If you have been outsourcing software development, you should be familiar with the Time and Material (T&M) model. This is the most common variable pricing structure in which a vendor doesn't provide a fixed estimate but instead sends you an invoice based on the actual hours developers have spent working on your project.
While software development providers can give you a rough estimate, things don't always go as planned. For example, if your project is large and your backlog keeps growing, that means more work for your team, higher costs, and longer timelines.
If you want more control over the cost, timeline, and team, a dedicated team model might be a better fit. With this setup, you handpick the specialists you need and manage their workload however you like. Unlike the Time & Materials model, a dedicated team is fully focused on your project, making it easier to predict costs and stay on track.
In this article, we’ll explore the pitfalls of the T&M model and reveal how switching to a dedicated team can solve these issues, offering a more effective and reliable path to achieving your project goals.
When to transition to a dedicated development team model
Here are the indicators showing you should consider building a dedicated team.
01 Your backlog is out of control
When your product first took off, it was exciting. Users were signing up and it felt like everything was falling into place. But soon, the requests began flooding in — new features, updates, improvements — everyone wanted everything right away. What was once thrilling, quickly became overwhelming as your team struggled to keep up with the growing user demands.
What if you could have a team focused solely on scaling your product?
With their full attention on your project, you could finally keep up with customer expectations and keep your product thriving!
02 Your product needs undivided attention
Teams working under the T&M model usually work on more than one project simultaneously, so their priorities might shift depending on the current situation. They might move your tasks from the top to the bottom of their to-do list.
Besides, T&M often involves a project manager standing between you and your team, making it harder to track the efficiency and performance of each team member. If you feel that your visibility into the project activities and progress is rather limited, it’s time to switch to the dedicated team engagement model.
With this model, you get a development team that works exactly like your in-house one, fully committed to your goals. With a dedicated team, you benefit from consistent support and the team's in-depth product knowledge that’s hard to achieve with a T&M model. This structure fosters a more collaborative and accountable working relationship.
03 Budget management is a nightmare
Initially, the T&M model seems straightforward, with hours and materials billed as they are used. But then, the project scope expands with new features and changes to the initial scope. Every adjustment translates into more time and resources, making the final bill very unpredictable.
Our dedicated team model works differently. You pay a monthly fee for each team member plus the actual salaries of your developers. This pricing is predictable. You agree on it with your software development provider before the project starts and they stick to it, with no surprises. This way, you have better control over costs and can optimize your budget effectively.
But it’s important to note that not all software development vendors offer the same level of control over dedicated teams. For instance, a vendor can provide a team fully committed to your project at a predictable price, but you don't know how much your developers get paid and may not communicate with them directly. You may not even know who is on your team. This approach isn't 100% transparent.
At Kultprosvet, however, we’re an open book. You get to personally choose each developer for your team and we’re fully transparent about their salaries, giving you complete control.
About salaries. To get a clear picture, let’s compare how much it would cost to hire a full-time development team using the T&M model versus the dedicated team.
A typical development team for a project involving both web and mobile applications usually consists of five key members: a front-end developer, a mobile app developer, a back-end developer, a UI/UX designer, and a QA engineer.
Let’s consider the costs under the T&M model with your vendor charging $45 per hour, which is the average rate for Eastern Europe. If each expert on the five-member team works 160 hours per month, the monthly cost would be calculated as follows:
So, under the T&M model, you would pay $36,000 per month.
This amount reflects the expense of paying for the actual hours worked by each team member, and it can vary if more hours are required due to changes in project scope. Also, keep in mind that some experts might have higher rates, so the final cost could be even more. For example, senior developers or highly skilled UI/UX designers might cost more than the standard rate of $45 per hour.
Now let’s calculate how much the same team would cost under the dedicated team model.
Based on the DOU report, here is a brief overview of how much developers earn in Ukraine depending on their specialization and seniority level:
To simplify the calculation of the team cost, let’s use the average monthly salaries in Ukraine: $3,500 for a developer, $2,000 for a QA engineer, and $1,600 for a UI/UX designer. This way, the total team salary will be $14,100 per month.
