Scale Tech Teams – Mastering the Art of Outsourcing for Flexible Expansion

Photo of Mateusz Czajka

Mateusz Czajka

Updated Apr 10, 2024 • 17 min read
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Every business needs to know how to scale engineering teams and tech teams to suit changing market conditions. Preplanning is essential when growth in an area is detected.

However, expanding a technology-oriented, dedicated development team goes beyond just bringing in new faces; it's more like embarking on a strategic adventure.

It involves coming to grips with challenges, tweaking leadership styles, fostering open communication, encouraging teamwork, and smoothing out the hiring and training processes. Exploring these areas shows how they all fit together, like pieces of a puzzle, contributing to a welcoming setting and to enduring business expansion.

The danger lies in exclusively hiring all 'the best' technical experts or all 'the best' creatives in the pursuit of building a formidable team. A truly cohesive team also necessitates the presence of an effective leader, one who not only recognizes the potential within the team but also knows when it's time to augment their capabilities. This may involve making decision to leverage software development outsourcing to bring in additional talent and expertise.

Identifying the right time to scale your tech team

The when or whether of scaling (up or down) is crucial. It lets you stay flexible and efficient and not waste any gains you’ve already made. For example, you’ve found your candidate, they’re onboarded, they fit your culture, have needed skills, and you see leadership potential.

Do you let them go because there is not enough work to keep everyone busy, or do you move them laterally to another team where they can learn, help, and develop until you have a useful spot for them? You’ve paid for their training and integration—are you going to give that to another company, or find a way to keep it in-house?

Signs it's time to scale up:

  • Rising customer demand is a sure sign. Your service or product is in demand and you need to add capability to that team to support business growth.
  • If you miss that cue the next sign is frequently missed deadlines, excessive overtime, employee burnout, or even employee attrition. Providing extra hands and support will keep the team functioning at a high level.
  • Projects that run past their expected completion dates tell you that your workforce is spread too thin. Adding members to the team can pull that completion date back inside the limits set by the initial sprint.
  • Another indicator is someone struggling with attempting to do something outside their skillset. Upskilling can take months of time whereas adding external talent can fix problems in just days.
  • As an alternative, if you have external teams that possess skills you need, bringing them on for a short-term need may be more economical. If you discover that skill should be a permanent addition, you can begin your upskilling, or hiring process to fill that gap now, while you still have that external support.

Signs it's time to scale down:

  • Overstaffing results when product demand decreases. If it’s seasonal, you can plan for that. If it’s due to a new competitive product, that same team could help you get back on track. If it’s an unrecoverable loss of business, it’s time to start shrinking that staff through redeployment or layoffs.
  • What if profits are down, teams are at half-idle, and the R&D budget is slashed? In-house tech teams represent a huge investment. It could be time to switch to an external resource to get the most out of your available budget.
  • Over the normal course of events, projects do end eventually. Dropping down to periodic or on-call iterative maintenance means far less staff is needed.
  • Finally, company goals and objectives evolve over time. Several smaller companies eroding your business model with smaller-cheaper-faster products may see you curtail your involvement in that field.

Challenges when you scale tech teams

  • Quality can be at risk when scaling down or up. Some team members might fight over who is the leader, and try to impose strategies from other groups. Be selective about who you put together for best effect.
  • Teams under pressure to deliver quickly may need expeditious support. Hiring can be too time intensive. One solution is to borrow from another team that is under less performance pressure. Giving an unoccupied member a new responsibility grows your company’s capabilities, fosters new relationships, and spreads company culture, making it more homogeneous.
  • Forecasting your team needs before initiating a project is difficult. Hard and fast rules don’t exist—your experience and common sense must prevail.
  • Culture is not uniform, so spreading people from team to team may not always work. With luck you’ll find matches and everyone will benefit. Your job is to note similar communication skills, empathy, work ethics, and dedication to achieving goals in a timely manner.

Strategies for effective team scaling

There are two options – adding new employees to your existing team or choosing an external software development partner

Scaling teams in the context of in-house recruitment

Agile always means “size-optimized” teams. Smaller teams have excellent communication, know their roles, are easy to manage, cost less to operate, and have high, easily-tracked productivity.

