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dedicated development team cost vs inhouse team vs freelancers web development

Is a Dedicated Development Team Worth the Cost?

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Quick Summary: When it comes to outsourcing web development, a dedicated development team costs less than in-house team but might cost more than working with freelancers. Is this a viable and economical alternative? Or should you look at hiring an in-house team or project-based outsourcing? Read on to discover the answers, cost comparison and the pros and cons of each model.

Working with expert web developers is essential to showcase your business in the best way.

The issue is whether you should hire in-house developers, work directly with freelancers, or approach a remote team.

All of these approaches have their advantages. Naturally, the cost is also a deciding factor. After all, you deserve quality work without having to go over budget.

In-house Versus Offshoring: A Cost Comparison

To begin with, let’s look at some numbers.

The average salary for a Senior Software Engineer in the United States is USD 116,949. In the United Kingdom, it is GBP 72,691 – or about USD 95,429.

However, it would be incorrect to only weigh the cost of salaries. That’s just one part of the story. 

Here are other cost factors to consider when it comes to keeping the bigger picture in mind:

  • One study shows that the average time to hire employees in-house can be up to 42 days. This is productive time that can be put to more profitable use.
  • With hired developers, you need office infrastructure. This means office space, computers, and amenities.
  • Then, there are employee benefits: performance incentives, insurance, annual raises, and so on.
  • Training and upskilling are other components that come with a cost attached.
  • Many of the above are not a one-time payment, but recurring costs.

in-house vs offshore development team cost

Source 

After you have put in all this time, effort and money, another study indicates that most tech pros tend to stay in one position for under three years on average. And so, you have to begin all over again.

Cost of Hiring Offshore Development Team

Now, let’s look at offshoring. An average hourly rate for a senior developer in the US is around USD 53 per hour, while in Eastern Europe, it’s around USD 25-50 per hour.

2020-global-outsourcing-hourly-rates-1024x466

Source 

To optimize even more without compromising on quality, you’ll be happy to find that in countries such as India, the rate is from USD 18 to USD 40 per hour. This, of course, is a rough indication. 

When hiring an offshore development team, you do not have to invest in other areas mentioned above, such as upskilling and office space. This itself is a huge saving of both time as well as money.

Is a Dedicated Development Team Worth the Cost? There’s Just One Answer.

When you offshore, you have the option of selecting a remote dedicated team. This means that all the time and effort of a group of developers is exclusively for you and the specific project they were hired for (unlike the project-based model where resources are shared between multiple projects).

With the dedicated team model, you also get the services of an experienced program manager, who is your go-to person for all details and progress of the project.

dedicated team model process

It’s Like an Internal Team without the Added Costs

You can look at it this way: a remote dedicated team works as a part of your own organization. You can deal with it like an internal team, without the hassles of paying for infrastructure, space, and benefits.

The advantages of a dedicated model are clear:

  • On-demand team scalability
  • Greater control and transparent team management
  • Greater productivity levels
  • High engagement levels and attention to project detail

Several notable companies have found that a dedicated team model works best for them. Among them are luminaries such as Ikea, General Electric, and American Express. There are thousands of others – of all shapes and sizes.

hiring dedicated developers

A dedicated development team proves cost-effective for:

  • Tasks that are large and ongoing in nature.
  • Projects that could have shifting requirements over time.
  • And projects that need different technologies, frameworks, and third-party services.

Also Read: Extensive Research on Front-end Developers Salaries across the Globe

Dedicated Vs. Freelance Vs. Shared: A Cost Comparison

It’s been estimated that a shared or project-based model increases the total product development cost by almost 30%.

The freelancer and shared model has added costs that may not be visible upfront.

Here are the simple equations to consider:

Dedicated Vs Freelance Vs Shared A Cost Comparison

Quite simply, the quality, focus, and expertise of a dedicated development team make it the most cost-effective of all the options.

In short, keep in mind the following:

  • Reliability: With freelancers, reliability can be an issue. With emergencies or urgent requirements, freelancers may not deliver. A remote dedicated team, on the other hand, comes with total commitment at all times.
  • Security: Data security and end-to-end solutions can be reliably offered by dedicated teams.
  • Scalability: If your project grows or has greater requirements over time, a dedicated team will be able to handle these seamlessly.
  • Control: Your level of control over a dedicated team is much greater.

