Outsourcing vs. Outstaffing: How to Choose the Best Model for Your Projects

George Fironov
George Fironov

I connect businesses with top software engineers and IT talent on demand. I focu...

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software outsourcing and outstaffing

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?

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. 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.

The Essence of The Outsourcing

The popularity of this model is related to its convenience. The practice of outsourcing projects is growing every year, and this is a fact. So, what’s the point? This approach allows you not to worry about the development process at all.

You delegate the task to a specialized agency, fix the terms of cooperation in the contract, and then accept the project after completion. Specialists working in your partner’s company handle all issues related to development. At the same time, you have the opportunity to deal with more important strategic tasks.

Let’s analyze the example. Imagine the situation when you run a healthcare organization. You decided to launch a new app. Mainly, your business provides medical services. The company doesn’t have experts with the necessary skills to complete the task. There’s no problem. Outsource it all, including the project management process. In a scenario like this one, your chosen partner manages every step. Isn’t that convenient enough?

Outstaffing: Keep the Reins Close

Outstaffing is like keeping the reins of a software development project firmly in your hands. By choosing this option, you can meet specific business needs by integrating additional experienced professionals into the existing workforce. We analyzed the experience of well-known market players and found that they successfully applied this method. Outstaffing can significantly reduce cost of software development.

Google is the most popular one. The giant is hiring additional staff to perform development and data analysis tasks. Microsoft, Alibaba, Spotify, Slack, and others also utilize outstaffing.

Let’s talk about a hypothetical IT company with a solid in-house team. Until recently, their capacity was enough to cover all projects. In the usual mode, internal employees perfectly cope with the tasks assigned to them. However, if there is an increased load, they will not be able to cover all projects. Since it does not make sense to add employees permanently because the high load is seasonal, the best option for them will be to start working with offshore team.

Outsourcing and Outstaffing: Table of Differences

Software outsourcing and outstaffing differ by various criteria. In those situations where one would be great, the other could fail completely. If you want to outsource the development, you’re handing over all related tasks to your chosen partner. Outstaffing is a different kettle of fish. You temporarily add new team members to the existing workforce. In the table below, you can see a detailed comparison of these approaches.

Factor

Outsourcing

Outstaffing

Employee works for

Service providing company

Your company

Employee location

Service providing company

Service providing company / Your company

Management

Service providing company

Your company

Scope of work

Project

From separate tasks to a project

Cooperation period

Project only

Full-time employee

Contractor location

Local of foreign

Mostly foreign

Dependence on contractors

Increased

Decreased

Communication with team

Through contractor's project manager

Via company channels

Hired expertise

Various

Depends on a worker

Best for

Project at any stage

Long-lasting cooperation

Benefits and Drawbacks of Outsourcing

Outsourcing is a model that can potentially bring many advantages to your company’s needs. This option is especially relevant when you are required to offload a project quickly. Partnering with an outsourcing service provider can offer several benefits. We propose to analyze its pros in detail. Below, you have eight main reasons for choosing to outsource.

Outsourcing offers the opportunity to get temporary staff with niche skills unavailable in your company. Keep in mind these benefits when you choose between outsourcing and in-house software development:

 

  • An external team sometimes completes tasks assigned more quickly. As an outcome, you stay ahead of the competition.
  • Agencies are primarily responsible for risks related to project management.
  • You can get fresh perspectives and innovative solutions with new employees from the outside.
  • Feel free to outsource one project, two or more. Also, you can pass on just some tasks. It’s all up to you.

When you select between software outsourcing and outstaffing, analyze the cons as well. It would be best to get a whole picture of this approach. So, let’s consider the most apparent drawbacks:

  • Collaborating with an agency, you don’t have the whole information about the project and can’t control the process.
  • Your only option is to trust an external provider to meet your expectations.
  • There’s a considerable risk that the provider may not fully grasp your company’s culture or vision.
  • Over-reliance on an outsourcing partner sometimes creates a dependency.

 

How do you find an agency you can rely on? Pay attention to reviews. Give preference to a company that has successful cases in a field similar to yours. Be sure to read the contract before starting cooperation. This way, you can protect yourself from potential troubles.

