There are multiple approaches you can take to staffing when it comes to IT projects. You can deal directly with full-time or freelance/contracted employees, or you can outsource using local or offshore development firms.
Determining which of these methods of staffing software development projects is right for your company can be a challenging endeavor, and three opposing characteristics of business need to be considered: cost, risk and convenience. Each of these three concepts demands extensive consideration in the specific context of the project and the organization as a whole.
Below is an overview of what you need to consider and the pros and cons of each option for IT staffing.
Convenience
First and foremost, you must decided whether to work with individuals or development companies. Regardless of if you're working with developers in-house, or remotely, or if they're full-time or contracted, the first decision you need to make is whether you want to work with individual developers or companies that specialize in outsourced development.
Full-Time Employees, Freelancers (directly) or Contracts (through staffing companies) - This approach allows your company to maintain total control as it manages the fine details of the project.
Outsourcing (local development company or offshore firm) - This option allows your company to step away from the “day-to-day” responsibilities of managing individuals and project details and instead focus on the project’s big picture.
The underlying questions to ask here are simple: Do you want to manage the small details of the project? Do you have the time, expertise and desire to handle this responsibility? Or, would you rather use your time for something else and leave those details up to an expert?
Risk
Risk management is about assessing (and minimizing) the likelihood of delays or failures. Minimizing the effects of unforeseen difficulties is also critical. Basically, you want to reduce the likelihood of anything that affects the bottom line.
Throwing money at a project does not always guarantee the best outcome, however, being prepared to commit to the appropriate budgeting often does. In other words, a company that is prepared to fund success is more likely to achieve that success.
You can minimize risk by performing due diligence when selecting a company or individual to work with, clearly defining the project scope, expectations and milestones in any development contracts, and allocating enough money to hire competent developers.
Cost
The most talented technical candidates do demand higher hourly rates, but as indicated already, their expertise reduces risk and the number of required project hours. Spending additional money also allows the convenience of implementing the exact approach your company desires, while at the same time potentially simplifying the candidate selection process.
The underlying question here (related to convenience) is how much time do you want to dedicate to finding the most qualified talent? How confident are you in being effective in the selection process? Does your budget line up wth expectations?
Benefits and Drawbacks of Each Approach
Let’s take a deeper look at some of the benefits and drawbacks of each method of IT staffing:
1. In-House Employees
(Moderate Convenience, Moderate Cost, Moderate Risk)
Benefits:
Longer term (employee) commitment to company
Permanent employment builds the internal talent pool
Allows most control over employees' daily activity
Employees have the greatest familiarity with a company’s personnel and procedures
Drawbacks:
Employee costs (such as benefits, vacations, taxes, health insurance, etc.)
Skills might not be applicable to next project
Employee turnover (loss of company-provided training and familiarity)
2. Contractors Through Staffing Company
(High Convenience, Moderate Cost, Moderate Risk)
Benefits:
Immediate pool of talent
Performance guarantees (to a certain degree)
Quick ramp-up (staffing up and down with changing project requirements)
Drawbacks:
Mark ups on contractor hourly rates
Unknown interview process
Inconsistent goals (staffing firms make money by placing candidates, not necessarily effective ones)
3. Direct Freelancers
(Low Convenience, Moderate Cost, High Risk)
Benefits:
No middleman in business relationship
Flexibility of contract terms
Many potential candidates
Drawbacks:
Unknown reliability (it can be difficult to assure reliability)
Too many potential candidates (requiring sifting through job board responses and resumes)
Thorough interview and reference checking process “required” (high risk)
No business entity standing behind work
4. Outsourcing
(High Convenience, High Cost, Low Risk)
Benefits:
Existing structures for successful project implementation
Proven track record of success (documented)
Quickly staff up and staff down as needed
Drawbacks:
Seemingly higher cost (potentially fewer hours)
Hiring company needs to extended greater level of trust and give up a certain amount of control
5. Offshoring
(Moderate Convenience, Low Cost, High Risk)
Benefits:
Cheaper rates
Ready pool of talent
Strong desire of most companies and its employees to succeed
Drawbacks:
Communication issues (language barriers)
Potentially higher rate of project failures and difficulties
Questionable enforcement of non-disclosure agreements (international laws)
Time zone differences (many questions/tasks unseen until next day)
Conclusion
Remember, this is a balancing act between the factors of cost, risk and convenience. No one goes into an IT project expecting it to fail, but the fact is, many projects do fail. Properly handling risk management, decision making and cost control demands flexibility and advanced planning. Thoroughly understanding the options available and potential risks when staffing a software project will help ensure the most effective results.
Let us know in the comments your experiences with any of these options for IT project staffing.
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