Dedicated Vs Freelance Vs Shared A Cost Comparison (1)

Though cost considerations are certainly important, you could well be jeopardizing the quality as well as timeliness of your project with freelancers or other modes of offshoring.

How Much You Need to Pay for the Dedicated Development Team

We’ve already compared average hourly rates for freelance as well as full-time developers.

With a dedicated model, the payment is typically every month. The cost might vary, being a factor of many variables such as team size, resource expertise, and speed.

‘Every penny spent on a dedicated team is well worth it. Your project deserves no less.’

Uplers is Dedicated to Your Success

At Uplers, we’ve built one of the largest, globally recognized outsourcing agencies in the industry. Every day, we empower businesses to build better digital ecosystems.

From front-end development to search engine marketing and more, we have the experience and the expertise to make a difference.

Contact us today to find out more about the value of a dedicated team and how our knowhow can turn your projects into success stories.

7 Reasons To Hire an Offshore Team When Trying To Close A Big Client

7 Reasons To Hire an Offshore Team When Trying To Close A Big Client

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After a slight dip in 2018, the global outsourcing market recorded almost 8% growth in 2019, as the annual revenues for the market hit the $92 billion mark.. 

R&D offshoring has been growing at a rate of more than 60% annually, while digital services offshoring has witnessed a growth rate of 30-35%.

outsourcing stats for hiring offshore teams

 Source

Why Companies Prefer Offshoring?

The Encyclopaedia Britannica summarizes five major reasons behind offshoring, of which the last three apply more to the offshoring of manufacturing tasks than to digital services offshoring:

  • Cheaper labor costs
  • Less strict labor regulations
  • More relaxed environmental norms
  • Tax benefits
  • Easy access to raw materials

Offshoring software development and other digital services offshoring have added several totally new dimensions to the reasons for offshoring. 

  • Accessing readymade teams of highly trained and skilled personnel at prices considerably lower combines with other incentives. 
  • You save time and resources on the entire hiring and recruitment process. 
  • The savings on overhead costs associated with training and office equipment also contribute to cost-cutting.
  • Business efficiency increases with outsourcing as it leaves more time for core business functions. 
  • Adds to the existing in-house skills and gets specialized tasks completed faster by engaging the relevant expertise. 

Why An Offshore Team Is Great for Backup Support?

A Deloitte study presents the efforts offshore partners make to ensure a seamless experience for partners. A look at those reasons clearly reflects why a dedicated offshore team can be great backup support for both sudden and regular business needs. 

We add our own research findings to make the list more comprehensive. 

1. Offshore Partners Usually Adopt A Collaborative Approach and Help the Client Organization to Develop Proof of Concept for Business Development

The Deloitte study indicates that client organizations are happy with the collaborative approach that their offshore partners usually practice. It implies that your offshore team helps you not just in carrying out a project, but also in securing new ones. 

Offshore team members openly share their own knowledge and expertise to help client organizations develop the proof of concept for potential new projects. Whether you have to get your Board’s approval to implement your new idea or entice a client with it – a solid proof of concept is critical. 

Your offshore team is an ally to depend on for this critical component, evidence suggests.

2. An Offshore Team Can Add to Your Secondary Revenue Stream

Your offshore dedicated team has the potential of adding a secondary stream of revenue to your business also. Your offshore dedicated team is like an extension of your in-house skill sets. That increases your portfolio of business offerings. 

A recent article stresses the need to find multiple revenue channels for accelerating business growth. It emphasizes the need to access outsourced expertise to add to your secondary revenue source. 

With an offshore dedicated team at your disposal, you already have such expertise to bank on. You have a readymade solution to implement your secondary revenue strategy straightaway. That also keeps you protected against ups and downs in your primary business area. 

Best Remote Teams

3. An Offshore Team Is Your Best Backup When You Need Resources and Skills to Meet a Short Deadline

Business like life springs surprises. Despite the best planning, there may be sudden needs that require specific skills at a short deadline. An offshore team at your disposal means you can readily access the necessary expertise without any time loss. 

Such a situation may arise because of a new lucrative project with an incredibly tight deadline. It may also arise because of a sudden scalability need in an existing project. You may even need to replace your in-house expertise at short notice because of a team member leaving. 

If you have an offshore dedicated team with proven expertise, then you know where your backup will come from.