Let’s say you need to build a team of 3 developers, 1 QA engineer, and 1 UI/UX designer:
The cost structure when you want to hire a dedicated team often involves a fixed monthly fee for the entire team, regardless of the number of hours worked.
With Kultprosvet, you get a transparent pricing structure where the invoice covers a developer’s salary along with a service fee per team member:
This fee decreases as the number of team members increases, making it a more cost-effective solution as your team grows:
If you partner with us to build a five-member team, the final budget will cover the team’s salaries plus a $1,000 fee per team member (on average) and will be $19,100 per month.
As a result, if we compare it with a T&M model ($36,000 per month or even more), you save $16,900, which is around 47%.
04 Frequent turnover causes delivery issues
If you have projects that require continuous attention, think twice before choosing a T&M model. In this setup, developers frequently rotate in and out, each needing time to get up to speed. This constant onboarding process disrupts progress and leads to inefficiencies, as no one stays long enough to truly master the details of your project.
In contrast, a dedicated software development team model provides you with a consistent group of experts working on your product day in and day out. Over time, they develop a deep understanding of your product and its codebase, knowing its strengths and weaknesses. It allows them to make quicker, smarter decisions, implement improvements more efficiently, and get new team members up to speed faster.
If you find yourself facing any of the challenges described, consider moving to a dedicated team model. If you’re still unsure, you can reach out to us, so we can consult you on the right approach for your project. But while you’re still here, let’s briefly review what a dedicated team model is and how it operates.
Dedicated team engagement model: how it works
A dedicated team is an engagement model used by software development outsourcing companies where they provide a team to work on a project full-time and report directly to the client.
The main advantage of a dedicated team is focus — your team won’t switch to any other projects. They are fully dedicated to yours, which is why they are called a dedicated team. This leads to shorter turnaround times and higher quality of work — no distractions and overwhelming workloads.
At this point, you might wonder, “Why hire dedicated development teams when I could just get in-house experts who would be just as committed to the project?” While it seems logical, hiring in-house comes with its own set of challenges – challenges that can be avoided with a dedicated team. The software development service provider handles many of the complexities for you.
Dedicated team model vs internal team
From difficulties of finding the right talent to the high recruitment costs and expenses on equipment, building an internal team comes with a hefty price tag and significant hurdles.
Now, let’s quickly review the most common obstacles to building an effective internal team.
The average monthly salary for a mobile app developer in the USA is around $9,600. This doesn’t include various overheads, such as recruitment and onboarding, perks, office space, gear, software licenses, and continual training which can significantly increase the final cost.
As we can’t know the precise overheads, let’s calculate how much it will cost to hire an in-house developer including recruitment.
Recruitment fees in the USA typically range from 15% to 25% of the developer’s salary, while for hard-to-fill positions the fee might go up to 30%. If we take an average of 20%, that adds $1,920 to the bill.
So, with recruitment, the cost rises to $11,520. And this is just the beginning – onboarding, administrative expenses, and other associated costs can push the bill even higher.
Also, it’ll take you 1, 2, or even 3 months to hire the right talent.
If we compare it with hiring a dedicated team in Ukraine with Kultprosvet, you get one developer for $5,300, where $3,500 is an average developer’s salary in Ukraine and $1,800 is a service fee. When you hire two or more developers, the fee decreases.
By building an offshore dedicated team you can save up to $6,220, or 54%.
Time-consuming hiring process
Hiring, onboarding, and training in-house developers takes considerable time. Based on the CoderPad State of Tech Hiring 2024 Report, hiring a tech candidate takes around 5 weeks. That’s the time you could spend growing your business! What’s more, it can delay your project’s progress, as new hires need to get up to speed before they can contribute effectively.
The tech industry is highly competitive, with many companies looking for the same skilled developers. This competition makes it harder to find top talent, often leading to prolonged hiring processes and the risk of losing candidates to more lucrative offers.
