Tech-powered businesses face mounting challenges, including rising customer expectations, pressure to adopt emerging technologies, and tight deadlines. Addressing these challenges often requires quickly expanding the software development team. This presents companies with two options: hiring new programmers (which can be expensive and time-consuming) or creating an extended development team by adding external specialists to the existing internal team.
This article explains how the extended team model works, when it’s the best option, and what benefits it offers. We’ll also compare it to other engagement models, such as hiring dedicated development teams and handing off the entire project to an outsourcing company.
Key takeaways
- The extended development team is an excellent choice for businesses that want to temporarily increase their development capacity, access specialized expertise, reduce development costs, and scale their team without the recruitment hassle.
- The extended development team model offers companies benefits like enhanced team flexibility, access to rare or in-demand skills, and seamless collaboration.
- The results an organization can achieve depend not only on the decision to build an extended team but also on selecting a trustworthy vendor and adopting effective collaboration practices.
What is an extended software development team?
An extended development team is a collaborative model that integrates remote professionals with the company’s internal team. These external specialists follow existing workflows, use the same collaboration tools, and attend all project meetings. Essentially, they function just like in-house staff, except the company accesses them through a service contract with a vendor.
The extended development model is quite popular in the tech domain as it allows businesses to rapidly scale their existing teams without the long-term commitments associated with traditional employment. Here’s how it works in practice:
- Cooperation. A company signs a service contract with a development provider that supplies pre-vetted software developers with the technical expertise matching the requirements. The vendor manages recruitment and employment, saving the client from the hassle of hiring new staff directly.
- Day-to-day operations. External developers integrate into the in-house team. Although they remain employed by the vendor, these engineers work closely with the internal staff, including the client’s project manager.
- Management control. Clients maintain complete control over the development process and the work of extended team members. Their in-house project managers assign tasks, set priorities, monitor progress, and ensure alignment with business goals.
- Engagement. Software engineers hired as part of an extended development team work for the client full-time. This means they are dedicated to the client’s project and not involved in other work.
- Commitment. Extended team members stay on the project for as long as needed. The client can easily scale the team by adding more developers or withdrawing specialists based on project requirements.
Extended development team: Best use case scenarios
An extended team offers more than just an extra set of hands—it provides a strategic advantage for a business and can become a key differentiator for the project’s success. There are several scenarios where this development model is especially beneficial.
Increasing development capacity
A workload on a particular project can increase quickly, and this change may not always be permanent. For example, a business may want to roll out the new product functionality. In this case, the company will need to find new team members within tight deadlines. And once the new feature is released and business needs change again, they will have to let those specialists go.
An extended development team becomes an ideal solution because vendor-provided tech experts step in as additional resources, only for as long as the client needs them. Thus, companies can quickly adjust their software development units to dynamic project requirements, scaling up or down as necessary. This is particularly valuable in sectors like fintech, where businesses must quickly respond to market shifts or align products with evolving regulatory changes.
Accessing specialized skills
The extended development team model is also beneficial when a business plans to launch an innovative initiative, such as implementing artificial intelligence, but struggles to find tech experts with the specific skills required for the project. According to Gartner, IT leaders cite talent shortages as one of the major barriers to adopting 64% of cutting-edge technologies.
IT outsourcing companies typically have access to extensive talent pools that may be hard to find via traditional hiring channels. This includes AI, machine learning, blockchain, big data, data analytics, and other specialties. By cooperating with such companies, businesses can fill skill gaps faster, even if they’re looking for rare or in-demand expertise.
Optimizing development costs
Maintaining a large in-house team can be expensive, particularly for companies in high-cost regions like the US or Western Europe, where developer salaries are significantly higher than elsewhere. For example, a software engineer in the US earns an average of $161,000 per year, while a counterpart in Poland earns around $45,000—with a comparable level of expertise.
This geo-arbitrage makes an extended development team a perfect model for businesses that want to reduce development costs. By hiring software engineers in lower-cost countries like Poland instead of a local developer, businesses can save approximately $116,000 annually.
Additionally, when hiring remote developers from a vendor, businesses don’t have to pay for expenses like salaries, benefits, office space, training, and other overheads, which leads to even more significant cost savings.