4. Your Offshore Team Increases Your Business Productivity and Facilitates Focused Resource Allocation for Further Business Growth

Deloitte’s global outsourcing survey 2019 reveals that 58% of the responding companies experience up to 15% productivity growth through outsourcing. Nearly half of the respondents (49%) pass the growth savings back into their businesses.

Productivity increase through outsourcing

Productivity increase through outsourcing: Source

Having access to extended expertise thereby increases business growth opportunities by increasing business productivity. It further adds to the growth potential by generating savings that can be channelized back into the business.

Also Read: Ultimate Guide for Agencies to Draw Maximum Benefits from Outsourcing

5. Your Offshore Team Helps You Present the Right Expertise to Your Clients for Extended Reliability

The Deloitte 2019 survey highlights that the ability to anticipate the needs of business units and client organizations scores high (6 on a marking scale of 1-10) as one of the advantages gained from outsourcing. 

When you have an offshore dedicated remote team, you have a readymade talent pool to present as part of your expertise to clients. It facilitates continuing clients to trust your ability to deliver. It also generates the necessary feeling of reliability for the new clients you secure. 

In addition, the ability to anticipate client needs and offer the necessary skills to them before they ask for it builds trust and dependability. 

With a readymade team of specialized experts as and when you need them, your ability to present a confident sales pitch to your existing and potential clients increases manifold. You know you do not need to scramble to find the expertise needed – it is already there.  

6. Your Offshore Team Helps You Pitch for Large Projects with Scalable Needs

As high as 72% of the respondents in the Deloitte 2019 survey have emphasized the need to continue with the same outsourcing partners. They believe it to be a means to retain their access to the necessary talent. 

By retaining such talent, your opportunity to look for large projects with scalability needs increases. You can pitch for such projects without any worries for extra investments of time and resources in the form of recruitment, training, office equipment, etc. 

To have a long-term offshore partnership is to have a readymade solution to scalability needs at any given point in time. You are saved from the headache of sourcing the required talent and go through the entire orientation process. 

7. Your Offshore Team Gives You High Return on Investments-fast!

The Deloitte 2019 survey indicates that 80% of the respondents recovered their outsourcing investments within three years. Half of them recovered it within the first two years.

Recovery of outsourcing investments

Recovery of outsourcing investments: Source

You cannot possibly ask for a faster ROI rate. It is clearly a win-win situation to have an offshore dedicated remote team for business growth. 

Consider The Dedicated Team Model for Offshoring

Due to the many advantages it brings, offshore partnering has become more popular in recent years. The dedicated team model (DTM) has all the pros of an in-house team without the cons. 

  • In the DTM model, the client and the service provider enter into a long-term contract for specific service needs. The vendor organization presents an expert team, which remains dedicated to serving the client organization post-approval. 
  • The client organization retains full control over the team’s functioning, except for typical administrative tasks like leave calculation, etc. 
  • The payment of team members is on a work-to-work basis. When there is no work, paychecks do not need to be issued. However, the dedicated team is always available to assist the client organization.

Looking Ahead

Businesses go through ups and downs regularly. Market volatility has increased with globalization and the emergence of new markets and competitors. Keeping a dedicated offshore team for backup support is a secure business investment. This post presents sound evidence of that.

Top-5-Things-To-Consider-Before-You-Hire-Offshore-Developers

Top 5 Things to Consider while Hiring Offshore Developers

Planning to hire offshore developers? Keep these tips in mind to make it a rewarding experience.

Do you know that 71% of businesses outsource web development projects include some of the most popular Fortune 500 companies like Apple, Microsoft and General Electric? Moreover, most Fortune 500 companies hire dedicated developers and rely on these offshore remote teams for project executions. Let’s look at the Top 5 Things to Consider while Hiring Offshore Developers.

Why Outsource?

The global market value of outsourcing reached US$ 92.5 billion in 2019. Two key factors drive this growth:

  • Cost-Efficiency: Outsourcing web development tasks are considerably less resource-intensive than getting them done in-house. According to a Glassdoor survey, businesses pay $90,000 per year to web developers. They can get the same expertise by hiring offshore developers from India at almost half the cost. 
  • Access to Global Talent: Outsourcing allows ready access to available talent globally, which saves time and resources by cutting out the entire hiring and onboarding process.

