Cost Calculation Of Remote Resources Vs In-house Team
The offices in large metropolitan areas now look like the abandoned film sets from old Westerns. Most businesses closed their doors in 2020’s March to ensure employee safety and public health, and plenty has yet to reopen.
In the past, organizations were strongly against employees working remotely because of worries about work quality and productivity. However, Covid-19 has forced businesses to allow at least some remote work to stay afloat. Even businesses that have always been run from an office (financial services, healthcare, and software development) are now considering the benefits and drawbacks of permitting remote work. According to Global Workplace Analytics, approximately a fourth to a third of the workforce will work from home after the Covid-19 pandemic.
Even without the pandemic, companies have been considering switching to remote working. It is estimated that the global market for IT outsourcing was worth $92.5 billion in 2019, a rate of growth that continued throughout the year. Further, 78% of outsourced businesses have reported that they are satisfied with the outsourcing experience, and 65% plan to increase their outsourcing activities in the future.
Here are some tips for preparing for this “new normal” and taking advantage of it. We’ll explore the cost evaluation of remote resources vs. in-house teams and help you make an informed decision for your business. Let’s first understand the two models:
Typically, an in-house team is a group of employees working on the same projects in the same company, usually within the same building or office. It is important to note that having a team of employees in-house can control the environment and processes of the workplace more quickly.
Managers can monitor employee performance more efficiently and resolve issues quickly. In addition, there are usually fewer communication problems because employees can talk to each other in person.
The most common model for conducting business is using an in-house team. This strategy maximizes trust, offers a cohesive team structure, and improves communication. Corporations like Amazon, Apple, and PayPal succeed with this model.
A remote resource is an individual or team working outside the company, usually in a different location. The main advantage of using remote resources is that it saves on overhead costs such as rent, utilities, and office furniture. In addition, businesses can hire hire the best remote resources from LevelUP without worrying about the timezone difference and quality.
Google, Slack, Alibaba, and other companies employ remote workers. They hire dedicated software developers at low prices to create bespoke programs. It’s more difficult to manage remote teams than in-house ones (finding a provider and writing the criteria), but it gets simpler.
Now that we understand the two models, let’s dive in and explore the cost evaluation of remote resources vs in-house teams.
Key cost metrics to evaluate in-house team:
Then let’s find out how much it would cost to create and market a product in-house.
The initial step for constructing an in-house development team would entail multiple processes and having a human resources group assess the candidates. The type of members you will need for the development cycle include, but are not limited to: developers, UX/UI designers, product architects, quality analysts, and testers.
Infrastructure and office space: To have an in-house team, you need a physical space for them to work. This means you will need to rent or buy office space, which can be costly depending on the location. In addition, you will need to set up the office with furniture, computers, and other necessary equipment, which can also be expensive.
Employee salaries: One of the biggest costs associated with an in-house team is employee salaries. You will need to pay your employees for their time, and you may also need to provide benefits such as health insurance.
Training and development: Another cost to consider is training and development. You will need to provide training for new employees, and you may also need to pay for ongoing education and professional development for your team.
Software licenses: If you want your team to be able to use specific software programs, each employee must have a license. This can be a high cost, especially if you purchase multiple licenses for different programs.
Paid benefits: In addition to salaries, you will also need to pay for employee benefits, such as health insurance and retirement plans. When you have a large team, these costs can add up quickly.
Now that we’ve looked at the key cost metrics for an in-house team let’s look at the cost of remote resources.
The cost of a remote resource is often more flexible than an in-house team because the provider bears more of the risk. This model benefits companies who want to save on costs but still maintain a high level of quality.
Key cost metrics to evaluate remote work team:
The cost of the resource: The first cost is the price you pay for the actual resource. This can be a monthly fee, an hourly rate, or a project-based rate.
The cost of tools and infrastructure: The second cost is the price you pay for the tools and infrastructure needed to support the remote resource. This can include the cost of a VPN, video conferencing software, and other tools needed to communicate with the remote resource.
The cost of training and development: The third cost is the price you pay for training and development for the remote resource. This can include the cost of onboarding, ongoing education, and professional development.
In-House Vs. Remote Resource Costs:
It is important to clearly understand the costs associated with each type of team to decide which option is most appropriate. Here is a detailed cost analysis of in-house teams vs. remote resources.
In-house teams come with some fixed costs, such as salaries, benefits, office space, and equipment. These costs are relatively easy to calculate and predict. In addition, there are also several variable costs associated with in-house teams, such as training and development expenses, recruiting fees, and turnover costs.
On the other hand, when you hire remote resources from LevelUP, they typically have only two types of costs: hourly rates and project-based fees. There are no fixed costs associated with remote resources, which makes them a more flexible and cost-effective option for businesses.
Businesses can benefit more from using remote resources when comparing them side-by-side. With no fixed costs and discounts available for bulk hours, you can save significant money by working with remote resources.
There are also a variety of other costs associated with an in-house team, such as overhead costs, increased salaries, benefits, and even the expense of hardware and software that needs to be purchased. Outsourcing your work to a remote developer means that you do not have to pay anything more than the remote developer’s salary or offer when you outsource your work.
When you outsource your work to a LevelUP, you are only required to pay the remote developer’s salary or offer. If they use specific software, there might be some additional fees; however, these are usually optional.
Clearly, outsourcing outsourcing to LevelUP can certainly help you reduce the costs of your software development in a number of ways. Usually, entrepreneurs and startups choose LevelUP to outsource not just because of the costs involved, but because of the benefits it comes with:
Availability of a large talent pool: When looking for the right person for your team, it can be difficult to find them if you only consider local candidates. By reaching out to LevelUP, you will have access to a much larger talent pool of top developers, designers, and more.
Flexibility: When you outsource, you are able to scale your team up or down based on your needs. If you have a project requiring a lot of person-hours, you can hire more developers to work on it for a short time. Once the project is completed, you can release them from your team. This flexibility can be very helpful when trying to manage your budget.
Focus on your core business: Outsourcing your development work to LevelUP will allow you to focus more on your core business when you are able to outsource your development work. This is because you won’t need to spend time managing a team of developers or worrying about the technical aspects of the project. You can hand off the project to the outsourcing company and let them handle everything.
There is no doubt that outsourcing your software development work to a company like LevelUP has several advantages that are associated with it. Aside from the fact that it can save you money, it can also provide you with access to a larger talent pool, which in turn allows you to focus on your core businesses and save you time.
The cost analysis shows that hiring remote resources is less expensive than keeping an in-house team. Salary, benefits, office space, and equipment are fixed costs of in-house teams. In addition, there are also several variable costs associated with in-house teams, such as training and development expenses, recruiting fees, and turnover costs.
When you compare the two options side-by-side, it is clear that remote resources are the more cost-effective option for businesses. With no fixed costs and discounts available for bulk hours, you can save significant money by working with remote resources.
When you need a more cost-effective way to complete your project, outsourcing might be the answer. By hiring remote resources from LevelUP, you can save money on many different costs, including hourly rates, project-based fees, and even software licensing fees.
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