Although there is no right or wrong per se in opting for any of the two models, it can be handy to take into consideration some advantages of each of them.
In the team extension model, you and/or your existing software engineers keep control over the newly added developers. That is to say, they complement the structure of your in-house team and become an integral part of the established methodologies and ways of communication. Next, there is direct communication between you, your software developers, and the extended team. This means they are all equally involved in and responsible for the project.
Not to mention that in this case, you have a great impact when it comes to selecting the members who will augment your team. You have the opportunity to choose the perfect candidate who will better understand your working style, vision, and company culture
Dedicated Development Team may appeal to you because it is in many cases a quicker solution. Instead of looking for particular developers, you choose a development team that is up to your requirements and expectations. That way, you save more time for focusing on other aspects of your business. With this model, the members of the team do not interfere in your daily activities. They take the whole responsibility and guarantee with their skill set, seniority, and knowledge (as well as contracts) that your project is in the right hands.
Giving away important deadlines and relying on the quality standards with the team you have never worked for may sound intimidating. Therefore, it is of crucial importance that trust and confidence are also some of the points that should be at the top of your list to check before you seal the deal.