5 Key Considerations while Hiring Offshore Developers

1. Geographical Location

Your outsourced development team needs to be located in a country with world-class infrastructure for delivering the services you seek. For instance, the partnership might become difficult if your partner lacks adequate high-performance internet access. 

Choose a country that has an existing and thriving business relationship with yours. That indicates your offshore development partner is likely to have a cultural orientation about the business atmosphere in yours. That’s a huge plus. 

English is pretty much the language of international business dealings. Check the country’s English proficiency before hiring offshore developers there. You wouldn’t want a language barrier in your communications.

India tops the global outsourcing destination list for any kind of IT requirements. Web development included, of course.

India now ranks 63rd among 190 countries in the World Bank report on ease of doing business. In Tholons’ Services Globalization Report 2019, India tops the list of digital nations. The score breakup (on a total of 1) is as follows: 

  • Talent, Skill, and Quality: 0.91
  • Cost and Infrastructure: 0.80
  • Business Catalyst: 0.79
  • Digital Innovation: 0.72

In the A T Kearney Preferred Location list of 2019 also, India ranks first with a total index score of 7.06. 

The following graph represents the global offshoring preferences. The “Already there” legend stands for the surveyed companies that have an existing relationship with a particular country.

India as a Global Outsourcing Destination

Source

Other than the cost benefits, skills and ease of outsourcing are other factors that indicate why you should hire developers in India.

Also read: 5 Best Outsourcing Countries for Web Development: Cost & Time Difference

2. Company Stability and Reliability

Once you’ve zeroed in on the country, you need to check the company’s profile before you make a decision. We recommend partnering with a web development company rather than with an individual freelancer if you need ongoing development support. 

The stability and reliability factors of a company are critical to ensure that your project does not suffer because of issues at your offshore partner’s end. 

Use the following yardsticks to measure an outsourcing company’s stability and reliability:

  • Check the annual financial statements for three consecutive years to check for the company’s growth profile. Investigate both net income and revenue growth.
    • Examine the debt/equity ratio to determine the company’s financial health.
    • Find out how long the company has been in business. 
    • Check the company website carefully.Look for customer reviews.
  • When you begin the initial communications, ask for customer references. Ask for their contacts to be able to speak to some customers directly. 
  • Inquire if the company has experience of working for clients in your country. That will indicate a pre-existing idea about the business culture in your country. That’s an advantage for sure.
  • Investigate the company’s cyber-security commitment and history. You wouldn’t want to risk a security breach.

It is always a better choice to hire dedicated developers from a trusted outsourcing vendor instead of investing your money and efforts on freelancers.

 

hiring dedicated developers

3. Cost Efficiency

This is the other major factor behind your decision to hire offshore developers. Calculations of how much cost-cutting you’ll be able to achieve are definitely important. 

However, it may not be cost-effective in the long run to choose the company offering the least expensive terms. Cost efficiency needs to balance expenses and quality. Compromising quality to cut costs is not good business practice. 

We present two tables below:

The first one reflects the average hourly rates for hiring dedicated developers across popular offshoring destinations. 

hiring offshore developers

Source

The second one presents a more detailed breakdown of the average hourly rates for developers across tiers if you adopt the dedicated team model in offshore outsourcing. Full-time employee in the second table implies an offshore dedicated team employee, not an in-house team member.

hiring offshore developers rates

Source

4. Human Resource and Talent Pool

If access to global talent is one of the main reasons you are hiring offshore developers in the first place. You have to probe the actual human resource and the skill-sets a company can offer. 

Check whether the company you outsource web development to actually has an in-house staff with the required skills ready to work for you. If their policy is to hire freelancers when they get a project, you should better look elsewhere. 

This is critical. The Mercer-Mettle Report 2019 on India’s state of talent acquisition reflects the following: 

  • 100% of small businesses (1-500 employees) reported talent acquisition to be a challenge
  • 90% of the medium-sized companies (501-1000 employees) said the same.
  • So did 67% of the large companies (more than 1000 employees)
  • Technology, internet, and electronics are among the industries that reported talent acquisition as a challenge.

