APRIL 4, 2022
8 min read
When you start a fintech company, there are some prevailing ways to run a business, depending on your goals and objectives.
A business may be grown by hiring IT experts in-house or by partnering with a company to do all the tech jobs for you. In addition, the consulting model may be able to give your company a wide range of creative abilities in the field of fintech.
4 Prevalent Business Strategies When Developing a Fintech Asset
There are four widespread business models for employing the IT development team: in-house, outfstaff, outsourcing, and consulting.
Investing in IT workers at a company’s base may be more cost-effective than outsourcing this division. Still, software development is kept in-house less commonly than accounting and payroll. Organizations often employ outsourced IT services to save resources and streamline processes.
Outstaffing may save money and time for personnel who do not need to be in constant touch with all aspects of operating a company. Finally, an outsourced consulting model gives your business a wide range of creative abilities in the field of fintech.
|The scope of the work||The whole project is dedicated to a single team||Different teams may work on different parts of the project||Different teams may work on different parts of the project||The whole project is dedicated to a single team|
|Costs for hiring and educating the team members||On the business||On the provider||On the provider||On the provider|
|Quality||Depends on the recruitment process||Depends on both: the company’s own recruitment process and the provider||Depends on the provider||Depends on the provider|
|Team accessibility||Due to the work schedule||Depends on the agreements||Usually 24/7||Usually 24/7|
|Security||All data left inside||Sometimes NDA is needed||Sometimes NDA is needed||Sometimes NDA is needed|
Let’s review the key differences. In this article, we’d like to focus on two of them: in-house and outstaff. They look similar but differ a lot.
What Is an In-House
In-house is a business model in which all activities are carried out within a company using its own resources and time.
Numerous businesses maintain many functions in-house, such as bookkeeping, payroll, marketing, and technical assistance. They choose to keep software development in-house less often. Outsourcing this part of the business may be cheaper, but there are situations when investing in in-house IT staff makes sense.
The Advantages of the In-House IT
When you hire a professional team or staff member who knows how your IT architecture works, there are a few advantages.
- They are well-versed in your industry. In-house IT staff know how your employees use their devices and how your network works. If your business is doing well, they will be motivated to come up with solutions that work for everyone.
- They are fast to reply. When there is a crisis or a problem, speed is very important. An in-house IT team can solve problems quickly. A simple letter or phone call could start solving the problem right away.
- You have greater control. When you work with IT, you have more control over how quickly things get done and how well they work. You can make sure that your employees are as well-trained in IT solutions as you want while also keeping costs down.
Downsides of the In-House IT
The benefits of keeping IT employees in-house are clear, but there are some important things to keep in mind.
- It is expensive. When you hire an IT worker, you need to think about how much their salary, benefits, and onboarding will cost you. You also need to think about how to keep your employees up-to-date on new technology.
- It is not always accessible. IT isn’t needed just from 9 am to 5 pm every single day. You’ll also need assistance at other times. Emergency situations might happen on the weekends or after work hours when your employees aren’t around. And you’ll almost certainly have to pay for work done over the holidays at a double price.
- It will be left behind. If your company is small or one of your employees is away, you may get a lot of requests for help and important software issues. Instead of keeping up with the latest trends, your team is always having to help non-technical employees.
When to Choose the In-House Model?
Usually, if you already have an in-house IT department with 25 or more employees, they have the skills and people to deliver a strong service, manage the workload, and cover most situations, so you don’t have to worry if, for example, a key member of the team leaves. If you keep your IT in-house, that’s a good idea.
Many people do the same or similar jobs and can help each other out when one of them isn’t around. When you have a lot of people doing the same or similar tasks, with the same skills and experience, you may be able to keep the IT team running even if one of the most important people leaves.
You might be better off keeping IT in-house if your business is not going to grow quickly, and you don’t even need to be able to grow.
What is an Outstaff?
Outstaffing is a way of engaging people where one company hires them, but then gives them to another company “on loan”. It can be used in all parts of the economy, from manufacturing to trading. Outstaffing is often called “staff augmentation”.
Outstaffing services are used to move corporate workers to outside management, which helps to cut down on staffing and tax costs. They will help the company become more attractive to investors and make more profit.
