In-House vs Remote: is there a difference now?
Welcome to the new world
There is constant discussion about which team model is more effective – an in-house or remote. There are great differences between these two team models. COVID-19 has changed our world and attitude to in-house and remote teams. Modern problems require modern solutions.
During the past few months, the world community has witnessed many sad events. Among them are natural disasters, escalating conflicts in the Middle East, the COVID-19 pandemic, and the failure of the OPEC+ deal, as a result of which oil futures prices fell below $30 per barrel to the level of 2004. Even individually, each of these factors can cause damage to the global economy. But the world markets faced them almost simultaneously, forming the “perfect storm” for the world economy.
In the case of the COVID-19 epidemic in China, not only stock exchange quotations but also industrial production were hit. China’s links in the world’s supply chains blocked, this paralyzes enterprises around the world. When the virus spread to other countries and became a pandemic, markets collapsed.
The subsequent failure of OPEC’s negotiations with Russia to reduce oil production not only increased panic but also put the stock exchanges in a “sell everything” mode. In the last couple of weeks, the S&P500 and Dow Jones have already experienced several worst days in their history since Black Monday 1987.
In 1987, an incredibly rapid drop was followed by stabilization and growth. The current fall has been going on for a month, despite stabilization measures – even lower base interest rates and pledges by international financial institutions to support national economies.
When will the world situation be stable again?
There are over 1 million infected people around the world, the containment measures continue to tighten. Even a successful response to the pandemic will not lead to immediate economic recovery. Damage from business interruption around the world will reduce annual global GDP growth by 1-2% – this is an optimistic forecast.
The situation is further aggravated by the fact that no one can say exactly when the world will be able to return to normal life. China is gradually lifting all restrictive measures, but the possibility of a new outbreak is still there. US President Donald Trump does not rule out that the pandemic could last until the end of summer. The postponement of many public events will also have an impact on financial performance in many market segments.
International financial institutions and national governments will switch to active measures for economic recovery and crisis overcoming after the return to normal life – with resumed air travel and international trade.
The most common tools to combat the crisis – refinancing and debt renegotiation, buying back troubled bank assets, and allocating substantial sums of money to support people and businesses – may not work. Further reduction of interest rates will lead to negative values and increase inflation, while the emergence of a significant volume of money supply, in the absence of prerequisites for demand growth, may lead to the rapid depreciation of currencies.
However, the impact of the coronavirus and the current downturn in world markets on the global economy will last longer than the outcome of the 2008-2009 financial crisis. Protectionist tendencies will increase in the world, revision of monetary and fiscal stimulus will begin, development of remote forms of employment and education will lead to a decline in incomes of some industries (development, air transportation, hotel business). Moreover, it is an expected wave of bankruptcies of numerous start-ups, businesses, and energy projects.
The global economic recovery is likely to be slower than we saw in the early 2010s. Investors will be less willing to return to the markets, which will involve a change in consumer behavior patterns towards greater caution and limiting excess consumption.
Which businesses will survive the crisis: with an in-house or remote team of developers?
A rapidly growing coronavirus outbreak hit the business hard. Many companies were forced to suspend their work or shut down completely to contain its spread.
The current situation of entrepreneurs is not encouraging at all. More than three quarters (76%) of small business owners say COVID-19 negatively affects their business – according to a new report by the National Federation of Independent Business.
On 30 January, the World Health Organization called the Coronavirus outbreak (COVID-19) a public health emergency of international concern. On 4 April, the number of confirmed cases worldwide exceeded 1 million, raising a new wave of questions about what companies will survive this critical situation in the world.
Fear of the coronavirus is growing and CEOs are looking for ways to improve collaboration among remote employees. In response to the rapid spread of the disease and related fears, some companies have canceled planned activities, banned business trips that could be avoided, and asked employees to work from home.
Apple, Google, Microsoft, Amazon, Linkedin, and Twitter were among the companies that invited their employees to work from home during the epidemic. While for obvious reasons, remote work is not possible in many industries and occupations, it can be a smart solution for those working in a flexible digital environment.
What changes in business should be expected?