Scaling a team without recruitment problems
Recruiting new team members is time-consuming and resource-intensive. A company may spend months finding the right talent and conducting interviews. When the software engineer is finally hired, the company must then manage employment-related matters such as payroll, taxes, health insurance, and labor law compliance. All of this adds administrative overhead, which might not be suitable for businesses focused on efficiency.
The flexibility of the extended team model allows companies to get the resources required to address current needs without long-term commitments. The vendor will handle the hiring and all employment-related tasks, freeing up the company’s team leaders for important business tasks.
Building an extended software development team is a perfect option for startups with limited budgets and fast-growing companies that cannot accurately predict long-term development requirements. They can also benefit from seamless collaboration, as extended developers become fully integrated into the company’s core team, which ensures smooth communication, project management, and information sharing.
Extended team vs. other outsourcing models
An extended development team is just one of several cooperation models available in software development. Thus, it’s important to understand how an extended development team stacks up against other outsourcing models to make the right decision.
Other options include:
- Dedicated team: a vendor provides an entire team of tech experts and dedicated software engineers who work exclusively on the client’s project.
- In-house team: a company hires professionals directly as internal employees, with their relationships governed by local labor laws.
- Remote team: a company collaborates with experts (full-time employees, contractors, or freelancers) who work remotely, often across different time zones.
- Traditional outsourcing: a company delegates a project to an external team, which manages the entire development process and delivery.
Let’s compare these options in more detail.
| Criteria | Extended team | Dedicated team | In-house team | Remote team | Traditional outsourcing |
| Control & management | The client retains full control over project management, workflows, and priorities | The client has high-level control over the project, but daily tasks are often handled by the team | The company has full control over team management, processes, and project decisions | Depends on the cooperation model | The software development company takes full responsibility for project management |
| Collaboration with a client | External tech experts work as an integral part of the client’s in-house team | The team operates with some level of autonomy while adhering to the client’s policies | Experts form the company’s core team | Depends on the cooperation model | The team independently executes the project based on agreed-upon requirements |
| Costs | Depend on the number of experts engaged and their rates | Include rates for all team members plus the vendor’s fees | Cover salaries, benefits, equipment, and other employment-related expenses | Vary based on the cooperation model (e.g., salaries, contract fees, or hourly rates) | Follow a fixed-price or time-and-material approach |
| Flexibility | High. The client can scale the team up or down as needed | Moderate. The team is stable but can be adjusted based on project needs | Low. Most changes take time and involve legal and financial constraints | Varies. Flexibility depends on the type of contract | Low for fixed-price contracts and moderate for time-and-material contracts |
| Time zone & location | Extended team members work remotely but align their schedules with the client’s time zone | The outsourced team is often nearshore or offshore, being available during pre-arranged working hours | Experts operate from the company’s office, with full time zone alignment | The team is spread across multiple time zones, requiring coordination for effective collaboration | The team is often nearshore or offshore, with scheduled client meetings during overlapping hours |
| Expertise & skill access | Provides access to specialized skills tailored to the client’s project needs | Offers a specific skillset required to complete project tasks | Limited to the skills and expertise of the hired internal staff | Varies by individual expertise of hired experts | Provides access to tech expertise required to complete a project |
| Cultural fit | High alignment as external experts integrate into the in-house team | Moderate cultural fit since the team follows the client’s processes but operates autonomously | Strong, as employees adhere to company policies and share the work environment | Low as extra effort is usually required to ensure cultural alignment | Depends on the region where the software development company is located |
| Risk management | Low risks as the client retains all the control | Moderate risks since the team operates under the client’s high-level supervision | Low risk since the company has full management control over employees | Moderate or high, depending on the cooperation model | High, but can be almost fully mitigated by partnering with a trusted vendor |
| Long-term relationship | Yes/no, depending on the client’s needs | Typically, yes, but it depends on the client’s needs | Yes | Typically, no, since this cooperation may be harder to maintain | No, the cooperation is often project-based |
| Project changes | Easily adaptable to all types of project changes | May require contract adjustments for significant changes | May require additional hiring for significant changes | Depends on the cooperation model | Challenging for fixed-price contracts and easy for time-and-material contracts |
| Faster time-to-market | Yes, swift onboarding of the right experts speeds up the development | Yes, the client gets a full team ready to start working on the project quickly | No, as it involves lengthy hiring processes and onboarding | Varies, but coordination challenges may slow progress down | Yes, but only with teams having the necessary experience and expertise |
Choosing an extended software development team among various outsourcing models is just the first step. Selecting the right vendor and establishing effective collaboration with team members is also essential.
