A Full Guide to Building a Software Engineering Team Remotely For Businesses That Have Never Outsourced

Software development outsourcing is an emerging trend that makes both small businesses and large enterprises rethink remote collaboration. Around 66% of companies with 50+ employees are working with remote specialists. Even though the number for small businesses is lower – 29%, more than half of SMEs consider outsourcing teams.

If you have never outsourced, getting the ball rolling may seem tough at first. There are so many things to consider. What is better, dedicated engineers or team extension? Where to look for developers? How to organize the process and where to start?

Binariks has prepared the answers to all possible questions about remote collaboration with a dedicated outsourced team. We will explain why the dedicated remote team model is preferable in most cases and how to manage it.


Read on to find out about:

  • Key differences between the leading remote team models: dedicated, managed and extended
  • When a dedicated model team is an optimum choice for your company?
  • Where to find a distributed team?
  • 5-step manual on how to set up a remote distributed team
  • Legal compliance in hiring a dedicated team: NDA, SOW, and MSA
  • Most popular management and team communication tools used for working with remote teams
  • Dedicated team challenges and managing remote teams best practices to solve them


Key Differences Between the Leading Remote Team Models: Dedicated, Managed, and Extended


Most IT outsourcing providers offer a flexible software development team structure. This enables them to satisfy the needs of any customer, be it a budding startup or a market giant. Whereas many small businesses opt for the time and materials model, top-performers prefer dedicated teams that fully cover the software development cycle. Microsoft, Hilton, CNN, HP, Coca-Cola, Samsung, Bank of America are just a few of the reputed companies that have switched to leading a globally-distributed team.

Let’s briefly go over the main types of distributed teams to know which one you need.


Dedicated team model

In this case, outsourcing companies build a software development team that is fully tailored to your budget and needs. You come to an IT outsourcing provider with an idea and requirements. From this point forward, they take care of the rest. Depending on the complexity and scope of the project, a dedicated team may include front-end and back-end developers, QA engineers, DevOps, UI/UX designers, business analyst, and project manager. The communication usually happens between the whole team, including a remote work project manager and a representative on your side. The hassle of managing a dedicated team is minimized since the software development vendor fully solves legal, recruitment, onboarding, and other administrative issues.

Recommended for: Projects and the companies that want to outsource the whole software development cycle or have an unfinished project to complete

Managed team model

This type of distributed team model is an intermediate option between dedicated and extended approaches. With the managed team model, an outsourcer sends a project manager to organize the work of the remote specialists. The manager regularly reports to the product owner and formulates the requirements for the remote team. This method of remote collaboration is less commonly used than the dedicated one since it requires staff relocation which rarely pays off. Besides, under the current quarantine conditions, the managed team model is quite hard to deploy effectively.

Recommended for: Companies that prefer to monitor the software development process personally.

Extended team model

The extended team model is suitable for companies that already have an IT department but need to expand it. This usually happens when the local market cannot supply the necessary specialists or a subject matter expert is needed asap. A third-party vendor offers you the specialists to integrate with your staff remotely. For team extension, the time and materials model is used more often than the fixed price model.

Recommended for: Companies that need to power their in-house staff with specific specialists


Usually, companies are charged monthly for the mentioned models. The monthly total is based on the composition and size of the team and a fixed service charge per role and level. If a project is small or unlikely to scale, you may consider the time and materials mode where you pay for the actual time spent on development. The most preferable option depends on the duration and scope of your project and is usually discussed with an outsourcing partner before the start of the cooperation.


When a Dedicated Model Team is an Optimum Choice for Your Company?


In this guide, we focus on the most widespread and traditional approach – a dedicated team. It’s a universal distributed team model for companies of any size and industry. To understand if the dedicated software development team is right for you, check yourself with this list. 


CHOOSE the dedicated model if you:

Expect long-term cooperation

✅ Start a complex project that requires specialists with a different set of skills and qualifications

✅ Have an ongoing project with the continuous need for developers

✅ Want to engage in distributed team management

✅ Lack of professional workforce on your local market

✅ Have no in-house IT department or want to fully outsource software development

✅ Need more cost-effective software development

✅ Want to start working on the project asap and reduce time-to-market

✅ Have business expansion plans and are likely to grow in the future

✅ Need to quickly scale the project

✅ Want to speed up the development process to create an MVP or demo asap


DON’T CHOOSE the dedicated model if you:

❌ Start a short-term project

❌ Hire an in-house software engineering team and plan to keep it

❌ Cannot ensure continuous workload for developers

❌ Have a very limited budget


To find more about the dedicated team concept, read our article on the benefits of the dedicated model.