The PWC CEO survey report 2019 also reflects that 79% of CEOs globally are concerned about the availability of the right kind of digital talent. 

hiring offshore developers talent acquisition problem

How To Check If The Vendor Has The Human Resource That You Need

  • Ask for online interviews with the staff member/s who will be working for your project. 
  • Organize to have their skills tested on-the-job. Get them to work on something while someone from your side oversees that. There are online platforms to facilitate such a process. 
  • If the company has personnel who have worked for clients in your country before, it will be beneficial for you to have such members in your offshore team.

5. Industry Understanding

Just as a prior idea about the business practices of your country is an advantage, so is industry understanding. 

Different industries have different needs. Check if the company and the offshore developers they propose for your development needs have the experience of working in your industry before. 

This is not mandatory. However, if they do have exposure to your industry, that will be of considerable advantage to you. 

Hiring Offshore Developers for Short-term or Long-term?

Just as there are different models of outsourcing, there are varying partnership models in offshoring also. Do you have a short-term need of developers for one particular time-bound project? If yes, a project-based contract with an offshore vendor may be all you need. 

However, if you need long-term development support over a period of time, it is recommended to hire dedicated developers. You can build your own dedicated web development team offshore.

A dedicated remote team is like your own in-house team without the recruitment and onboarding hassles. Also without the heavy overheads. You get a readymade team of your choice. You also get the authority to retain monitoring and oversight control. But you remain free from the need to micromanage. 

You cannot possibly ask for anything better.

Offshore development team

10 Mistakes That Can Demolish Your Offshore Development Team

The restructuring of the global business ecosystem is unfurling novel opportunities for companies. Due to the integration of global markets, the collaborative flow of new technological advancements is being shared. In today’s current market place, the new or growing web companies need to imbibe potential alternatives to scale up the development. Hence, hiring an offshore development team accentuates the optimum use of advanced technological, economical, spatial and cultural domains. The ubiquity of IT tools is hedging the popularity of the dedicated development teams in the web development cycle.

Offshore development team members are distributed geographically and collaborate for common goals through virtual technology tools. But as new dynamically economic spaces are erupting, the current offshore environment also indicates some challenges, complexities, and prerequisites before and after hiring offshore development teams. So it is important to access probabilities of mistakes, which may undermine your development team’s efforts.

Let’s read more which mistakes can demolish your offshore development team:

With the cohesive collision of growing web development companies, it also becomes important to dive in for probably associated risks. Nothing is without trade-offs in the economy, and offshoring is not among exception. So let’s have a comprehensive look over mistakes, which can be avoided while working with a dedicated development team offshore.

1. Inappropriate Offshore Location

The growth of business relies on human capital, financial capital or social capital. Hence, similarly, once you decide to offshore the development, what matters first is the location. Some contributing factors are:

  • In a competitive market, every company needs to revivify the core factors like cost-effectiveness, adroit resources, experienced team, market trust, and quality work.
  • After racking up all necessitous observation,  the decision to choose offshore development company ordains with a perfect offshore location for your web development.
  • The location must not be holding an unconstructive road map for your projects. It must not face undue technological and communication differences.

Now, the question pops out, where to offshore?

best it outsourcing companies location

India is the best location for the offshore development team due to:

  • Economical labour cost
  • Consistent technological advancements
  • Innovations
  • Time zone benefit
  • Evolving IT ecosystem

The latest forecast by Gartner Inc. suggests, that India’s total IT spending will be US$94 billion in the year 2020. Furthermore, It is expected, that the digitally skilled manpower (IT-BPM) in India, would swell up to 150 million by 2020. So, offshoring to India has more salutary results.

2. No In-house Technological Expert

The uncertainties keep mounting up with an offshore remote team not having in-house technological experts. It becomes more colliding and less efficacious if you are not tech-savvy.

Lee-Parry

Hence, a technical expert is a fundamental monitoring factor for your entire web development cycle. They will be committed to organizing necessary communication with the offshore remote team and documentation of technical requirements. You need to ensure the availability of a dedicated in-house technical expert before executing the project.

3. Undervaluing Project Budget

Undoubtedly, a Fixed-price Contract is a preferential option for small projects with pre-determined purposes. If, there will be no further additional budgeting, no need to explore, Rate Card, Time and Material, and Cost contracts.

But with instantaneous market strategy and requirements propels to increase the budget of contract. The company accompanies several creative phases in the entire web development cycle. Hence, it is quite suggestive to keep a substantial margin while determining the final cost.