Working with an extended team: Best practices
Many of the benefits the extended team model brings depend on how well both teams collaborate. Here are some best practices.
Find the right vendor
It’s critical to choose a vendor with a proven track record and a team that has experience handling similar tasks to yours. Look for the vendor’s reviews from previous projects, explore their case studies, and check ratings on independent platforms like Clutch.
Assess candidates
Typically, vendors ensure that all candidates meet the client’s technical skills requirements. However, conducting interviews yourself is recommended to verify their fit. It is also a good idea to ask questions to assess the candidates’ cultural alignment, problem-solving approach, and teamwork capabilities.
Onboard extended team members
Though temporarily, the tech experts hired from the vendor will become a part of the company’s internal team. To ensure a smooth onboarding, provide them with a comprehensive project overview, including the goals, timelines, and key deliverables.
Use tools for smooth collaboration
Equip the extended team members with the same tools your in-house staff uses. This includes project management tools like Jira, Confluence, and Trello, communication tools like Zoom or Microsoft Teams, and version control systems like GitHub or GitLab.
Ensure quality with the right processes
Regular check-ins are essential to keep the extended team aligned with project goals. Also, setting and monitoring key performance indicators (KPIs) will help you track productivity and ensure high-quality deliverables.
Establish fair conflict resolution practices
Conflicts between extended and in-house team members can be effectively managed with the right approach. Start by clearly defining roles and responsibilities to ensure everyone understands their boundaries and collaboration points. Also, foster open communication and mutual respect to create a trustful environment. Finally, a project manager or team lead should be designated to handle conflicts proactively, addressing issues before they escalate.
Final thoughts
By seamlessly integrating external experts into the core team, businesses can access rare talent and accelerate development without sacrificing management control. While an extended development team is an ideal solution when an in-house team needs extra hands to meet tight deadlines, this is not the only use case. Hiring extended team members is also a good decision when a company requires hard-to-find expertise, wants to reduce development expenses, or needs to scale quickly without the challenges of recruitment and employment.
However, like any business collaboration, success with an extended team depends on selecting the right vendor. With over a decade of experience, Neontri provides professional IT staff augmentation services to clients globally. We specialize in connecting companies with highly skilled software developers across various technologies and business domains, including fintech, banking, and e-commerce.
Don’t let talent gaps become innovation barriers—schedule a consultation today and discover how our extended team can become your competitive advantage.
FAQ
What are the main challenges of using the extended team model?
Working with an extended development team can present several challenges, including communication barriers, integration issues with in-house teams, and consistent quality control. Fortunately, they can be addressed with proactive communication, strong vendor partnerships, and well-defined processes.
What are the most common roles filled by extended development teams in banking?
In the banking sector, extended development teams commonly fill roles requiring domain knowledge or specialized skills. They include:
- Cloud architects who can design cloud-based infrastructure for the bank’s IT ecosystem.
- Software developers with expertise in fintech, artificial intelligence/machine learning, and blockchain
- Data scientists who can retrieve insights from datasets to inform strategic banking decision-making
- Cybersecurity experts with experience in identifying and mitigating cyber threats faced by banks
What are the security implications of using an extended development team in banking?
As extended developers act as part of an in-house team, they might get access to sensitive financial information, which increases the risk of data leakage. Also, collaborating with an extended team can introduce compliance challenges. However, a trustworthy vendor will implement stringent security measures, conduct regular audits, and ensure that all team members are trained in best practices for data protection. So, in this case, most security risks are mitigated.
What industries benefit most from the extended development team model?
The extended development team model is particularly beneficial in industries that require specialized skills combined with cost-efficiency and flexibility. These include technology, fintech and banking, e-commerce, and healthcare.