The main expected changes in the business we can summarize below:
- The number of companies whose employees will work remotely will increase due to increased confidence in the viability of this model.
- There will be more technologies thanks to which employees will be able to work remotely.
- Globalization would be rethought, this would increase the resilience of production chains to global shocks.
- The business will become more stable overall and companies will pay more attention to long-term planning.
- Only those businesses that will adapt to the current situation and optimize costs will survive during global chaos.
The Coronavirus is seriously changing today’s economy and business. Now that the business is closing down, you need to act and adapt to new conditions. As it used to be, it won’t.
Let’s review In-House & Remote team models
In-House team model: what is it?
The in-house team model means hiring employees for own needs and projects. This is the most common model because it offers maximum confidence to the managers. It is a team that shares a company’s vision and business goals. There is no better option if your team has the right skill set.
Who is this model suitable for?
For all types of businesses. No matter how simple it sounds, whether startups or large enterprises, each type of business can use an in-house team model. Successful world leaders (PayPal, Salesforce, Google, Amazon) depend on their team for their development solutions.
Advantages of an in-house team model
- Complete immersion in the project: work on one project allows programmers (or any specialists) completely to completely understand the niche, focus on the study of a particular product and the market. It is possible to immerse specialists in the project as much as possible.
- Participation in strategic project development: employees have the opportunity to directly influence project development, track growth dynamics, and change approaches based on market/product changes.
- Established business processes: communication with other departments, process transparency, and reporting simplification. With proper communication, the specialist sees the work of the entire team and its direct result. There is no need to attend weekly customer meetings and prepare reports. The whole team and manager clearly understand the goals and can assess the result.
- The opportunity to experiment: more freedom to act and more opportunities to realize the team’s ideas. Specialists see the result of their work, almost in real-time.
- Stability: stable budgets, independent cost planning that rests only on coordination with the company’s management.
Disadvantages of an in-house team model
- Additional costs, such as training courses: specialists have no opportunity to develop themself in different niches. Especially when business processes are established, it is very difficult not to get mired in routine for them. Working in one niche, programmers lose expertise on the market as a whole. When the main business processes are already established – there is a certain routine in the work, lack of variety. Often, companies pay for special courses for employees to improve their skills or to develop expertise.
- Lower efficiency due to outside activities of programmers: as a rule, a specialist in an in-house team does not only perform his direct tasks but also has more responsibilities. Often specialists are distracted from the consistent implementation of tasks by additional tasks. Programmers are hanging tasks that aren’t specialized. This decreases the efficiency of the programmers’ work.
- There is no opportunity to share experiences: there are often not enough conditions for professional growth within the company. If there is a weak team in the house, specialists are deprived of the society of professionals at work, which negatively affects the improvement of their skills.
- High level of responsibility: it will not be possible to transfer responsibility to a manager or other specialist. All responsibility for the decisions made and for their outcome on the employee.
- There is no opportunity to work in the office during COVID-19: while the whole world fights the disease, in-house teams work like remote teams. Moreover, no one knows when in-house teams will be back in the offices. So, the only way to keep the working process is to use a remote team model.
Remote team model
The remote team model is defined as a type of IT outsourcing in which enterprises hire a dedicated team or individual developers to create a remote group of them. These are skilled specialists with a lot of experience which are available at an affordable price. They work remotely and are designed for a client or business based on long-term contracts.
Who is this model suitable for?
The model is preferred by clients who have a well-analyzed project scope and progress with a clear investment vision. In addition to cost benefits, the remote team model provides a proportional list of business benefits.
Advantages of the remote team model
- Attracting and retaining employees: one of the biggest advantages of remote work for companies is the fact that employees appreciate it. Being able to work from home can be a great argument for your company in a market where business competes for human resources.
- Increased productivity: one of the most common fears among employers is that remote workers will be “lazy” and less productive. It’s very far from the truth – remote workers simply don’t stretch their jobs to the traditional 9-15 interval, but do all the work much faster in most cases. At least, their attention is not distracted by too chatty colleagues. A remote team can increase productivity by 13% compared to an in-house team.
