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Team Leasing in IT: Benefits, Challenges, Alternatives

Chief Business Development Officer
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Expert in offshore development strategies for technology companies and startups. Legal background in M&A, IP rights, and contract law.
26 March 2021
6 min

Whenever you need to find software developers for a project or task, you will probably want to choose a staffing option that is both time- and cost-efficient. In this case, pay attention to team leasing, the employee expanding practice that lets you quickly complement your staffing needs for a quite reasonable price. Read up to get a grasp of IT team leasing and find out whether this staff complementing solution is useful for your tech business.

 

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What is Team Leasing in the IT Industry?

 

Team leasing in IT means using the services of temporary employees through leasing providers. Body leasing in IT presupposes looking for a single worker. A leasing agency becomes a supplier of different talents: from QA software testers to senior developers. At the same time, it remains to be in charge of all the legal aspects of cooperation and administrative tasks such as payroll, accounting, and procurements.

 

This type of staffing partnership especially benefits small and medium-sized enterprises because it’s cheaper and faster than hiring on-premises full-time programmers. Besides, development team leasing is helpful if you need to complete a project but don’t have enough employees. For example, you may ask an IT team leasing provider to find you a fitting engineer to develop a new feature in your app.

 

But, there’s also the flip side of leasing for software development – it could cost you an arm and a leg in the long-term perspective. Aside from paying a service fee to the intermediary (your body leasing provider), you are likely to spend money on employee buy-out fees. Since your leased team are not your official workers, there also might be IP rights risks and a lack of dedication from their side.

 

 

How Does Team Leasing Work?

 

First of all, you realize that you have to hire people with suitable engineering expertise. Then, you research countries that have the biggest IT talent pool and analyze local labor markets. After that, choose a provider with developers leasing services that has the most attractive offer. Finally, you sign a contract and receive the leased staff.

 

Although it seems like a win-win scenario, odds are you will struggle to end your cooperation with the leasing vendor. Not only does this process require a lot of paperwork and negotiations to transfer ownership rights to you but also it will be more expensive because of the fees to buy out your leased developers and officially employ them.

 

Advantages and Disadvantages of Team Leasing

 

If you resort to setting up a new team utilizing software development team leasing, you have to take into account the advantages and disadvantages of this staffing solution. Let’s start with the pleasant part!

Advantages of Team Leasing

Flexibility is one of the most convenient benefits of software development leasing. You may easily adjust your outstaffed team by either expanding or reducing it. When the project is done, you can fire them or buy them out from the vendor.

 

Another pleasant perk of leasing a software development team is speed. You allocate additional skills that your leasing vendor finds you to achieve the results faster.

 

Last but not the least, you delegate responsibility for legal services and administrative operations to the vendor. You entrust your provider with everything, except for team management.

Disadvantages of Team Leasing

One of the most disappointing facts about team leasing is indifferent teams. Unfortunately, your leased employees will never develop as much loyalty as the in-house specialists. Temporary engineers know that after they develop your product or feature, their work is done. They won’t have to maintain it unless you officially employ them.

 

What is more, you may feel the need to ask for a substitution of the leased developers, if you’re not satisfied with the quality of their services. It often happens since leasing agencies tend to lack an understanding of the actual needs of their client and hire the wrong talents.

 

Don’t forget that no matter how skilled a temporary team is, you will always have to pay for the training of external staff. Even if you don’t spend much money on it, you invest your time and energy to skill up someone else’s team. Not so appealing, huh?

 

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Challenges in Using a Development Team Leasing Model

 

When you lease a team, you’re not only at risk of receiving bad service and poor development quality but may also face other troublesome consequences of this decision, such as:

Risks of ceasing your internal expertise

The longer you work with leased software engineers, the more insider knowledge about your product they will accumulate in the development process. The negative effect of it is that they will eventually become an indispensable asset in your company and make your internal expertise decrease. This situation makes your company highly dependent on the external resources which implies risks for your core business.

Buy-out fees and other additional expenses

With team leasing for software development, you pay the salary to your temporary programmers and a service fee to the leasing agency. Besides, you may also spend some funds on employee training. In case you want to permanently work with leased engineers, you will have to buy them out from your provider.

IP rights issues

As an expert in IP rights, I can say that you can’t be too careful with your intellectual property. Problems will arise if you work with a leased team since they build your product and become the owners of these rights. If you don’t specify the further transfer of intellectual property to you in the contract, you may lose it. The best way to mitigate the IP-related risks is to have full ownership of them from the beginning. That is why it’s best to consider other staffing options that let you do this.

 

Risk-Free Alternative for Software Development Team Leasing

 

If you feel that team leasing will not meet your expectations, you may either outsource or offshore your software development. While outsourcing is problematic in terms of management, privacy, communication, and many other aspects, offshoring is the best and most secure way to find IT employees.

 

This business expanding practice lets you set up an overseas R&D office – an offshore development center abroad that is also abbreviated as ODC. Unlike leased teams and outsourcing, such a center lets you enjoy a whole bunch of benefits: your branding, secured IP rights, and dedicated software developers.

 

You don’t have to establish an ODC yourself; it’s better to do it with a reliable business process outsourcing provider like Alcor. We offer BPO services such as recruitment, legal & compliance, real estate, payroll & accounting, and others to make you forget about the operational work once and for all.

 

The best thing about Alcor is that we focus on high-quality IT recruitment. Our professional IT recruiters and IT researchers can supply you with 5+ software developers in only a month; plus, in contrast to other providers of business process outsourcing services, Alcor offers a 3-month employee warranty: if our candidate does not satisfy your requirements, we will substitute this worker free of charge.

 

This is why BigCommerce, an IT product company that provides a SaaS e-commerce platform and has recently gone public, chose the Alcor model. After unfruitful cooperation with outsourcing firms, BigCommerce decided to establish its ODC office in Ukraine. Alcor helped set it up in a month and supplied the client with over 40 software developers in half a year.

 

 

Final Thoughts

 

Team leasing is pretty beneficial because of flexibility, speed, and delegated responsibility. However, this staffing solution has too many risks and challenges that far outweigh the advantages. At this point, IT executives start looking for more secure team expanding options such as an offshore R&D office establishment and end up negotiating with the top business process outsourcing providers.

 

One of them is Alcor, which is the #1 BPO provider for tech companies in Ukraine. We have already helped companies like BigCommerce, Tonic Health, SBTech, People.ai, and others to fulfill their recruitment needs in the shortest time. Our professional team not only has expert insider knowledge of the IT industry but also provides all of our clients with the seamless experience of all-in-one-place services.

Contact Us

We will provide you with statistical data regarding the number of developers in Ukraine and their average salaries. The discussion will proceed with the expected hiring deadlines and our recommendations on managing payroll, equipment procurement, and compliance matters.

We respect your privacy and will never share your data with any third party or spam you

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