It depends how you think of it.

They do develop the next expansion alongside patch content. The bulk of that work begins after the .3 patch, but before that they are figuring out the story, developing a story board, etc. In that sense, it would seem they probably have to split their team up. Although if you observe the mobs in each dungeon carefully, you will notice they often knock two heads with one stone - the mobs in the latest expert dungeon are often later seen in the expansion, sometimes even as important NPCs or bosses or open world mobs.

They do split their developers into teams that handle specific things as well. Obviously concept art, UI, programming, story design, level design, QA, etc.

Now if they created an entirely separate team (in the sense of, we have CBU3, so a CBU4 could work on it?), there is the potential for inefficiency with people having to be on the individual teams like concept art, level design, and so on, that would repeat jobs that could be done by CBU3 without much hassle.

They do actually outsource to a lot of companies and you can see this in the credits (part of the reason for covid delays was waiting for texture delivery and stuff like that, because the companies they paid were not working). So they could just outsource side development teams.