Such teams know their strengths and, of course, their weaknesses. Assigning a task lets them say “We’re going to need someone who can do x, y, and z for us”, allowing you to suggest a match for them. Inquiries like “Can we borrow Mike from Carla’s team, if he’s not busy?” will make your decision process much easier.

Team management should also have a fairly solid list of team capabilities for each one. Team A does “X” type projects; Team B does “Y” type projects, and so on.

Matrices of skills, such as customer interaction, presentations, IT skills, innovation, and so on, inform as to when a team will require outside help on a new project before you assign it, so you’re already halfway done before it begins.

Scaling in the context of outsourcing

Sometimes you already know that you don’t have the skills in-house as you review a project. Now is the time to seek a partner with a history of easy integration in others’ projects. Their communication skills are probably quite high and they can cope with existing code with minimal difficulty.

One of the challenges we face at Netguru is integrating unsatisfactory code written by others into a project by refining it into something more useful for the purpose. We solve problems autonomously by being perceptive and proficient.

Table: Scaling in-house vs outsourcing – a comparison

In-house

Outsourcing

Time

  • Recruitment time: Sourcing candidates, running interviews, and candidate selection can take from a few weeks to several months.
  • Onboarding and training: Additional time invested before new hires are fully productive.
  • Quicker initiation: Service agreements can be negotiated and signed relatively quickly. A good agency is able to deliver candidates for roles in as little as 8 days.
  • Onboarding and training: no need for upskilling. Immediate availability and expertise.

Cost

  • Recruitment costs: Includes advertising, interviewing, and even relocation.
  • Salaries and benefits: Fixed, ongoing costs.
  • Infrastructure: Costs for workspace, equipment, etc.
  • Payment not aligned to the current workload: Same cost during project downtime.
  • Legal and documentation: Employment contracts and compliance.
  • Service fees: Can be more predictable than in-house costs.
  • Avoids direct costs for benefits, office space, or equipment.
  • Contractual costs: Generally lower than employment contracts.
  • Payment typically aligned with work delivery; less/no cost during project downtime.

Flexibility

  • Scaling up: Requires hiring more staff, which can be slow and costly.
  • Scaling down: May lead to underutilization of staff or layoffs, affecting morale and incurring severance costs.
  • Less flexibility to quickly adapt to changing project needs.
  • Scaling up: Easier to add services or increase the scope of work through renegotiation.
  • Scaling down: Contracts can often be adjusted or terminated based on agreed terms, offering more flexibility to respond to project changes with potentially lower financial penalties.

Market situation vs. scaling tech teams strategies

During the 2022-2023 reordering of the market, Amazon decided to let go 18,000 employees due to market volatility, while Meta was looking at 21,000 in workforce reductions. That reordering hasn’t stopped, though it has slowed down, which is good news for everyone.

Despite that,

it is still my firm belief that external teams are going to continue to play a major role for the next few years.

Companies are going to wish to maintain the flexibility they have discovered with solutions like Netguru provides.

If a company is progressing, they are going to need the ability to scale their teams quickly to maintain their responsiveness to the market conditions. Of course, there is the in-built cost efficiency, too.

Many companies have found they can rent less space, furnish fewer offices, reduce the number of portable electronics in use (tablets, laptops, phones), as well as the upkeep and software rollouts for all of them. They can reduce insurance premiums, benefit packages, parking costs, internet provisioning, and many other expenses, including salaries, vacation pay, sick days, and more.

This provides flexible, fast, better budget management. You can add people as needed, or discontinue working with unneeded personnel at a moment’s notice because there are no long-term commitments.

Aspects to consider when you scale tech teams

If you’re planning on scaling your tech team, there are a few things that should guide you in your decisions.

Firstly, search for a team of problem-solvers. Lucas Bédout, Head of Engineering at Spendesk, told us: “If I were to start a company tomorrow, I’d ask everyone I interview about a problem they don’t know how to solve, just to see how they react to something they’ve never seen before. Because every time you scale something, you encounter problems that you haven’t seen before”.

Quote by  Lucas Bédout

Here’s why working with an external team can be so beneficial. You verify their problem-solving skills and how they tie in with hard skills by looking at the past projects they’ve delivered.

Secondly, prioritize sustainability. Ask yourself – how quickly can you scale your teams up or down, if need be? Traditional recruitment and onboarding processes can be very time-consuming. Also, what costs will these decisions bring upon your business?