Where to Find a Distributed Team?


Now when you’ve made your mind about leading a globally distributed team, here comes a logical question: How to find it?

First of all, you need to choose the location of remote engineers. The region usually impacts salary expectations, soft and hard skills of potential employees, and time zone difference, of course. Generally, there are three main options to choose from: onshore, nearshore, or offshore development team.

difference between nearshoring and onshoring

(Source: Clutch.co)


In recent years, Eastern Europe has gained particular popularity as an offshore outsourcing destination. The local specialists have a similar mentality to the Westen world, boast a decent level of English and technical expertise. Their services are more affordable with the average developer salary several times lower than in the US. The industry market shows that US and European clients save 60% of their cost with Ukrainian companies. Asia and Latin America are other renowned offshore destinations with favorable outsourcing conditions.

Here is another thing to keep in mind. Although you can hire software engineers through freelance marketplaces such as Upwork, in this case, the administration will fall on your shoulders. To cooperate with a well-coordinated team, it’s better to opt for a third-party outsourcing company. It will organize offshore team management for you and has the necessary expertise for effective offshore development.

Let’s sum up. To start the search of a perfect distributed team you need: 1.) Choose the outsourcing destination. 2.) Find a local company with relevant experience and skills.


5-Step Manual on How to Set Up a Remote Distributed Team


At Binariks, we know how to build a software development team and organize offshore team management. It takes roughly 5 steps from voicing the requirements to the start of work.


Step #1. Requirements gathering

Binariks team will communicate with a customer to clarify the requirements for the final product. At this stage, the customer also needs to specify the team size, mandatory technical&soft skills, and expected workflow. This information helps to plan the composition of the dedicated model team, estimate the hiring deadlines and budget.

Step #2. Talent search

If an outsourcing vendor has unoccupied tech specialists, they can be immediately engaged. If not, it initiates the recruiting and onboarding process that may take up to a month. Most software development outsourcing companies have recruiters and access to the local pool of developers, which allows them to build an outsourced team within the shortest time.

Step #3. Recruitment and selection

HRs, recruiters, and TechLeads organize a series of interviews to assess the candidates. They learn the background of the developers, evaluate their technical skills and English level. HRs also check the soft skills of potential employees to make sure the “forming, storming, norming, and performing” cycle will be as smooth as possible. Once the initial screening is over, the customer will only interview the shortlisted candidates to choose the best fits for the project. This saves time while allowing customers to participate in team formation.

Step #4. Team integration

Hired engineers either join an ongoing project or start a new one from scratch. You can choose the preferred management approach and team software. We usually recommend making a personal visit as one of the best practices for managing offshore resources. This boosts team spirit and helps to make sure you and the remote developers are on the same page.

Step #5. Successful start of the project

You get the requested specialists that constantly stay in touch with your company and adhere to the approved schedule. The communication is so smooth, there is basically no difference between remote developers and in-house staff. The only one is that they work remotely and you don’t have to worry about the administrative tasks. Once you sign several documents, you can get down to the project.


Legal Compliance in Hiring a Dedicated Team: NDA, MSA, and SOW


When you start managing remote employees, make sure to consider the legal aspects of working with an offshore team. Even though you may be interested solely in building a software solution, it’s necessary to secure yourself from data leakage and ensure regulatory compliance.


Generally, there are three simple documents used for managing offshore teams right:

  • NDA (Non-Disclosure Agreement). If you provide a remote software engineering team with confidential information (and be sure you will), sign an NDA first. This document stipulates that anyone who gains access to your sensitive information mustn’t disclose it. The non-disclosure agreement also determines the allowed uses of the provided data.
  • MSA (Master Service Agreement). An MSA is one of the main documents signed between two parties on the verge of new cooperation. It spells out the terms of payment, copyright, dispute resolution, and many other nuances. Make sure to specify that you own the intellectual property right for everything developed by the software engineering team.
  • SOW (Statement of Work). Request this document from the remote software engineering team to have details specific to the project. Make sure to sign the document before the start of the cooperation and discuss the mechanism of reviewing or changing it with the outsourcing company.


