expenses.
When you compare the providers’ offers, look at those additional expenditures. It influences the motivation, satisfaction, and commitment of the team that will work on your project.
In Sigma IT, we take responsibility for:
It is not only about the issue of extensive employee health and well-being benefits, which have become the standard in most tech companies in Poland. As research shows, they aren’t criteria that developers consider the most essential. Its company culture and values cultivated in the organization matter. The more it is worth asking about it the software development company. The more they are similar to yours, the greater the chance for good and long-term cooperation.
Software development companies know how demanding the IT professional job market is, so they invest a lot of energy into building company cultures that attract and retain talents. The HRM Institute Employer branding in Poland 2020 report shows that 94% of employees indicated the atmosphere in the company as the most important factor of job satisfaction. Apart from the atmosphere, which is often a derivative of the company’s culture, career planning and learning are of particular importance in the work of developers. In The Developers at work survey by CODINGAME, 68% of respondents indicated learning new things as a value that matters the most.
Career planning and learning programs require time and effort to build, and some companies incorporate them as a part of the organization’s culture. It’s how we do it in Sigma IT:
Our company culture combines Swedish business values and Polish energy that help us create an attractive working environment for our employees. As in Scandinavian work culture, we have a flat structure, and trust and focus on employee-company relationships is the key to achieving results. We know that the only way to make our company better is to trust our employees. The teams feel responsible for themselves and the company. When we face a problem, we look for solutions together. We take responsibility for mistakes made by the team. High trust guarantees employees freedom in making decisions and leaves space for creativity.
As tech is at the center of everything we do, learning and knowledge-sharing are at the heart of our working culture. We commit to employee development by:
Employee retention rate is the measure that a company successfully retains its employees. It’s an important rate, especially in IT industry, where the turnover rate is much higher than in any other business sector. According to Dice report 2021, a fundamental reason for the high tech attrition rate is the wrong culture fit.
Why is it essential for you? The more success in talent retention is your provider, the less risk your project team members will change.
If you want to build a team that will be durable without often employee turnover, it is worth asking your provider what the employee retention rate is. It may be a difficult question with a reluctant answer: not all software development companies will be willing to admit they have a high turnover.
In Sigma IT, the employee retention rate in 2021 was 86 %, which is very result considering the average rate in the tech sector in Poland. We are proud of it and treat it as solid proof of our organizational success in talent retention.
The project manager usually manages the outsourced teams and is the main point of contact, taking care of all product development and launch issues. The team’s management may differ depending on the chosen cooperation model, but the organization’s structure also influences it.
In Sigma IT, we manage the project team and keep the team motivated, engaged, and equipped with the necessary competencies and tools to allow smooth delivery. We monitor performance and take care of continuous improvement.
We ensure successful delivery by involving both the Project Manager/Scrum Master and the Delivery Manager in the project. It allows us to secure early red flags, performance tracking, escalation power, and effective solutions.
Our team management model allows delivery teams to focus on the project and the best delivery as other issues related to the projects are managed by Competence Unit Managers. CU Manager is the single point of contact for the client and is responsible for team management (including 1on 1 performance reviews, training, and development program), delivery management, and risk management.
Choosing the right technology partner is not an easy task. Apart from such criteria as customer testimonials, recommendations, and costs of services, the “soft” factors are no less important and worth the effort – as they can have a significant impact on the effective cooperation and success of the whole project.