Adrian Pica, VP of Product Management at Bolt, says that it’s the strong focus on balancing cost-effectiveness and productivity that helped bring Bolt to the market.

“We focused on ROI, which meant allocating the smallest amount of engineering work to the right tasks. We spent more time on choosing the right tasks to work on. And if we choose the right order, that means the added value” he says. “Our competition was extremely well-funded, they hired more than we did in different locations”.

Quote by Adrian Pica

However, focusing on full-time employment has proven to be a two-edged sword. As the economic turmoil unveiled in just the last four years, organizations that prioritized full-time employment were also the ones that experienced the largest layoffs in an effort to maintain company profitability.

Future of scaling tech teams

Scaling tech teams remotely

COVID-19 did horrible things, but it left some remarkable benefits behind. We’ve long been capable of doing remote work. The business inertia for everyone to be at a desk at 9am and not leave before 5pm has been eroding for years. COVID-19 pushed that right off the table.

Virtual workplace tools suddenly came into their own. People could remain isolated but still participate in collaborative efforts and maintain a close knit culture. Work was accomplished with new levels of efficiency on electronic whiteboards; people were happier not fighting heavy traffic for hours per day—and you could attend meetings with a suit jacket, a tie, and your pajama bottoms—much better than Casual Fridays.

Nowadays, fully a third of companies are primarily remote, according to Stack Overflow’s annual survey. In over 5,000 other organizations, half of all employees remain on remote work. While a bus driver and a masseuse still have to make a physical appearance, engineers, designers, and even MDs are doing much of their work remotely.

This is less true for small organizations (<20 employees), but these are not really candidates for rapid scaling in any case. So, aside from limited exceptions, companies have embraced the remote operator as a more economical and equally serviceable model.

AI will impact upscaling strategies

The same Stack Overflow study cited above indicates that 70% of professional engineers are in the market for, or are already using, AI tools as of 2024.

Our partners at Netguru also say that managers and CTOs are actively looking for those expressing an interest in applying AI in their jobs, and its application towards educational possibilities.

AI itself will impact upscaling, too. ML consists of predictive analytics and algorithms that enhance workforce planning and how we will manage our high-talent employees. Data-driven decision-making on scaling our teams is on the horizon as we learn to capitalize on AI’s ability to assess historical data, forecast future demands, and analyze skill trends.

Companies will continue to scale with the help of external partners

Despite widespread dismissals casting a bleak outlook on IT recruitment, the IT services sector remains on an upward trajectory. As per a report, revenue in the IT services market is forecast to hit US$1.364 trillion in 2024.

IT outsourcing is expected to maintain dominance, with a projected market volume of US$512.5 billion in the same year.

Mistakes to avoid when you scale tech teams

Ignoring scalability

It's important to think ahead, invest in infrastructure that can grow with you, and build partnerships that can scale alongside your business. Failure to do so can create bottlenecks and restrict growth, or cause economic hardship later on. Make sure everyone stays flexible and adaptable, and don't forget to check in on your team structure regularly.

Putting communication on the back burner

When onboarding new team members or collaborating with external partners, aim to find individuals who not only have the right skills and experience but also resonate with your organization's values and culture. Foster open communication and feedback among everyone to create a supportive and effective workplace environment.

Learning from past mistakes when bringing on new team members

Similar to how engineers conduct after-action reviews for their projects, it's beneficial to assess your scaling efforts, whether it's upscaling or downscaling. Reflect on the team scaling decisions you made, or those by others, and the resulting outcomes. By combining insights from past experiences with future industry projections, you can develop a robust strategy.

How to scale software development teams for long term success

This was just an introduction to how to scale teams, the advantages of information sharing in large-scale teams, or dedicated development teams. Honestly, the strategic advantage of outsourcing in scaling tech teams and the evolving landscape of outsourcing and global team collaboration is impossible to understate.

Companies need to stay competitive and continue developing their projects, but outsourcing is a more cost-effective, faster way to work with the best talent, and that’s a fact.

There is much more to this subject than can be covered here, but we would be happy to talk with you and expedite your journey toward proper scaling.

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Mateusz Czajka

Chief Delivery Officer at Netguru. Mateusz is responsible for delivering top-quality, innovative...
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