McKinsey-&-Company

4. No Long Term Goals

It is among the popular principle of the business, to constitute a road map for long term goals. So, if you lack it in the case of the offshore development team, you are stacking up more problems. Hence, you need to prepare long term plans about collaborating resources, its utilization, future competitive needs, customized solutions, etc. It gears them up for a strategic course of action for successful projects. And hiring a dedicated development team turns out a better option.

Also Read: Is Your Dedicated Web Development Team Making These Common Mistakes?

5. Look Away The Similar Project In The Bucket

Similar projects sprout more ideas and give a thorough insight into the team’s skills.

One size never fits everyone: No web guarantees the exact replica of the business requirements unless they are made customized. The expectation of the stakeholders necessitates the managers for taking proper insights for similar prior projects.

Bloatware is dangerous: Working over the old frameworks always leave the company in midstream. Therefore changing the frameworks and finding the compatibility with the existing system is necessary. Around 44 percent of businesses are raising their IT budgets for customization, which was a little lazy effort a few years back.

 

hiring dedicated developers

6. Communication Gap and Undecided Goals

Better communication flow hedges the efficient development of the project. If communication is deteriorated due to the unwanted communication gap, the project development would be more wretched. Bridging the communication gaps through potent mediums is a must. Furthermore, there must be predetermined goals and objectives for managing offshore teams efficiently. It is to be jotted down while planning future decisions with an offshore development team.

7. Disregarding Cultural Differences

Higher cost does not guarantee upper hand on skills: Most prominent psychological blunder outsourcer make is to give blindfold trust to tier1 resources. Always check the correlation between financial attraction, skills and business environments.

offshore development_graph

Play wisely with geographical diversity of web development: Web development industry is too wide and covers almost every civilized community in the world. The way of settling the conflicts always differs from culture to culture. High context people are way harder to deal whereas low context people prefer to discuss conflicts better.

8. Inefficient Management and Coordination

The managerial efficiency leads, yielding road maps with viable options for additional developments. You need to ensure that there would be a Project manager in the dedicated development team. It makes them responsible for planning budget, team resources, time management, quality assurance, reporting, and documentation. Furthermore, you need to establish better coordinated and planned meetings for managing offshore remote teams. There may be an issue with a time zone difference while scheduling a call or meetings, so a better mutual decision would end it.

9. Lack of Detailed Documentation Before Hiring

The lack of proper and detailed documentation may lead to unwary future consequences. You will not be yet confirmed about the credentials of the dedicated remote team. It is better to have detailed documentation of all relevant details before hiring. Around 39 percent of the project fails due to the unclear or bad requirement gathering.

  • Your product specification document must be engaging and effective.
  • PRD communicates the necessary capabilities, that need to be included before release to the testing and development team.
  • For channelizing every effort into the forwarding step, you should be in contact with the offshore development team
  • Also, quality assurance becomes easy.

10. Overemphasize On Cost

Every business decision is ultimately motivated by cost. Good research can let you get the premium services at a much lower cost than other available options.

Less focus on cost-effectiveness: Spending a few bucks more can never purchase you the better efficiency. The secret of the good web lies in the development process and models. The European and US developers prefer Agile/DevOps model (leaving great scope for improvement), whereas few countries still work with the Waterfall method.

So where do you draw the line?

The key here is to do your research and figure out what the ‘average’ fees are from different offshoring companies. Ideally, you’d be able to discuss specific case studies and real numbers.

Focus over good SRS: A perfect SRS saves time, reduces cost, increases transparency, and leverage the understanding with the development team.

Offshoring reduces the cost by 50 percent, eliminate the defect by 25 percent and reduce the time to launch by 40 percent; only and only if the above factors are given significant concern.

The global IT outsourcing market was $62bn in 2018 and rising with CAGR of 6% annually. [Beroe Inc.]

Wrapping up

The embellished role of the offshore development team can offer you a more economical product development process. But you need to avoid these mistakes for preventing unprecedented managerial and financial problems. Whether you opt for MVP or directly launching the product, the time-to-market is a significant factor to look for, which is considerably reduced with 37% difference, while choosing a dedicated development team. Apart from the above, the development team must have business-specific skills. It is always not possible for offshore developers to advance the specific skill, whereas the dedicated team model leverages the specific needs, therefore considered successful.