- Reducing costs: renting a good office in a comfortable place can be very expensive. Moreover, for each employee, you also need to equip the workplace, buy equipment, and various office supplies. Costs such as office furniture, electricity, Internet of business level, and other infrastructure can be saved by selecting a remote team. Working in remote mode reduces such costs to almost zero.
- The ability to hire the best specialists: even in large cities to find professionals of a sufficiently high level can be a big problem, especially when it comes to narrow specialization. As a result, you can not find the right person in the office or his salary expectations will not match your business level. If you are opening a job with the prospect of working from home, you can easily find the right person anywhere in the world.
- Great loyalty of outstaffing employees: allowing people to work far away from your company or office, you show them your trust. They feel responsible for the execution of your project, especially because their earnings depend on the execution of the project. In most cases you manage highly qualified specialists, they are initially motivated to do their job well.
- Time difference: the remote team can be located in another time zone. Some specialists can classify this to disadvantages of the remote team model but we have another point of view. Working with a remote team in another time zone you have an opportunity to maintain a continuous workflow on your project.
Disadvantages of the remote team model
- Communication and management: digital communications, including phone, email, messengers, or video calls, cannot replace face-to-face communication. As a manager, it is difficult for business owners to analyze the capabilities of their remote teams. They need to make more efforts to develop skills and establish proper coordination between members of the remote team.
- Cultural differences: remote specialists from different regions, different time zones, and without a direct link to the internal team demonstrate the intercultural gap. However, the culture of enterprises is more linked to shared values and goals. In any case, we are humans, history shows that the mix of cultures brings success to the common cause through the exchange of experiences.
- Risks: freelancers that work like remote specialists are self-employed experts who are not responsible for the company and work on a contractual basis with clients as full-time or part-time employees. Although these experts have considerable experience and a reliable portfolio, the risks associated with delays and project failure exist. If you want to minimize these risks, you need to look at hiring individual developers or a team of developers from an IT company that takes responsibility for controlling the employees and ensuring their performance.
Let’s compare the costs
Everybody knows that their in-house team costs more than other development teams models. In-House development team expenses:
- The cost of finding and hiring employees.
- High taxes.
- Medical and other insurances.
- Vacation expenses.
- Expenses for the office (utility services, rent, cleaning, etc.).
- Costs of machinery (technical equipment, software).
- Costs of development downtime.
- Long-term liabilities to regular employees.
The remote team is much cheaper than an in-house team, the main expenses are salaries.
Ukraine is a very attractive country for many international companies. Cooperating with the MintyMint remote team any American or European company can save up to 68% of expenses.
How much money do you need to hire senior developers in Ukraine per Month?
- You can hire Back-End developer in Ukraine for 6 500$ / 40$/hr
(in the US for $10 500$ / 65$/hr)
- You can hire Front-End developer in Ukraine for 5 900$ / 37$/hr
(in the US for $8 800$ / 55$/hr)
- You can hire Full-Stack developer in Ukraine for 6 200$ / 39$/hr
(in the US for $9 900$ / 62$/hr)
- You can hire DevOps Engineer in Ukraine for 7 200$ / 45$/hr
(in the US for $14 500$ / 90$/hr)
- You can hire a Machine Learning Engineer in Ukraine for 8 000$ / 50$/hr
(in the US for $17 600$ / 110$/hr)
*Here is only the salary of the employees. You should also take into account at least +30% of the additional costs (for example equipment, office, vacations, insurance, taxes).
Saving Intellectual Property with a remote team
Intellectual property is one of the key assets of IT product companies. Very often companies do not pay attention to registration and maintenance of intellectual property (IP) rights, which creates risks for their business.
Ensuring the company owns IP rights is crucial. It is important to be clear about who owns what. The company must take the following steps to ensure that it owns the intellectual property:
- Any intellectual property created before incorporation must be transferred to the company by written agreement. In some cases, the transfer is in exchange for company shares or directly repurchased for cash.
- All remote employees must sign confidentiality agreements and define all inventions that require the transferring of intellectual property as a condition of employment with your company.
- All remote consultants and independent contractors hired by your company must sign agreements that clearly state their obligation to transfer the intellectual property they are developing for the company.
