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Outsourcing vs Outstaffing

01.07.2022
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Outsourcing vs Outstaffing
In today's world, time is of the utmost importance. What was relevant yesterday is no longer relevant today. Therefore, companies are constantly looking for ways to accelerate product development and bring them to market.

To close this need, competent IT specialists are needed, the search for which is very laborious. After all, the market is experiencing a constant shortage of professional developers.

It is for this reason that models such as outsourcing and outstaffing have gained popularity. They help to solve the issue of finding and hiring employees, as well as to reduce the time of project implementation.

However, there are many myths about these models. Most do not fully understand their differences. As a result, business owners turn to contractors who do not solve their tasks, wasting money and time.

Today we will try to put everything on the shelves. We will help you find answers to such common questions as “When is outsourcing not beneficial”, “When considering outsourcing what should firms be sure to avoid”, “What is outstaffing” and much more. You are ready?
Then we will begin.

What is an IT outsourcing model?

The IT Outsourcing Model assumes that one company hires another for complex software development, from start to finish. In this case, the client is not involved in team management and control. He is not involved in hiring employees, and the supplier is responsible for the final result. Thus, outsourcing is when a company does what is not in its competence on a remote basis, taking on the full range of work and responsibility.

What is an IT outstaffing model?

Now, for greater clarity, consider the outstaffing definition. This is a type of remote employment in which the outstaffing company provides dedicated employees. They become part of the client's team. The customer takes full responsibility for the personnel management process. However, he is not a direct employer. The IT outstaffer is responsible for remuneration, bonuses, and the search for performers. In this case, the customer is responsible for the final result.

Why businesses prefer software outsourcing and outstaffing?

Every year the popularity of outsourcing and outstaffing is only growing. This is due to a number of undeniable advantages that these models offer. For example, you don't have to do a talent search. You get significant cost and time savings and much more.

In addition, access to markets is opening up, where qualified personnel is much cheaper. For example, if you compare the hourly pay of specialists from Ukraine and the United States, you will be very surprised to see this difference.

Outsourcing vs Outstaffing — Key Differences

Despite the fact that many people confuse these concepts, there is a big difference between outsourcing and outstaffing. The key thing you should remember is that outstaffing assumes that you have dedicated employees at your disposal.

Project management and quality control of the final product are carried out on your side. Developers become part of the team, along with the regular staff.

During that time with outsourcing, when the customer does not interact directly with the developers.
Outsourcing

AIM
Complex implementation of the project by an external organization

PLACE OF EMPLOYMENT
Remote employment, within which the client receives the agreed results. The work schedule is set by the service provider

PAYMENT
Payment is made to the outsourcer for the result achieved

FEATURES OF COOPERATION
In this case, the client orders services. It does not monitor the methods and methods of implementation, and also does not control the staff

Outstaffing

AIM
Complex implementation of the project by an external organization

PLACE OF EMPLOYMENT
The employee becomes part of the state. Coordination of the work schedule and conditions is carried out on the client-side

PAYMENT
Transfer of funds for the volume and time of work under the contract to an IT outstaffer. He calculates salaries, and benefits and pays taxes

FEATURES OF COOPERATION
Employees are transferred under the control of the customer company. Therefore, she takes responsibility for the result

To summarize, outstaffing means hiring freelancers, and outsourcing can be recommended when turnkey services are needed.

Pros and Cons of Outsourcing

Outsourcing Pros:

The responsibility for the final product lies with the outsourcing company. The service provider takes full control of the quality of the code and the project as a whole. For this, an established project management functions in his staff.

You don't have to go into the process. You get a turnkey solution, where all management lies with the company providing the service. From communication to performance.

The issue of hiring staff is completely removed. When a company uses outsourcing, the problems associated with human resources are handled by the supplier. You do not hire employees, do not pay taxes for them, and do not charge wages. You voice the needs, and the outsourcing company gathers the necessary number of professionals with the appropriate qualifications for implementation.

Savings on office equipment. No need to buy additional equipment, rent a room, or purchase the software. As a rule, all this is already included in the cost of services and is much cheaper.

Adaptation to needs. The outsourcing company quickly responds to emerging requests. For example, your business needs to complete a small task that only takes a few hours. The supplier can provide a specialist without his subsequent involvement in the project.

Outsourcing Cons:

There is no way to control the process. This is both a plus and a minus. For some customers, it is extremely important to have access to project management.

More expensive than capacity outstaffing. Since outsourcing involves an integrated approach and turnkey implementation, such services are much more expensive. This is due to the fact that you hire a whole team, which includes not only developers but also a project manager and other specialists.

Outstaffing Benefits and Shortcomings

Outstaffing Pros:

The best talents. You get proven professionals who fully meet the needs of the company. You do not waste time searching and checking. All this is taken over by the IT outstaffer.

Cost reduction. All costs associated with taxes and insurance are paid by the personnel supplier. You, as a customer, get a ready-made solution in the form of dedicated developers.

Hiring flexibility. You completely relieve yourself of issues related to staff turnover, and you can also flexibly manage the size of the team. If you suddenly need to increase or decrease the number of employees, it will not take long.

Reduced implementation time.

Outstaffing cons:

Interruptions in communication. When working remotely, there is a risk of poor integration into a full-time team. However, this can be avoided with proper preparation for the onboarding process. Also, if the employees are multinational, you may encounter misunderstandings related to cultural differences.

The customer is responsible for the quality of the product. Management is carried out by workers on the client-side. This means that the responsibility for the final result lies with the customer.

Outstaffing vs Outsourcing — What would be best for your project?

What is better to choose? To answer this question, you need to consider your own needs, business model, and available resources.

In general, outstaffing is ideal if your needs for IT specialists are long-term. At the same time, you have employees on staff who can provide proper control over the developers.

Outsourcing is often a good choice when there is a need for complex services or short-term tasks. Suppose you have a beauty salon and you need the development and application for recording clients. You do not need permanent staff, and you need turnkey services. Outsourcing is perfect for such situations.

Conclusion

In an increasingly competitive environment, business owners must move at the speed of light. For this reason, the demand for freelancers is constantly growing. This solution allows us to ensure rapid development without compromising the quality and stable growth of the company.

What is better outsourcing or outstaffing? This question is always relevant.

It is impossible to say for sure. It all depends on the situation, goals, and other factors. But one thing is certain. To obtain the desired result, it is necessary to carefully approach the choice of a partner. It should be a reliable company that truly takes into account your needs.

Weigh the pros and cons and you will find the right solution and implement your idea.
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