How Delegating IT Projects Can Save You 100k+ a Year

At one of the activity stages, business owners realize that their management practices are outdated and time-consuming. It’s no doubt that they consider digitalization as a way to stay flexible on the market and improve the business experience. However, to achieve success and create a multi-purpose tool they need strong examination capable to solve 100% of the issue.

As a rule, business people are confused because they don’t know who they can trust the product development to. Anyway, there are 2 ways — hiring in-house staff or working with an outsourcing model.

Today we will make research and show you why the outsourcing team expertise is more beneficial both economically and strategically. Let’s dwell on this point.

Outsourcing model vs In-house department. Brief research.

As the company owners don’t have enough awareness of how to create and launch a digital product, they want to hire an in-house team to control the process completely.

However, skilled players expertise is a valuable resource. Besides, by hiring such employees you should offer them a salary according to the market level. In addition to this, you need to spend the company’s budget to provide specialists with all the tools needed for the successful development cycle.

What do the figures say?

For the research, we have chosen 8 European countries. Here are the countries where the professional experience of specialists is most demanded on the European market.

So, what is the amount of a programmer’s salary in Europe?

Salary (Euro per month)

France: 3,300

Germany: 4,500

Switzerland: 6,800

Sweden: 4,500

Norway: 5,900

Denmark: 5,800

Netherlands: 4,000

The table shows that the monthly salary of one European developer varies from 3,000 to 7,000 Euro. Analyzing figures for the year, we can make a conclusion that the annual wage amounts 40,000 to 80,000 Euro.

Salary (Euro per year)

France: 40,000

Germany: 53,713

Switzerland: 82,100

Sweden: 54,494

Norway: 71,000

Denmark: 70,407

Netherlands: 48,413

If you want these specialists to be a part of your team, you should take into account the fact that your department will need financial resources for software, vacations or training for each of them too. Does your company afford such expenses? You could delegate your project tasks instead of hiring the in-house team.

If you include these expenses to your employee’s salary, then you must pay for the services 100,000 Euro. As a rule, to manage one project you need 2–3 programmers approximately, therefore, managing such a team, you spend more than 200–250,000 Euro per year.

Other challenges and ways to overcome them.

Apart from the hiring qualified developers, any business owner faces other possible risks. In addition to forming an in-house department, you must think about workflow organization, project estimation and planning all stages that need to be managed every day. One of the key issues is that you demand several specialists from different fields to develop any project properly. Here we are talking not only about several Software Engineers but also about QA-Engineers, UX/UI Designers and Project Managers. Moreover, you need not just to hire employees, but to combine them in a way that the whole system works effectively.

Let’s face the fact that sometimes a company needs expertise it doesn’t have. It is easier to attract professionals who will share knowledge and help avoid pitfalls. Hiring the outsourcing team allows establishing clear terms and conditions as well as manage necessary experts only for the development time.

Besides, you can choose a cooperation model depending on your preferences and project requirements:

• You can share the product idea only. Therefore, the team will write tech specs and create a project from scratch.
• If you need certain people (for example, a web designer or a developer) you can hire such a worker on your own so that they can work on your project exclusively.

While working with the outsourcing model, all you need is to describe the future product and discuss the time and price needed for development.

After discussing all the aspects you can start monitoring the project progress regularly.

Also, you can choose how to pay for the result:

• Pay after the team completes the project.
• Establish an hourly rate in accordance with the contract.

What do the figures say?

Here you can see the average hourly rate you should pay for Software Engineer expertise (Working with the outsourcing model).

European countries (hourly rate)

Middle Software Engineer: 45–63 Euros

Senior Software Engineer: 68–80 Euros

For example, the average number of hours needed for project development is 200 hours. The pay of the one Middle Software Engineer’s varies from 9000 to 12600 Euro. Thus, you spend money only on your workflow without additional investments for vacations, trainings, etc.

So, you can choose the right service provider and manage your company’s resources flexibly and efficiently.

How can you strengthen your relationship with the outsource team?

Such a business model allows you to pay only for working hours and get your product on time. Besides, you can conclude contracts that allow to understand both parties’ responsibilities and maintain your business relationship throughout the entire development cycle.

Trusting your project outsourcing team, you can conclude:

• Non-disclosure agreement (NDA). Signing the contract, both parties are legally bound to keep information close if it is related to the customer’s product. This contract explains what information is public and what is private to avoid any missteps.
• Service Level Agreement (SLA). It is a contract between the customer and service provider, containing a description of the service, rights and obligations for both parties.
• Master Service Agreement (MSA) doesn`t include the process of service delivery but indicates rate, deadlines, warranties and other ways the client can control its project.
• Statement of Work (SOW) explains quality control requirements, the time, materials and tools needed for development. In other words, SOW shows how your project needs to be accomplished.

Each digital product needs a good development strategy, a defined course of action, and last but not least, an excellent manager. But sooner or later the company owner should be more focused on strategic tasks and do it so that the product development did not suffer from the quality loss.

To find a good specialist, form a team, train it, find all mistakes and correct them sometimes turns out quite expensive. The outsourcing model has its features, but it allows the company to solve many existing issues and save a lot of money.