- Any business partners or joint development efforts for the project must state ownership of the joint development, testing, production, marketing, and subsequent maintenance of your products or services.
These agreements should also include the following:
- Understand that confidential company information is only for use in the interests of the company.
- Require the disclosure of any ideas, inventions, and discoveries related to the agreement or work.
- A clear separation of ownership of ideas, inventions, and discoveries.
Is NDA effective working with a remote team model?
NDA agreement is a document concluded between the company and remote employee, which specifies the obligations of the employee not to disclose confidential information. The protection of such information is especially important for IT companies and other organizations where the leakage of confidential data leads to serious financial risks.
Commercial secrets include information hidden from the public, the use of which may benefit the company’s competitors:
- A database of customers.
- Program codes.
- Unpublished articles.
- Marketing strategies.
- Information about planned actions.
- Employees’ data, amounts of their salaries, bonuses, and fees.
- Characteristics of new products, etc.
Even an unconscious violation of the non-disclosure agreement leads to serious problems ranging from a heavy fine to dismissal and even criminal responsibility. For example, Apple fired its employee Ken Bauer after his daughter posted a video of a joint dinner with parents on YouTube in the company’s cafeteria.
So, the NDA agreement is the best way to settle a relationship with a remote team. Almost all companies choose it working with remote teams from all over the world. But an NDA agreement can provide security of IP only if it is properly drafted. Ukrainian companies have a huge amount of experience of work with foreign companies using remote team models.
Team management during coronavirus outbreak
The result of the company’s activities largely depends on how coherently and effectively the development team works.
Remote work during the COVID-19 period serves as one of the precautions that hopefully slow down the spread of coronavirus. While the ability to work remotely has been a major trend in the corporate environment in recent years, teams still need resources and tools to help solve new access, collaboration, and logistics challenges.
The in-house team used to be very important for the CTO but COVID-19 is changing everyone’s usual life. Now CTO`s are faced with a situation where they need to change their thinking and move towards new possibilities. Working in an in-house team is very risky. Until humanity wins the pandemic, CTOs will need to manage a remote team anyway, even if they are internal employees.
We have created a special article “How to make remote work effective during a coronavirus outbreak”. Read it, there you will find essential tips which will help you to increase the productivity of remote work during these tough times for the whole world.
Advantages of choosing developers from Ukraine
Many companies first think about Poland or Russia when considering remote teams. Strange as it may seem but the smartest companies turn to Ukraine. Ukraine is an ideal place for IT remote teams and outsourcing for many reasons, we will discuss the most important below.
Huge specialists’ pool
Ukraine is rapidly gaining a reputation as the technological leader of Eastern Europe. There are more than 350 universities within the country, more than 35 000 students graduate every year. Information technologies, engineering, and other disciplines related to computers have huge popularity among young students. Why? They are looking for financial stability, which these specializations offer. So, it is easy to find a professional remote team in Ukraine.
Convenient time zone and a high level of English
Most IT companies are located in Kyiv, Odesa, and Zaporizhzhya which are in the GMT+3 time zone. This is the same as Israel, and only 1-2 hours off from Western Europe. This greatly simplifies the planning of calls and meetings when working with the professional remote team from Ukraine. Language, the curse of many remote relationships, is not a problem among Ukrainian developers. Almost 50% of IT specialists have a B2 level of English, 30% – C1.
Ukraine is the main destination for global corporations looking for quality IT work. Famous examples are Intel, Microsoft, Google, and many others. Many of the veterans of these corporate R&D labs continue to create or play key roles in new, disruptive projects. Grammarly, Petcube, Plarium, TemplateMonster, and many other technology stars either located in Ukraine or actively use Ukrainian human resources.
Fair price for high-quality work
Despite the abundance of educated, skilled, experienced workers, Ukrainian remote teams usually cost much less than equivalent teams in Western Europe. For example, you can hire a senior software engineer from Ukraine for $59 000 per year. In the US, senior software engineer earns $107,580 per year.
The cost of living and expected wages in Ukraine are much lower than in Western countries. That is why companies can use this to save huge amounts of money without sacrificing quality or convenience.
