How Employee Outsourcing Operates in the IT Sector

Many businesses are currently exploring the advantages of employee outsourcing as a strategic practice. The global IT outsourcing market has already reached a substantial $92.5 billion and continues expanding. However, it’s crucial to understand when this type of collaboration can benefit a business. Companies can reap the benefits of outsourcing employees in the following situations:

  • Cost Savings for Project Development: When there’s a need to reduce costs while developing a project.
  • Accelerating Time to Market: To significantly reduce the time required for a product or service to reach the market.
  • Handling Multiple Projects Concurrently: When working on several projects simultaneously to boost business revenue.
  • Accessing Global Talent Pool: To tap into talent not readily available locally.
  • Delegating Routine Tasks: For responsibilities such as overseeing infrastructure, the internal team can dedicate their attention to essential business operations.
  • Implementing New Solutions or Technologies: When a specific skill set and knowledge are required for adopting a new solution or technology.
  • Startups Building MVPs or Products with Limited Resources: This is particularly beneficial for startups looking to minimize costs and overcome staffing shortages.

The Primary Models of Employee Outsourcing

When delving into software developer outsourcing, the first step is to choose the appropriate outsourcing model. It’s more complex than paying a third party to perform tasks. There are three primary models to consider: time and material (T&M), fixed price (FP), and dedicated team (DDT) models.

Time and Material Model (T&M):

  • Payment is based on the time spent on development.
  • Suitable for smaller to medium-sized projects.
  • It offers flexibility and allows changes to the project scope.
  • High client involvement ensures close monitoring of progress.

Fixed-Price Model (FP):

  • Agreed-upon scope, specifications, and a fixed project price.
  • It is ideal for small, well-defined projects or testing outsourced workers for small tasks.
  • Offers budget predictability but lacks flexibility for changes.

Dedicated Team Model (DDT):

  • A client compensates a consistent monthly salary to an exclusively devoted team fully focused on their specific project.
  • Suitable for large-scale projects, even when requirements are not well-defined.
  • This model offers control, flexibility, and budget management.


Ultimately, the outsourcing model choice depends on the organization’s needs and expectations.

When hiring in-house software engineers or opting for outsourcing, thoroughly assessing both options’ advantages and disadvantages is crucial. There needs to be more than one-size-fits-all solution for every business. However, when contemplating the various models and opportunities for outsourcing employees, it becomes essential to consider the potential challenges.

  1. Communication Hurdles: Language and cultural differences can hinder effective communication.
  2. Quality Control: Ensuring consistent quality across remote teams can be tough.
  3. Data Security: Protecting sensitive data from breaches is a concern.
  4. Scope Creep: Managing changes to project scope can be challenging.
  5. Dependency Risk: Over-reliance on service providers can be a risk.

The Common Benefits of IT Outsourcing

In addition to the challenges associated with outsourcing developers or teams, there are several compelling benefits to this business practice:

1) Cost-Efficient for Startups: This is particularly advantageous for startups as it eliminates the need for office space, in-house hiring, and administrative tasks.

2) Access to Expertise: Overcomes the scarcity of IT professionals by tapping into the skills and knowledge of experts, especially in rare technologies.

3) Optimal Cost-to-Skill Ratio: Allows access to high-end professionals without breaking the budget by taking advantage of varying economic levels in different regions.

4) Effortless Team Selection: Simplifies the process of building a project team as the vendor or PEO handles candidate selection based on client requirements.

5) Minimal Client Micromanagement: Outsourcing reduces the need for day-to-day management, with project managers handling tasks such as scrums, meetings, and task assignments.

6) Agile Methodology: Allows agile development with frequent, client-reviewed progress updates, enhancing transparency and control.

In conclusion, outsourcing software developers globally can bring significant business advantages, ranging from cost savings to increased access to specialized talent and improved scalability.

EmployeeOutsourced is your gateway to accessing global software development talent. Our services are tailored to accommodate businesses of all sizes and industries seeking to harness the advantages of outsourcing software development. Let us assist you in finding the perfect software developers for your specific needs.