And finally, remember that any cooperation is easier both for a customer and an outsourcing team when it’s transparent. The signed agreements will help you better manage the engineering process and protect your rights.


Most Popular Management and Team Communication Tools Used for Working With Remote Teams


If you wonder how to improve communication with a remote team, this section is for you. Thanks to modern software solutions, connecting and managing people located in different parts of the world is simple.

Most probably, you will have to combine several types of tools to satisfy all your needs. The main categories include:

remote team

(Source:  Atlassian Jira)


These collaboration tools for remote teams are commonly used by outsourcers. They help to ensure seamless communication between two parties and create a shared space to track and discuss the progress. If you’re currently using any specific tool, don’t hesitate to offer it to your remote colleagues. There is usually no problem with switching to new project management or communication software.

Some customers also insist on using time trackers for the time and materials model. Although there are numerous tracking tools, including Toggl, Hours, or Jira, their effectiveness is questionable. Many developers complain about feeling watched and policed, which may be counterproductive for the final result.


Dedicated Team Challenges and Managing Remote Teams Best Practices to Solve Them


Everything has its pros and cons. The same relates to outsourcing and remote cooperation. Although some challenges to managing a geographically distributed team are undeniable, they are possible to overcome. If thousands of companies all over the world have managed to organize outsourcing effectively, you also will.

Here are the most common dedicated team concerns with possible solutions. Use them to make outsourcing easy.


Concern: Varying scope of work

The more complex is the project, the more difficult it may be to estimate its scope. As a result, many customers aren’t sure whether they need dedicated developers for long-term cooperation. They are afraid that the workload may not be enough to provide the hired engineers with regular tasks.


If you cannot tell the scope of work in advance, you should, first of all, reconsider the selected team model. It well may be that the T&M approach meets your business needs best. In case the project is complex and the dedicated team is the only right solution, make sure to plan the workload beforehand. Estimate the necessary resources before starting the project and openly communicate with the outsourcing vendor to avoid any bottlenecks and disruptions.


Concern: Cultural diversity

When you hire a team from another part of the world, the cultural differences are inevitable. They comprise anything from the personal distance to mindset. Therefore, many employers fear that their remote colleagues won’t follow the existing business processes successfully.


You should know that high-diversity companies are 35% more likely to improve their financial results compared to the industry average. Perceive people from another culture as a great asset to your company and encourage communication between the in-house and outsourced teams. To find common ground faster, try to communicate through visuals and use simple words instead of complex metaphors or slang.

Best Employers For Diversity

(Source: Statista&Forbes)

Concern: Remote management

Management is never easy. When you cannot meet your staff in person, building trust-based relations is even harder. Many managers are also concerned about tracking work and performance.


For improved performance tracking, focus on global tasks, and deliverables. The actual results will allow you to make sure that everything goes as planned without micromanaging. Always keep in touch with your team and be transparent about working hours, pay rate, project expectations, payment timelines. It’s also highly recommended to arrange one-to-one meetings with every remote employee. This makes them feel valued, boosts morale, and helps both parties exchange expectations and ideas.


Concern: Time difference

This issue is common among companies working with offshore teams. To be more specific, Asia is around 12 hours ahead of the US, whereas the time difference with Eastern Europe is 7 hours. Thus, those who have decided to outsource often bother with synchronizing work in two (or more) time zones.


Agile with different flavors of the scrum will be an asset here. Clear requirements, advance planning, and one daily meeting are enough to smoothly cooperate on current tasks and share information.  With team communication tools and video conferencing, you can assign tasks in advance. Also, make sure to find the time when your schedules overlap and use it for joint meetings. Some companies even treat the time gap as an advantage since it enables them to achieve around-the-clock continuity of processes and speed up product delivery.



No physical obstacles should stop you from leading a software development team remotely if you need quality engineering services. Our guide covers the main aspects of remote cooperation and outsourcing. Want to know more about the possibilities of hiring outsourced software engineers? Contact Binariks for assistance.