How to choose and hire Remote developers?
Step by step organization of the remote teams looks different for all companies, but in general, the scheme is similar:
- Define the tasks and areas of work. Identify the specialists who can perform these tasks and decide how much of specialists you need.
- Define the requirements. There are two strategies: to define the requirements and then allocate the budget for salaries or to see how much you can afford to allocate for salaries and choose from those who are suitable for finance.
- Develop a selection of criteria to evaluate performance. For remote employees, a system where time is of the essence is rarely suitable. You will need to choose the performance criteria by which the work will be evaluated. Criteria can be both quantitative and qualitative.
- Choose the tools to work with. You will need a program or service for setting and controlling tasks, a messenger for communication, and cloud storage for documents, files, and instructions.
- Hire specialists.
Choosing the right remote development team is not an easy process. If you hire unskilled remote employees, your project will be in jeopardy. To avoid problems with the creation of projects, we have gathered the most important aspects, based on which you will find the most professional remote development team.
1. Pay attention to the team’s portfolio
When choosing your future remote development team, you need to evaluate their level of expertise. This will help you to understand if a remote team has enough experience to work on your tasks. An important aspect is to view the portfolio of your future remote team. In such a way you will be able to assess the level of functionality and usability of their previous projects (sites, applications, software). Although, cases can be problematic things. A remote team can have projects for other companies under NDA, details cannot be disclosed. Such cases can be impersonal, without specifying specific customers.
2. Check out the company reviews
The best way to find information about cooperation with the IT team is to read the feedback from previous clients. Linkedin – the best place where you can read feedback about cooperation with the IT team from previous clients. Using reviews, you will know if the team has worked on projects similar to yours and can it complete your project or not. Another great way to find out the expertise of the remote IT team is a video interview with the CEO or CTO. This is the most accurate way to find out the technical expertise of the IT team.
3. Assess the positioning of the remote team
Almost all remote development teams provide full-cycle development services. Pay attention to the types of projects the IT team has worked on. Look for an IT team that has practice similar to your product. If you are a company that develops its product as SaaS / PaaS enterprise solutions, you need to look for a remote team that has already worked on similar projects.
4. Assess how quickly does a remote team respond to your letters
Speed of response to customer inquiries – an important factor that should be considered when searching for a remote team provider. If you decide to work with a small remote team, they may not have a sales department. In this case, you can contact the head of the remote team. If a remote team is interested in new clients, you will see it.
5. Ask about the acceptance of the interview
Even if you do not plan to interview every developer, ask the company representative if they are ready for an interview. As a rule, competent companies treat interviews positively.
6. Assess the availability of impersonalized resumes + skill cards
Impersonalized resumes are ordinary resumes of employees, only without contact details. Skillcard – a description of specialist competency. It helps select a developer with the required degree of expertise. At the customer’s request, the company must provide several impersonal resumes of free employees with a description of their competences.
Many companies work too long without attracting new talents to their remote teams. Hiring is as important as creating a product. It is important never to stop searching for new specialists because remote teams are created first, followed by products and success. A lot of checks slow down the process and give competitors an advantage in finding a strong candidate.
Our company offers services to create remote teams depending on the needs of the client. MintyMint is one of the leading remote teams’ providers in Ukraine. We have a huge experience in cooperation with American and European companies.
A remote team model fits you when you need a long-term partnership with a service provider. It is also ideal if you do not have the time or resources to hire an internal team and train them, or if you understand that you may need to increase the number of participants.
The remote team helps to get specialists who will be fully immersed in the specifics of the client’s business. Also, the team shows flexibility to the customer’s requirements, it scales up on a project if needed.
Regardless of industry, your business goals, software specifics, MintyMint company helps companies from all over the world get a dedicated team of professionals that will work according to their requirements.
Recent from #Business
How to Make a Minimum Viable Product your Most Valuable Player
What are the benefits of an MVP? Tips and insights on how to make a minimum viable product the most
Contactless payments: spike during COVID-19 and future
Spike of popularity among contactless payment during Coronavirus pandemic Coronavirus – a dangerous disease that poses a huge threat to