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IT outsourcing

The CTO’s Dilemma: to In-Source or Outsource IT Teams?

Mickaël Hiver
Mickaël Hiver
Revenue Manager Europe & Asia

CTOs often struggle when it comes to hiring in-house vs. outsourced talent. Either way, they should be well-informed with the knowledge to make sound decisions for their teams.

Being a CTO is tough. Besides having to own everything tech-related company-wide, the CTO has the especially hard task of guiding HR in finding and hiring talent. IT recruiting can be especially painstaking given its dual technical and creative bent. This makes it not only necessary to gauge talent, but also to gauge fit—everything from disposition to teamwork-orientation and flexibility.

In this case, CTOs must make one of three decisions: boost their in-house efforts, work with freelancers, or hire a dedicated outsourced IT team.

IT Team

Timing means everything but can especially make or break a small tech team with very limited resources.

The Problem

As a startup with a small team and limited resources, small mistakes can come at a big price. For large companies, the problem is less one of having a small margin for error and one more of delegating highly specialized tasks in order to focus on core business strategy.

Consequently, CTOs find themselves at a deadlock.

“Should I spend more to hire an external IT team? Should I spend time screening individual freelancers and hope to find the right ones? Or, should I look to boost efforts within my own organization?”

Luckily, organizations have more options today than they ever did to cast a wider net and find the exact talent they need to level up.

Solution 1: Hiring Freelancers

For an established company, outsourcing is sometimes difficult because resources can be too much of a hassle to re-allocate by onboarding a new team. And, redirecting the energy of internal team members to work on a new feature or test a page can create chaos as well. In this case, it is best to rely on individual freelancers.

The startup CTO that does this must take into account a few considerations to make it work effectively. Cost-benefit analysis must come first, as a PhD’s expert applied perspective and talent may mitigate their expense to a tech team of graduate students. Yet even the most seasoned academic will prove useless without applied experience.

Duration is second. Timing means everything, but can especially make or break a small tech team with very limited resources. If done correctly, hiring freelancers can actually save the startup money as well as provide the team more time, as a freelancer might either be in a complementary time zone or have a complementary daily schedule.

Many kinds of companies can benefit from freelance workers and freelance teams. As a group, freelancers exist in almost every time zone and geographic area, and can also handle any workload for any period of time. Companies can hire any kind of freelancer with any mix of skills, at any competency level, given testing and recruitment matching platforms like SkillValue. The large databases of freelancers these service platforms use to match talent with need makes freelancing a good idea for any company needing to standardize costs for a long-term, but impermanent, need.

Solution 2 – Hire a Dedicated Outsourced Team

Companies of any size can find great talent in-country, but what if there’s only one company that does exactly what you need—and they’re in another country? It might be best hire a dedicated outsourced IT team. Awarding contracts based purely on name recognition—instead of looking for agile, stack-agnostic, mission-driven, meticulous and highly team-oriented IT teams—can backfire.

Outsourcing specialized help could be especially good to conserve time and effort internally, improving upon or building a brand new service that would normally consume precious internal resources. For this to work though, the CTO in question should always conduct due diligence to assess whether the organization has pre-allocated budget itemizations for such needs, especially since hiring the wrong 3rd-party team can be disastrous if personalities and skills prove ill-suited to the task. If the outsourced team can provide results on time, communicate effectively and are aligned, then outsourcing is definitely a route the CTO should consider.

Typically, clients who outsourcing successfully are building digital product and need developers, but want to own the intellectual property. Many startups usually try to hire friends to vital positions, but it’s difficult to find inexpensive tech talent, especially if the company is unknown small-to-medium-sized enterprises (SME’s). We can speak to this since even some of our largest clients face the same issues.

In these cases, we advise clients to hire a non-outsourced CTO with the skills and knowledge to create the initial product – and then, after that’s done, to start outsourcing. Additional key roles include CEO, CTO, Project Director, QA Specialist and Full-Stack/Front-End/Back-End developer.

Solution 3: Ramp up Your In-House Efforts

What happens when sensitive, long-term projects call for ongoing, in-house help? Recruitment, in this case, becomes the CTO’s best option. Ramping up internal IT teams can mitigate institutional memory loss and mobilize native knowledge of internal processes and policies, which can help these teams avoid operational traps while existing employees help newcomers get ahead of the company learning curve, faster. And, while this can be a time-consuming, often labor intensive process – it can be streamlined and simplified through the use of an external agency, like SkillValue.

Provisioning in-house teams helps when clients need a diverse skillset to finish a long term project or when companies are searching for niche, hard to fill roles such as a CTO, Scrum Master or Product Owner, to name just a few.

Case Study: Made.com x Pentalog

For startups, internal teams may have deep expertise, but re-allocating their time and energy can come at the expense of other, equally important tasks – a mistake startups (and larger companies, for that matter) simply cannot afford to make.

UK designer furniture e-tailers, Made.com’s team featured on-staff developer profiles. But, with a vision to create an interactive, visual platform for customers to display their purchases – another project was quickly added to the scope of their normal business activity. They needed additional highly skilled and competitively priced technical expertise– fast.

By enlisting the help of an outsourced nearshore team in Iasi, Romania, Made.com and Pentalog were able to build and launch the Made Unboxed platform. Working alongside a Product Owner and UI Designer on Made.com’s end, the developers in Iasi were able to work cohesively (with just a 2 hour time difference) as an extension of the UK company’s team. Soon after the first successful project launch, Made.com made the decision to ramp up Pentalog’s efforts by boosting the number of developers and adding another project to the scope of the collaboration – crowdfunding platform, TalentLab.

As a result of this continued collaboration, the number of developers in Iasi working alongside Made.com’s team stands at 25 (up from 8) and are still working together to consistently tweak and improve the platforms they built together.

Discover the testimonial of Jonathan Howell, from Made.com :

 

 

Conclusion

Companies of any size can benefit from outsourcing, hiring freelancers, or in-house recruiting. When done correctly, it can provide outsized gains for the savvy CTO looking to maximize time, money, and effort for their organization. Considering the above can help executives make well-calculated decisions when it comes to talent. Just make sure to use the right company.

 

Read more:

High-Tech Cities: Have You Ever Tried Coffee in Bucharest?

Low Cost IT Outsourcing in Moldova, Mexico, and Vietnam: Pentalog Ramps Up its Teams to Tackle the Coming Crisis

Agile Methodology: 4 Ways to Set your Project up for Success


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