The IT Outsourcing industry is growing rapidly. According to Statista, it is expected to have a compound annual growth rate (CAGR) of 8.28% from 2025 to 2029, reaching a market volume of US$812.71 billion by 2029.
The continuous growth of the field reflects the need for advanced, flexible, and innovative solutions. Though one size doesn't fit all, businesses often struggle to choose the right team engagement model for their projects.
Should they create a Dedicated Team that focuses solely on their project? Or should they use an Extended Team to add flexibility and specialized skills?
If you are also looking to narrow down your decision by evaluating all the details, then you have come to the right place. This blog will walk you through the importance of both team models and provide a detailed comparison of the dedicated development team vs the extended team model. Let us begin.
Before moving directly to the differences, let’s understand each IT outsourcing model quickly.
What is a Dedicated Team Model?
A dedicated team model is a self-contained team that works exclusively on your project. With a deep understanding of your goals, they handle every aspect of the project from initiation to deployment.
What is an Extended Team Model?
An extended team model is a flexible and external team that integrates with your in-house team. It acts as an extension of your existing workforce.
Exploring the Key Differences: Dedicated Team vs. Extended Team
Both dedicated team models and extended team models have their unique features and characteristics, which we will compare to help you understand their distinctions.
When it comes to making a decision on the suitability of your unique project requirements, the choice can be made only after having clarity over the models. Now, let’s take a look at both models.
Control and Management
In terms of control and management, having a dedicated team gives you direct control over their operations, methods, and workflow. It’s like having a remote development team working just for you.
This setup allows you to align closely with your internal processes and goals. For CTOs and business owners, this level of control is essential for projects that need to follow strict internal standards and manage complex tasks.
In contrast, an extended team offers a more collaborative approach. It’s like adding specific skills to your existing team.
The only thing that requires attention is integrating external talent into your existing workflow alongside the client's in-house team. However, having an extended team working on your project is a valuable option for business owners looking for agile scaling and rapid project adjustments.
Cost Efficiency
A dedicated team usually comes with a fixed monthly fee. This makes it easier for businesses to define a budget for long-term projects. The return on investment in this model comes from having skilled experts, smoother development, and lower long-term costs due to fewer project delays and corrections.
On the contrary, team extensions offer flexible pricing because you only pay for specific skills and resources as required. This makes them ideal for projects with changing resource demands.
Business owners should examine their project's timeline and resource needs to understand the total cost and potential ROI of both models. Dedicated teams provide better long-term value, while extended teams offer short-term flexibility without the full costs of hiring.
Expertise and Specialization
A dedicated team helps you build a team with specialized skills that match your project's needs. This model gives you access to deep, niche-specific expertise with high-quality deliverables.
CTOs and business owners only need to focus on building a team with the specific technical expertise required for complex projects, working alongside the client's in-house team. The team will provide long-term commitment, innovation, and vision.
On the other hand, with an extended development team model, businesses can access niche skills as needed, helping them quickly fill skill gaps and speed up development. This approach works well for projects that require specific expertise for a short time.
Scalability and Flexibility
When choosing a team model, dedicated teams provide reliable growth for long-term projects. You can adjust the team size as needed, but this requires a structured approach. CTOs and business owners need to plan for the long-term growth and scalability of the development team while considering the balance between internal and external teams.
On the other hand, extended teams offer more flexibility to integrate seamlessly with the in-house development team. They allow businesses to add or reduce resources based on project needs quickly. This could be an ideal approach for projects with dynamic requirements and tight deadlines.
In a nutshell, if you need a stable, long-term team, choose the dedicated team model. If your project has uncertain or evolving needs, the extended team model is better.
Security and IP Protection
A dedicated team gives you better control over security and protecting intellectual property. Since the team focuses only on your project, it reduces security risks and keeps your data private. Security for dedicated teams is generally higher due to better control over the processes and direct management.
An extended team needs careful planning for security and intellectual property protection. Because this extended IT team works more flexibly, businesses must set clear security rules and make sure they follow data privacy laws.
If your project involves sensitive data, an extended team gives you better control. For long-term development with contracts that protect intellectual property, a dedicated team is a great option.
Process and Tools
Both dedicated and extended teams are effective in using processes and tools. A dedicated team follows a clear process, which helps them work efficiently and communicate well because they have set tasks and a specific team structure. A dedicated team uses collaboration tools like Slack and JIRA for agile project management.
