CIOs face many choices when trying to improve their enterprise solutions and software efficiency. They might have a great new idea, but which outsourcing strategy is best to get it done? If the project involves expertise that the company does not have in-house, executives will face choices that can roughly fall into three categories: (1) build a team of professionals who can complete the project in-house, (2) hire a team of professionals that can get the work done, or (3) a mix of the two.
Build a team
Building a team is a great strategy when a company knows it will need these skills now and in the future. This long-term strategy requires a lot of work upfront, but is excellent if a company needs things such as constant support of their e-commerce website. It helps the company grow and diversify its offering. With this approach, executives are essentially creating a new department where they have to find the right people (or train the right people). They also have to provide the right equipment and support to their new in-house team. All these things take time and money that pay off especially if the goal is to build an effective department that is likely to bring bigger profits in the future. After the initial hurdle of establishing in-house development, there are of course advanatges to this approach. In sum, the advantages include: full ownership and control of the final product, easier communication between development teams and user base, and perfectly customized products that meet company goals (this paper summarizes them pretty well).
Buy a team
For projects that do not require long-term commitment, for example if a restaurant with no in-house IT capabilities is just looking to create a new mobile application, it often makes more sense to simply hire a team of developers from a third-party vendor. This eliminates many of the overhead and training costs. The downsides, however, can include problems with communication and an incomplete product. It can also cause maintenance issues, especially if the vendor does not provide any maintenance past the project’s completion date and the in-house staff lacks the right knowledge to maintain their new software applications.
But what if your project is not quite long-term enough to justify building a new internal department, but requires more involvement, beyond just one project? Or what if you can’t even find the right talent, but need to get started on your project right away? Some executives have instead opted for “hybrid” solutions – outsourcing models that combine the benefits of building a team and buying a team.
These models often involve closely working with a remote team. They are used for projects that don’t just require one-time services of a third-party vendor, but rather seek a more involved partnership with a third-party (they can range from remote in-sourcing to joint ventures). The advantages of this approach are that you can get a much more personalized service, maybe even your own dedicated team. A dedicated team can be beneficial because you don’t have to train and provide working facilities for your remote team, but you also don’t have to re-introduce new professionals to your company and re-train them to meet your goals. By using hybrid options executives get the best of both worlds.
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