Outsourced IT Team vs freelance IT Contractor – A White Paper

In this white paper, we aim to help you understand the key differences between these two ways of resourcing a project, which we believe will help you make an informed decision and ultimately save you time and money.

Fear of Change

Introducing change to your business isn’t easy. Resistance can come right from the top and from the workforce on the ground, but most of the time that resistance is based purely on ‘but it’s something we’ve always done’ or fear of making things worse. If you are using sub-contractors (contractors) for your IT development projects, and would like to consider an alternative, this white paper is for you.

 

Using Contractors – the benefits and the pitfalls

With a large project and a small team, contractors have historically been called upon to fill the gaps and help deliver the requirements. When looking for a contractor, a business can list the skills they need, the time frame, and the budget and then the appropriate contractor can be selected. Sounds great, right? Yes, the ability to pick up and put down individuals without the long drawn-out process of interview, employment headcount, on cost etc is appealing. And for example, if a contractor doesn’t deliver for whatever reason, they can be dismissed immediately and a new one found in their place. But how much time does it then take to bring the new contractor up to speed and get them to gel with the rest of the team? Then there’s the management overhead required to ensure they are working effectively and administer the process, which can be a huge issue.

Costs for contractors in a market where supply outweighs demand can be expensive, and let’s not forget the new IR35 rules that will be imposed in 2020. Private sector organisations are required to operate the new IR35 rules for contractors from April 2020. This in itself will mean an increased administrative overhead for the ‘employer’ managing the deductions of the Contractor and new contract negotiations as you find your way through the new rulings.

 

The Benefits – Contractor

  • Project funded and therefore do not affect headcount
  • Quicker than employing new permanent staff
  • Easy way to expand your internal team to deliver projects
  • Specific skills can be acquired per project

 

The Pitfalls – Contractor

  • A contractor does not take the time to understand your business processes, which are a fundamental requirements for building software solutions
  • High day rates to businesses, covering both the contractor fees and the agency fees
  • Managing multiple contractors from potentially multiple agencies, means you will need to keep track of everyone’s time, contracts and performance
  • Getting individuals to gel together as a team can be difficult when contractors are from different disciplines and backgrounds
  • We make do with the skill sets we have, as to bring in the blend of relevant resources can cost too much
  • Resources with specific skills can be underutilised, costing your business money
  • New project will often require a new contractor, meaning a cost of on-boarding each time
    • There is a lack of focus as there are so many internal distractions, meaning projects often overrun in terms of cost and budget

 

An outsourced IT team

There are many reasons why outsourcing to a software development team could work for you as opposed to contract workers, here are just a few reasons why.

  • An outsourced team will have worked together for a long time, so there is no time spent developing effective ways of working together.
  • One point of contact: instead of managing several recruiters, you will liaise with your account manager who will take care of everything for you.
  • Flexible resource models
    • Extended Teams: you have the resource and manage them yourself
    • Managed Service Development: you give the brief and the whole project is managed for you with milestone deliverables
  • Business Knowledge: good outsourcers have good talent retention. A good outsourced IT team provider like Evolve take the time to get under the skin of your business to understand how you work and the objectives of your project in full. This way you can be reassured that the team are aware of any historical issues, how the project/solution will fit in with the rest of the business and the impact on future success and growth from a wider perspective.
  • Flexibility: an outsourced IT team can be flexed to meet your requirements, even if things change along the way. For example, if your project requirements change, your team can be amended accordingly, all through that one point of contact. Also, you have access to the right skills at the right time, even on a part time basis.
  • Cost effective: all costs are transparent, salary + Fees
  • Managing budgets: you will agree the deadlines and deliverables for your project up front with an outsourced team and it will be their responsibility to deliver those on time and to the agreed budget.
  • Impartial estimates: contractors and developers in general always tend to overestimate tasks to protect themselves, outsourcers have a vast amount of project experience and are there to deliver solutions at the right cost.
  • Innovation: contractors will build utilising technologies they are familiar with and generally being so busy means they often do not keep up to date with the latest technologies. However, outsource providers always have to remain up to date and innovative, meaning you are getting the best solution.
  • Managing the project: your account and project manager will ensure that any divisions to time and cost are reported to you, ensuring you are always in control. Outsourcing will allow you to deliver your project without any surprise bills turning up.
  • Experience: your internal IT team or contractor may have an impressive level of experience, but only an outsourced IT team can provide your business with experience that draws on multiple external projects. An outsourced team is likely to have worked with many different clients in many different industries, giving them a far broader mix of experience of different apps, languages and frameworks that you may not or cannot consider due to lack of internal knowledge or capacity.
  • Alternative perspective: as outsiders, an external IT team will be able to look at your project with fresh eyes, and challenge your thought process. They will almost definitely see things your internal team won’t and provide you with an alternative perspective, and usually one that will ensure the project delivers value quicker. An outsourced team will not get distracted or bogged down with legacy company hang-ups (we’ve always done it like this) but instead will be aware of them and able to provide truly unbiased advice.

 

Conclusion

If you’ve ever felt like your organisation needs to move forward or operate differently, particularly with the impending changes around IR35, you are not alone. You may sometimes feel like your internal departments are working in silos, possibly breeding tunnel vision based on past experiences, have a team that does not work well together or a blame culture. Embracing change in a business is far more likely to succeed if the people in the business adapt to new technology and the requirements and demands of their evolving customers. The difference in hiring an outsourced team as opposed to a contractor, is that they will understand that it’s very difficult to see above the parapet in these situations. They will be dedicated to your cause, are commercially aware, and can be held accountable when they don’t work out.

To find out more about working with an outsource software development provider, either as an extended team model or a managed service development, contact Evolve. We’ve got 12 years’ award-winning experience supplying software development products and services to businesses across many industries.

Call us on 0116 2987460 or email us at enquiries@evolve-consultants.co.uk