In contrast, an extended team adds flexibility to the process. This allows them to adjust based on the changing needs of the organization. Extended teams also use project management tools and video conferencing to facilitate smooth collaboration despite physical distance.
In summary, extended teams vs. dedicated teams: both are equally dynamic and efficient.
Recommended Read: How to Effectively Manage Your Remote Development Team?
Global Talent Access
Businesses often face unprecedented competition for skilled professionals, particularly in technology fields. Since domestic talent pools are limited, the demand for specialized talents in areas like AI development, cloud architecture, and full-stack engineering is increasing.
Both dedicated and extended team models address these challenges by breaking down geographical barriers to talent access, but they do so through fundamentally different approaches.
A dedicated team model provides you with full-time professionals who work exclusively on your projects, typically employed by a service provider who handles recruitment, administration, and workspace provisioning.
The extended team model augments your existing team with external specialists who integrate into your workflows while remaining employed by their original companies. This approach creates different opportunities for global talent access, such as multi-specialized networks.
Both dedicated and extended teams allow companies to access top-rated talents from global markets.
Communication and Collaboration
A dedicated team makes communication and collaboration easier. Since the team is part of your workflow, it helps with clear communication and efficient project management. To work well together, businesses need to set up clear communication channels and tools for managing projects.
In contrast, the extended team model also requires communication and collaboration tools for efficient communication throughout. However, it's important to include strong communication and collaboration tools for all extended team members. This helps ensure that the new team joins smoothly with the existing team and keeps the project on track.
How To Choose the Right Hiring Model Based on Your Business Stage?
When deciding between the two models, the right choice can also depend on the different business stages. And the decision may differ based on that. Take a dig into it below.
Dedicated Team vs Extended Team - For Startups & Early-Stage Companies
Are you a startup looking for a more feasible and cost-effective option to hire developers to start your software project development immediately? Below is a quick glimpse of which model could be the best fit for your business stage.
Extended Team Model For Startups
The extended team model helps make the most of limited resources by sharing management tasks with the existing team. This model provides flexibility, which is important during the strategic shifts that often happen in startups.
It allows founders and technical leaders who have the project vision to give direct input. This model also supports growth as funding rounds and needs change. Also, it helps establish good development practices as your internal team grows.
Dedicated Team Model For Startups
This model keeps costs predictable and makes budgeting easier, especially when resources are limited. It offers a complete solution for startup founding teams that lack technical skills.
With set workflows, initial results are delivered faster. Also, this dedicated development team might grow into a future acquisition or function as a separate technology department.
Related Read: How To Hire Developers For Startups - Ultimate Hiring Guide
Dedicated Team vs Extended Team- For Growing Mid-Sized Businesses
As your business grows from a startup to a mid-size company, hiring people with different skills becomes important. Here’s a simple overview of both hiring models to help you decide what works best for your business at this stage.
Extended Team Model For Mid-Sized Businesses
The Extended Team Model meets the specific needs of software development projects effectively. It adds specialized skills and fits well with current development practices and tools.
This engagement model provides the flexibility that mid-sized businesses require during growth and changing priorities. It also helps manage technical debt while keeping the development process strong.
Dedicated Team Model For Mid-Sized Businesses
A dedicated team model works on specific projects or product lines independently. This leads to faster growth in development capacity.
It also provides a strong framework for starting new initiatives that are not part of the main business. Furthermore, working at this scale is often more cost-effective and makes management easier during times of growth.
Dedicated Team vs Extended Team- For Enterprise Organizations
As an enterprise owner, deciding whether to add a specific skill to your in-house team or create a separate team for a project can be challenging. However, it doesn't have to be this complex. Here's a simple answer to help you choose the right hiring model based on your business stage.
Extended Team Model For Enterprises
The Extended Team Model seamlessly integrates into complex enterprise workflows and approval processes. It meets specific needs within departments and helps fill skill gaps in established teams.
This model works within existing rules and regulations that allow for more strategic project implementation without needing to restructure.
Dedicated Team Model For Enterprises
With dedicated development teams, enterprises can set up independent teams that encourage innovation without corporate restrictions. Hiring dedicated development teams means having an entire team of skilled professionals who can independently handle software development projects or significant features.
This approach helps clearly divide budgets among different business units. Dedicated teams also follow strict security and compliance rules that meet enterprise standards.
Which Hiring Model to Choose for Your Project?
Although both hiring approaches bring different pros and cons for businesses, they are considered ideal choices in some specific scenarios. Let's get familiar with it.
However, the goal is to move beyond general comparisons to a specific recommendation based on their unique business requirement.
