A software development model for 2022
I’ll just say it – the co-located development model is a waste of resources and offers negligible benefits. Is this statement controversial? Of course, but it is less and less the case every day. More and more organizations recognize that remote and outsourced development can reduce costs, is highly scalable, and provides access to a larger talent pool. And talent is the key, what really matters in modern software development.
With COVID, distributed development makes even more sense, as the economic disruption of 2020 rocked the world and we still haven’t fully recovered. Working hours and job losses were four times higher than the crash of 2009.
Ironically, when there was a record high unemployment rate, companies couldn’t find the right people to fill the positions – another kind of record. On top of that, average salaries in the IT industry are rising, in part in an attempt to retain talent.
With the traditional co-located development model, we face these key challenges:
-Search and retention of talents
-Change to telecommuting
-Stay competitive in the face of rising wages
And this is where distributed development and remote internalization come in. Let’s take a close look at the two models.
How Remote Internalization and Distributed Software Development Work
Basically, a distributed team is a group of people who work together across geographic boundaries. They use various collaborative tools for real-time communication, but they can also work together asynchronously.
You can hire quality IT staff in countries with lower pay, reducing costs without compromising quality. IT scientists in Eastern Europe, especially Ukraine and Belarus, have rightly earned a reputation as highly skilled, goal-oriented specialists. While the salaries of team members from Eastern Europe will be more expensive than, for example, those of developers from South Asia, the quality of their work is more aligned with that of their American counterparts.
In 2021, the “cost of ownership” (salaries, bonuses, benefits, other expenses) for North American developers ranged from $ 80,000 to $ 300,000 per year; in Central and Eastern Europe, the rates charged by service providers were significantly lower, from $ 40,000 to $ 140,000. And it’s not just about saving money, but more importantly, time to market, your innovation success, and your victory over the competition.
If distributed development is starting to look pretty good, wait until you hear about remote internalization. When building a distributed development team, you still have to take care of finding, training, and retaining employees – they’re just located in more affordable geographic locations.
Traditionally, if organizations didn’t want to handle all of this, they would work with an outsourced development team. But the trade-off of outsourcing is that you have little to no control over the quality and training of the team.
Remote insourcing is the best of both worlds – it gives you access to lower wages and better scalability while providing full control over productivity and quality. With this model, a remote and autonomous team of developers integrates with your own staff.
Unlike an outsourced team, a remote outsourced team operates under your direction, and you would work with it as you would your own employees. Yet, you’ll also get the help and service to scale the team up whenever needed.
Remote in-sourcing case study: the health portal
To illustrate the benefits of remote internalization, I’d like to share a case study with you: A US-based healthcare company wanted to develop a healthcare portal that could help hospitals, practices, and groups. of firms to develop their activities. The company had previously worked with outsourcing vendors, but due to skills shortages and organizational reasons their attempts were unsuccessful.
After switching to the remote internalization model, a team of five people integrated perfectly into the staff of the organization. Due to the easy scalability of this model, the healthcare company could eventually increase the internal team to more than 50 people.
During 10 years of continuous cooperation, the Remote Internalization team has designed and implemented 100% of the company’s healthcare products, including a healthcare portal, which now serves five million people per year. .
By following the remote in-sourcing model, the company was able to work with highly skilled developers at a lower cost and retain full control of the team.
Are you ready to change your model?
I want to leave you with a brief checklist as to whether distributed development or remote internalization is right for you. Of course, this won’t give you a definitive answer for your situation, but it should serve as a starting point for further research.
-You don’t need a quick turnaround time for team formation.
-You want to take advantage of global markets to reduce costs.
-You want a team made up of your own employees.
-You don’t want to pay the change management fee.
-You need fast turnaround time for team formation.
-You want to take advantage of global markets without having to spend resources scouring the world in search of talent.
-You want full control over the team without having to worry about logistics.
-You want to work with an outsourced team as if they were your own employees.