Project-based vs. Team-based | Organizational Models in Outsourcing Software Development Services

Project-based Structure vs. Team-based Structure

Software development projects available for outsourcing are often tackled by members of dispersed teams — some local, some around the globe, some working for the organization developing the software in different rooms, others working for distributed firms, or even working on their own. When it comes to successfully managing distributed teams for these types of jobs, the success of the project often rests on the way a company organizes their teams.

Project-based Structure vs. Team-based Structure

If you are figuring out how to outsource software projects for your business, look first at this essential guide to common organizational models. We are breaking down the pros and cons of each model and doling out expert tips and best practices based on what we have learned as a software development company over the last ten years.

What is a Project-Based Organizational Structure?

In a project based organizational structure, a dedicated team is assigned to tackle a single project from beginning to end. The team may consist of software developers, designers, business analysts, project managers, and software testers — in essence, people with all of the skills required to bring the project to fruition.

A project-based organizational structure is best for companies in flux, as it allows managers to use an outsourced development team and distribute employees on teams as needed to meet specific areas of expertise. However, effective outsourcing with project-based models requires clear communication and coordination to avoid duplication of tasks. Additionally, sharing knowledge and resources is crucial for delivering projects on time and within budget.

There are some advantages to this model:

  • Clear communication. One project manager is assigned to the team and bears responsibility for communicating with the team and the client. Clear and cohesive communication can help to improve productivity and efficiency and remove roadblocks faster.
  • Varied skill sets. These teams are cross-functional, bringing together people with different skills that can be brought to bear for successful project completion.
  • Diversity of thought. Conversations between these team members can help identify new opportunities, innovations, and best practices.
  • Single focus. When team members can all focus on one deliverable, they can be more productive and less distracted. Not being pulled in several different directions at once can help to expedite the completion of their assigned duties — and the project overall.

But, there are some drawbacks as well:

  • Tunnel vision. Concentrating on a single, narrow project may lead to tunnel vision with those involved in the project failing to see, or understand, the bigger picture.
  • Management responsibility. The project manager’s skills and ability to successfully lead the team are crucial to success. Poor management can create the risk of team members diverting their attention to less important side projects.
  • Replacing team members. The need to replace team members may be more challenging; it’s easier to replace team members based purely on skill sets than their participation in and knowledge of a single project.

This team dynamic may not be the best choice in all situations related to software projects outsourcing. Fortunately, there is another option — the team-based organizational model.

When Is a Project-Based Organizational Structure Best For Your Project?

A project-based organizational structure is the best option for your software development team if your company is undergoing changes or needs to adapt to varying expertise across projects. This type of structure allows for flexibility and the ability to assemble teams with the necessary skills and expertise for each project.

What is a Team-Based Organizational Structure?

In contrast, a team-based organizational structure is best for companies that already have teams working on projects. This structure focuses on encouraging teamwork, problem-solving, and employee empowerment. It is also highly adaptable to changing company dynamics and allows for better and faster communication between departments to avoid redundancy.

With a team-based organizational model, a distributed or remote team is asked to contribute to two or more projects at a time. For example, you might hire a distributed team that delivers both web application and mobile app development for your company.

The benefits of a team-based model include:

  • Flexibility. The ability to be agile and flexible allows a team to switch from one task to another across multiple projects. In this scenario, there is rarely downtime; for instance, if one project is on hold while waiting for client feedback or input, the team can pivot to work on another.
  • Skills applied more broadly. Team members aren’t limited to a single project that may not utilize all of their talents. In a team-based model, team members have the opportunity to leverage their skillsets across multiple projects and share those skills and knowledge easily with other members.
  • Deeper understanding of business. The more experience team members have in working with a specific company or client, the more deeply they’ll come to understand the company’s overall business objectives and company products.

But, of course, there are some potential downfalls here as well. These include:

  • Communication hurdles. Communication can pose a challenge when various teams and departments are working on the same project from different locations and time zones. Communication in the team-based model looks more like a multi-directional web than a singular two-way channel.
  • Impacted output. Lack of team cohesiveness surrounding a project may also lead to reduced productivity and efficiency. For instance, if communication breaks down between team members working together on multiple projects, all projects are likely to suffer.
  • Conflicts for time and attention. When working on more than one project at a time, team members must make choices between projects, allocating their time as best they can. This may prove challenging at times, though, and output can be impacted.

Despite the pros and cons of both the project- and team-based organizational models, each might be the best option in certain situations.

When Is a Team-Based Organizational Structure Best For Your Project?

A team-based organizational structure is an ideal choice for your organization if your teams are already working on projects and you want to support a custom approach for your manager. This structure allows for greater adaptability and integration of an outsourced development team into the company’s hierarchical structure, resulting in improved quality and productivity without sacrificing flexibility and accountability. When determining when to outsource software development, a team-based approach can help build software development teams that positively impact company culture.

Which Organizational Model is Right for Your Project?

Depending on the needs of your project(s), the software development organizational structure you implement with an outsourced software development team may vary.

Project-based models are excellent choices for:

  • One-off tasks with flexible deadlines that aren’t closely linked with another project
  • Projects that require multiple roles (i.e., project manager, designer, tester, etc.)
  • Early-stage projects that require end-to-end engagement (from product discovery and requirements gathering to designing, coding, testing, deploying, and maintaining).

Team-based models are smart choices for:

  • IT staff augmentation — for instance, bulking up your development resources to pitch in with multiple projects. Software development staff augmentation can be a perfect solution when your project requires more specialized knowledge, experienced resources, or even rare technology your current team does not possess. 
  • Ongoing and related projects where you have other resources inhouse
  • Projects that already have requirements and discovery completed

Project- and team-based organizational models offer businesses two different approaches for tackling software projects. Each model has its own unique advantages and potential disadvantages, and each has specific benefits for certain types of projects.

Which software development organizational structure will work best in your situation will depend on the project itself as well as existing dynamics and relationships in your organization. One thing is certain though: outsourced development team is growing and offering great opportunities for businesses around the globe to gain access to the specialized aptitudes and expertise they need to gain a competitive advantage.

Also see:

Benefits of Outsourcing Software Development
Dedicated Team vs. Extended Team Models in Software Development

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