Outstaffing is a new way to run a business. It has become more popular because it is a good way to save money for businesses and set aside time for workers to do things on their own. There must be a lot of responsibility from both the people who work there and from the people who run the company.
You should bear in mind that there are two types of outstuffing:
Staff leasing. Contracts between the contracting agency and the organisation that is going to do the work usually last more than three months.
Temporary employees. When a new project has a duration ranging from one week to three months, it necessitates the hiring of extra staff. After the project ends, the temporary employee is to be dismissed.
Benefits of the Outstaff Model
The use of an outstaffing service has several benefits over recruiting employees directly. It allows businesses to hire people from all over the world without having to stay in one place.
There are several advantages to working with an outstaffing company, including:
- A greater control over the project. In this case, you can be sure that your understaffed team will give it their all on your project. Outstaffing lets you avoid communication problems and delays that might happen when third parties are involved. You can always talk to your team about new features, changes, and improvements.
- Exceptionally high-quality. Focusing on just one project allows developers to spend more time getting to know the project’s inner workings and making it work to its fullest potential. Consequently, you can expect your remote employees to add a lot of value to your business, even if they don’t work on the software itself.
- Great price-quality ratio. Outstaffing from other countries is cheaper for both wages and maintenance costs. The other thing to note is that foreign software developers have skills and expertise that many businesses don’t have at home. Combining these two criteria results in a win-win situation.
- Flexibility in team scaling. Outstaffing lets you change the size of your workforce as needed. Unlike other models, you can easily add more engineers or cut the team down to one person. If you use outstaffing, it is possible to make team decisions or strategies that are better for the business.
- You choose developers to work with, not the provider. Unlike traditional outsourcing, where people are brought to you no matter how culturally compatible they are with you. If you choose your team members carefully, you will be able to learn more about their skills, expertise, personalities, and views. This is very important for team growth.
Disadvantages of the Staff Augmentation
As far as outstaffing is concerned, there are a number of drawbacks to be discussed.
- The expense of HR activities is sometimes included. The contractor will have to pay for people management. These costs, however, are much less than the money the company wants to save.
- Data leakage or disclosure of confidential information. By signing a bilateral agreement, the company can be sure that its data will not be stolen and that it will be safe.
The DashDevs' team created a mobile SDK for one of the top banks in Bahrain as an outstaff project. Generally, DashDevs’ teams built an account aggregation that would give customers a complete overview of their money in NBB mobile apps. Customers can get data from all of their accounts, credit cards, loans, and mortgages at all retail banks through an open banking platform developed by Tarabut Gateway.
First of all, the outstaff Java and DevOps teams developed an open banking platform for the Tarabut Gateway, which would have been an intermediary between banks and other businesses.
In addition, the DashDevs' iOS and Android teams developed mobile applications in order to implement the personal finance management services into the bigger NBB app.
When to Choose the Outstaffing Model?
Outstaffing is better for business owners who have a lot of long-term needs and want to be in charge of their vendor team every day.
Because it isn’t as restrictive as internal teams or as open as outsourcing, this type of staffing is great for companies that need a few talented employees but want them to be available to a long-term group.
Staff augmentation services can help you get things done faster and more efficiently by adding extra workers to your team. Outstaffing talents have the skills and knowledge they need because they go through a rigorous and sophisticated hiring process every quarter or year. They are hired by a company to work with its own employees to look at trends and change industry best practices.
Companies can use IT staff augmentation to improve their skilled human resources while still focusing on their main business tasks. Staff augmentation services are a great bridge between hiring full-time workers and outsourcing software.
To Be Continued
Outstaffing is not a new concept in business, but it is sometimes confused with outsourcing. The difference begins with the recognition that you need a specialised development team located outside. This choice is often justified by the reduced expenses and qualified personnel available.
If you want project-based assistance, you will almost certainly find an outsourced consulting company. In this strategy, you’ll employ an outsourcing business to manage your project from scratch, including marketing research, and assign it to a team of developers. This team may work on many projects for various businesses concurrently.
Outsourced consulting is a preferable alternative if you need more committed collaboration. Additionally, under this approach, you will engage an external contractor to help you establish a team. You’ll talk to your provider a lot, talk about your projects and how they’re going, and build a close-knit team.
In our next article, we’ll review the other two popular models of employment for an IT team: outsourcing and outsourced consulting, which provide a lot of opportunities for a business owner.