With trends like ‘The Great Resignation’ and ‘Quiet Quitting’ still in the spotlight, employee turnover rates are increasing worldwide. According to Remote, employee turnover rates have increased by an average of 8.7% since 2019. In the US, turnover rates have been even higher, rising by 9.6% over the same period.
Retaining developers can be difficult, especially for young startups. High turnover rates lead to project disruptions and additional costs as you constantly have to hire and train new staff.
Taking into account the risks associated with hiring an in-house team, it becomes clear that this approach may not always be the most practical or cost-effective. Now, let’s consider the benefits you get when opting for a dedicated development team service.
Dedicated team model advantages you should take into account
For startups searching for ways to grow, the dedicated team model seems like a perfect fit. You get access to specialized tech expertise, so you can increase productivity, while also saving significant resources. To explore why businesses hire dedicated software development teams and why it might be right for you, let’s dive into some of its key advantages.
One of the top reasons to hire a dedicated team for software development is cost efficiency. This advantage works in two ways:
Global salary disparities: You can take advantage of different salary ranges around the world. With access to a wide talent pool, you can find the best balance between skill and cost.
Reduced administrative costs: A dedicated team helps you save on overhead expenses. Your outsourcing vendor handles most employment-related costs, including office space, equipment, and employee benefits.
At KPS, we simplify this even further with a transparent pricing system that covers only the developer’s salary and our fee. This approach can save you up to 60% compared to hiring in-house and 40% compared to the T&M model.
A dedicated development team for hire typically covers a broad range of services to ensure end-to-end support for your project. With KPS, you don’t have to worry about resourcing, project management, or team performance –– we handle it all. We offer full assistance with recruitment, onboarding, operational needs, team scaling, and team performance management and can add additional roles such as a PM or a CTO whenever you need it.
We also provide office space and dedicated HR support to retain talent and ensure your team stays motivated and engaged for the long term.
Your software development needs will change as your business grows or takes a new direction. A dedicated team provides you the flexibility to scale your resources accordingly. Whether you need to ramp the team up to meet demand or scale down during lean periods, you will only be paying for what you actually need at any given time.
When you hire software development teams with KPS, you are not limited to our in-house specialists only. You can request to recruit new specialists in a way that meets your project requirements and budget limitations. Plus, we add new developers during the project at no extra cost, and offer free replacements if needed.
Seamless communication and collaboration
Successful project execution relies on team members being on the same page and having aligned expectations. Establishing direct communication channels helps foster a collaborative environment where ideas and feedback are exchanged freely in real time.
At KPS, we’re not just a vendor providing a dedicated team of developers for hire. Our partnership goes beyond delivering teams, as we’re committed to your long-term success. We help you navigate challenges, optimize performance, and drive innovation. With KPS, you gain a dedicated ally, focused on achieving your objectives.
“Kultprosvet’s responsibility, communication, and accountability were outstanding. The team really cared about us and put extra effort into our product by helping us understand what we needed and how to prioritize the tasks throughout the process”
Gleb Udovychenko,
CEO, WhitePay
Fast and straightforward process
At KPS, your journey begins with sharing your team structure requirements.
Next, we kick off with a strategy session to align your hiring goals and determine how involved you’d like to be in the interview process.
Within 1-3 days, our team conducts candidate shortlisting.
You interview our best-fit developers and can start making progress on your project within days.
We scale your team with new experts hired from our diverse talent pool of 16,000 candidates. Each new expert goes through our screening process, where we assess their soft skills, perform background checks, and conduct technical interviews with our CTO.
As a result, you avoid hiring fatigue, lengthy negotiations, and endless back and forth with your provider. We make the process seamless for you.
Build a dedicated remote development team with KPS
If you are seeking a dedicated, high-performing team to accelerate your product development, Kultprosvet will be glad to help. Explore our dedicated development team services and fill in the brief form at the end, describing which tech roles you’re looking to fill. We will get back to you within 1 business day to discuss the details.
