Outsourcing vs. Outstaffing: Which to Choose for Your Business?

Lyudmila Kucher
Lyudmila Kucher

I specialize in outstaffing and staff augmentation, and I have extensive experti...

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The market for remote software development has filled up with different services over the past few years. Tech managers who want to make good decisions need to know exactly what the market offers. Let’s clear the confusion what is outstaffing, how is it different from outsourcing, and what is the best option for you?

Marc Andreessen was right. Software is eating the world[1].

It already runs, or helps to run pretty much every aspect of our business, as well as our everyday lives.

It’s understandable, then, that software developers are in huge demand.

Project managers in technology companies know that hiring tech talent is challenging, no matter if you hire golang web developer or react native programmer. Even more so if you wish to hire locally, which in many cases will be downright impossible.

This has created demand for services that allow managers to find developers online, or even a custom remote team of developers.

But it’s hard to decide on the best solution, if you aren’t sure whether you should choose IT outsourcing or outstaffing companies.

It doesn’t help that terms like outsourcing and outstaffing are often used interchangeably, even though they mean completely different things.

So let’s clear the confusion and settle this once and for all.

This article is an explanation of what outsourcing and outstaffing is and the different types of such services that are available on the market.

Difference Between Outsourcing and Outstaffing
The Difference Between Outsourcing and Outstaffing. Source Azoft.com

In today’s time, making a mobile application isn’t rocket science. However, making a successful mobile application is a process involving quite an extensive pre-planning. Building your mobile application could be as easy as opening up the IDE, throwing a few things together, doing a fast round of testing, and submitting it to an App Store, all done in half day’s work. Or you can make it an extremely involved process involving rigorous up-front design, QA testing on a whole lot of devices, usability testing, a full beta lifecycle, and then deployment some different ways. The path you choose will give shape to your vision. With that said, here’s a look at the app development lifecycle and the objectives and challenges along the way.

 

Looking for a reliable outstaffing partner?

Let’s discuss in details.

What is better than Upwork and the other platforms calling for freelance hiring? No doubt, offshoring is. Across many industries, tech included, a very popular type of outsourcing is offshoring or simply offshore outsourcing.

  • It means outsourcing business processes to a different country to cut costs.
  • However, some companies (like financial and medical tech companies) have to operate within specific regulations, either legal or operational.
  • This often makes offshoring an impossible option for them but they can still do onshoring (also known as nearshoring or nearshore custom software development).
  • It’s the same as offshoring, the main difference being that it’s limited to providers that are in the same country.

The offshore-onshore categories also apply to outstaffing. Such models proved to be more reliable than the freelancing approach when companies hire local or remote developers one by one on special freelance platforms – see Toptal company reviews to know more about it.

Outsourcing and Outstaffing models
Outsourcing and Outstaffing models. Source Tigo

When a company outsources daily server management to a specialist service provider it’s known as data center outsourcing.

Migrating parts of a network to third-party services (like AWS, Azure, or Digital Ocean) is known as network outsourcing.

Outsourced product development means hiring a third-party provider to build a product from A to Z, for example, a non-tech company that needs to outsource web development in order to have a custom website. For instance, the customers needn’t dive deep into the benefits of PHP or ruby on rails, they just get the ready-to-use website.

Outsourcing services come with one of two main pricing models.

One of them is fixed price which works best for clearly defined projects with a strict budget and timeline.

The second model is time and material which is most suitable in case of volatile projects with undefined final costs and dynamically changing workloads.

Outstaffing services are generally offered in two cooperation models.

The first one is referred to as remote team, when you hire overseas developers, dedicated team, workforce augmentation, staff augmentation, IT staffing or IT resourcing.

This means hiring a specialized company or programmer, for example, hire a full time magento developer, to provide you with a specialized development team, tailor-fit to work remotely on your project, or a part of it, for a fixed fee.

You retain full control of the project and manage dedicated teams as you see fit.

The second popular model is referred to as relocation.

This also involves hiring a contract team, but with the addition of relocating them to work in-house.

As the market for outsourcing and outstaffing grows, we’ll surely see new types of pricing and cooperation models to accommodate the fast-changing needs of the tech industry.

Summary

Outsourcing and outstaffing are two different types of services that allow tech companies to reduce costs and increase managerial capacity for dealing with key business issues.

Outsourcing involves hiring another company to deliver a finished product for you.

Outstaffing involves hiring another company to provide you with more developers to finish your project in-house.

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