Team Extension vs Outsourcing vs Subsidiary
Team extension gives you developers employed by a local partner but managed entirely by you, day to day. Staff augmentation and classic outsourcing hand both employment and management to the vendor — outsourcing goes furthest, taking the whole deliverable. A subsidiary means you own the local entity and employ the team directly. The right model depends on how much control and long-term commitment you want, not on price alone.
Four ways to build a nearshore team, and how to tell which one your situation actually calls for.
The four models, defined
"Nearshoring" covers several very different arrangements. They vary on two axes: who legally employs the people, and who manages their day-to-day work.
| Model | Who employs | Who manages | Best when |
|---|---|---|---|
| Team Extension | Local partner (e.g. Jezda) | You, day to day | You want control without setting up your own entity |
| Staff Augmentation | Staffing vendor | Mostly you, vendor-mediated | You need to fill seats fast, short term |
| Outsourcing (project) | Vendor | Vendor owns the deliverable | You want an outcome, not a team to run |
| Subsidiary | You (your own entity) | You | Long-term, larger team, full ownership |
A short decision framework
Four questions settle most cases. Answer them in order.
- 1
Do you want to manage the developers' day-to-day work yourself?
Yes → team extension, staff augmentation, or subsidiary. No → project outsourcing.
- 2
Is this a long-term team (12+ months) or a short-term gap?
Long-term → team extension or subsidiary. Short-term → staff augmentation.
- 3
Do you want to own the legal entity and employ people directly?
Yes, and at scale → subsidiary. Not yet → team extension, with a path to convert later.
- 4
Is keeping the same people over time important to you?
Yes → team extension or subsidiary (dedicated, low churn). Less so → staff augmentation or outsourcing.
Control, cost, and commitment compared
The same models across the dimensions buyers actually weigh. Cost here is directional — see our pricing page for real figures.
| Dimension | Team Extension | Outsourcing | Subsidiary |
|---|---|---|---|
| Day-to-day control | High — you manage | Low — vendor manages | High — you manage |
| Setup effort | Low | Low | High (entity, legal, HR) |
| Cost structure | Predictable monthly, per developer | Per project or per deliverable | High upfront, lowest long-run per head |
| Team continuity | High — dedicated people | Low — team may rotate | Highest — your own employees |
| Knowledge & IP retention | Stays with your team | Risk of leaving with the vendor | Fully yours |
| Speed to start | 2–4 weeks | Fast for a defined scope | Months |
A general comparison of the models, not vendor-specific terms.
When each model breaks down
Every model has a failure mode. Knowing them prevents an expensive mismatch.
- •Team Extension — Breaks down if you have no capacity to manage the team — it is dedicated, not hands-off.
- •Staff Augmentation — Breaks down on long-term work — churn and thin ownership erode continuity and context.
- •Outsourcing — Breaks down when scope is fluid — fixed-deliverable contracts fight against changing requirements.
- •Subsidiary — Breaks down below a certain scale — an entity's fixed cost only pays off with a sizable, lasting team.
How Jezda maps to these models
We run three of the four as managed offerings — and the fourth is where the subsidiary path leads.
- •Team Extension — dedicated developers, employed by us, managed by you.
- •Subsidiary Setup — we help you stand up and run your own Serbian entity.
- •Hybrid — start with team extension, convert to your own entity over time.
- •Custom Development — when you want an outcome, not a team to manage.
Frequently asked questions
Team extension, staff augmentation, outsourcing, and subsidiary — the common questions.
Not sure which model fits?
Tell us your timeline, team size, and how hands-on you want to be — we will recommend the model that fits, even if it is not the biggest one.
Talk to us