Key Considerations for Deciding Between Extended Development Team and Dedicated Development Team Model
Along with the specific business stages, several factors also influence the decision to select the right engagement models. By thoroughly exploring the factors below, businesses can identify which model aligns with their strategic priorities, technical capabilities, and organizational constraints.
Project Goal & Scope
When it comes to clear goals, both team types can be effective. A clear scope helps align the team with the business objectives. Therefore, it is essential to clear the project goal beforehand.
Technical Leadership
Stronger technical leadership is better when teams are dedicated, as they can provide more structure and guidance. However, extended teams need strong internal technical leads to guide them effectively. Therefore, businesses must assess their ability to supervise and lead these extended teams.
Knowledge Gaps
Extended teams cover the knowledge gaps well when supplementing existing expertise. The dedicated team model excels when bringing entirely new capabilities. Therefore, businesses must consider whether they need specialists or generalists.
Budget Constraints & Financial Planning
Each hiring model deals with different accounting treatments. Extended teams usually count as operational expenses, while dedicated teams are often seen as project-based capital expenses.
Extended teams allow for more detailed cost management, but their costs can change. In contrast, dedicated teams usually offer more stable and predictable costs. So, it is crucial to consider the budgets this way to ensure the appropriate financial planning.
Parallel Development
Dedicated teams can work independently on parallel tracks. For example, when your team is done for the day, the dedicated team might start their work. This often leads to productivity around the clock for your software development project.
When talking about extended teams, they integrate better with complex interdependencies. So, it is crucial to consider the development methodology and productivity you are planning for your project.
Technology Stack Evolution
Using extended teams can help your existing in-house team gradually improve their technology. On the other hand, dedicated teams are better suited for complete revamps or new technology projects. Therefore, businesses should think carefully about their strategy for modernizing technology.
Conclusion
We hope that this blog has provided you with sufficient knowledge of the hiring models and helped you decide between both.
However, whether you choose a dedicated development team or an extended team, it is all about getting quality hires. It is not just about filling the roles but also about bringing the expertise your project needs!
At "Your Team" in India, we can help you obtain the talent you are looking for. Even if you have opted for team extension or are planning to build a dedicated team, we have a complete blend of expertise, skills, and top developers for hire from India.
Frequently Asked Questions (FAQs)
A dedicated team is a group of professionals who work solely on your project. They are usually outside your company and focus full-time on your project for a long time. This approach gives you more control, focus, and commitment.
An extended team supplements your existing in-house team. This approach is flexible and allows you to bring in specific skills as needed. It focuses on filling skill gaps where the in-house team lacks and providing additional resources to your current team.
A key advantage of a dedicated core team is that it gives you better control and focused expertise. Since the entire team is only working on your project, you can directly oversee their work and methods. This helps the team develop strong knowledge of your project and leads to high-quality outcomes.
Yes! You can have both extended and dedicated teams working on your project simultaneously. And when you hire a hybrid remote team from a reliable service provider, you have an advantage of gaining a competitive edge. However, this choice can vary based on your unique project requirements.
When choosing an outsourcing team for your business, it's important to look at a few key factors. Consider these points when selecting the right group for your project:
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Project goals
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Skills and qualifications
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Budget and commitment
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Integration and control
A dedicated team is a group of professionals hired to work solely on your project or company. They are part of your operations but are employed by an outside provider. This setup allows for greater focus, control, and a long-term commitment.
We provide IT Staff Augmentation and IT Resourcing Services, where we staff, manage and support offshore development teams according to our client’s requirements. Our services include:
- Hiring Certified and Experienced Developers
- Client’s Team Management
- Offering State-of-Art-Infrastructure in terms of Hardware and Software
An extended team is a way to strengthen your in-house team by adding skilled workers from an outside company. These professionals collaborate with your internal team on specific tasks or projects. They bring specialized skills or extra help when you need it. This approach offers flexibility and scalability.
Imagine a startup developing a new mobile application. Instead of hiring a full team for development, design, and testing, they choose to work with an outsourcing company. This company builds a special team of developers, designers, and QA engineers just for the startup. This team focuses only on the startup's app, follows their processes, and reports back to them. They act as a startup's remote development team.
A dedicated team can be more expensive than an extended team, especially in the short to medium term. On the contrary, an extended team is usually more cost-effective for short-term needs. This gives you more flexibility and allows you to control costs.
However, for long-term and complex projects that need a consistent external team, a dedicated team can be more cost-effective over time.
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