Benefits and Drawbacks of Outstaffing

Software outsourcing and outstaffing are two of the most popular approaches. Let’s move on to the second one. Consider the situation with hiring full-time employees. It is expensive, time-consuming, and not consistently effective. Outstaffing involves adding external employees who work on the project directly under your supervision on a temporary basis. You can integrate them seamlessly into your existing team. Let’s discuss the benefits:

 

  • The professionals involved align closely with your company’s culture and objectives.
  • You decide whether to increase or decrease the team.
  • This approach can be more cost-effective than traditional hiring.
  • You can maintain complete control over the process.
  • Access to a global talent pool and bring in skills your business needs at the moment.
  • Free yourself from managing payroll, benefits, and other logistics.
  • Your in-house team can focus on strategic assessments that drive business growth.
  • Adapt if the project needs change or specific skills are no longer required.

 

Is that all exceptionally well? Sure, there are some nuances you should be aware of. We suggest that you also study the pitfalls of this method:

 

  • If you choose this model, you have complete control of the process.
  • Integrating remote team members into your existing workflow can result in communication impairment.
  • If you rely on external staff, you might become dependent on them.
  • New team members may not fully grasp your long-term vision.

 

In fact, you can foresee the disadvantages listed above. Are you interested in how exactly? Choose a partner responsibly. Trust reliable companies that have a good reputation. One more recommendation: understanding the pros and cons of offshore software development and outstaffing will help you make the right decision. Before taking action, gather all the information about the particular model.

outstaffing vs outsourcing

What Model is The Best Option for Your Business

So, what method should you select: outstaffing vs outsourcing? Each has its sweet spot. Every business is unique and has its requirements. Assess the situation from all angles and only then decide. Let’s take a closer look at specific situations when one or another model would be a better choice.

When Outsourcing is the Best Option

Outsourcing is suitable when you need to delegate an entire project. A team of external experts is responsible for all the stages, from initial planning to final delivery. One of the most important an IT outsourcing vendor selection criteria is technical expertise and capabilities.

Imagine a situation where your team specializing in the promotion of training courses decided to develop software. You do not have a specialist with the necessary skills in your staff.

Moreover, there is no one there who would control the quality of such a task. You don’t need to hire a developer. That decision could lead to unjustified expenses. In this situation, you have a great option, for example, to IT outsource in Europe the whole project and don’t care about how the process is organized.

When Outstaffing is the Better Fit

In fact, it is hard to decide. Outsourcing or outstaffing? If the first option doesn’t work for you, consider the second one. Additional employees for the new project could be your best bet in different situations. Choose this model if you want to:

 

  • Keep the development process under your control and promptly make corrections when necessary.
  • Integrate the chosen solution seamlessly and effortlessly.
  • Get scalability and flexibility.
  • Involve team members in performing tasks for the long haul.
  • Fill specific roles or handle specialized tasks on a temporary basis.

 

Your project manager controls the work of the external professionals integrated. That’s a crucial nuance if data safety matters for your business. Outstaffing is an excellent solution if you want your new staff to align with your company’s culture.

Using IT outstaffing companies like Talmatic, you can scale your team quickly. It all depends on the project’s specifics. There’s no need to hire full-time employees. When you seek to fill specific roles or handle specialized tasks temporarily, it is better to pick an outstaffing model as well.

Common Misconceptions You Should Be Aware of

We have covered the outstaffing vs outsourcing pros and cons. Also, we’ve talked about how to select the perfect option. There is one more point. You may come across some common myths. Let’s dispel typical misconceptions.

Outstaffing is Just Outsourcing by Another Name

We believe you already understand the difference. It is nothing but a myth. These two methods are entirely different. If you choose to outsource, you are handing over the project to another company. If you decide to outstaff, add professionals to your in-house team.

Outstaffing Leads to a Team Fragmentation

Another misconception is that outstaffing can lead to team disjoining. In-house and external members don’t mesh well. Is that true? In reality, it is not. Newcomers can be integrated seamlessly if the provider organizes a proper onboarding process. Communication is important in this case as well.

These Models Are Affordable Only for Large Companies

Many assume that outsourcing or outstaffing is suitable only for big corporations. That’s wrong. If you run a small business, such as custom mobile app development, you can benefit, too. Imagine that you have received many projects. This is a start time for the growth of your business. But you have a problem. Your existing team cannot fulfill all orders in time. What can you do here? Adding experts temporarily will help a lot.

Outstaffing Teams Are Only About Recruiting

When companies plan to involve an IT partner in creating business software, they usually choose whether to outsource vs outstaff this task. Recruitment is a significant part of outstaffing team function, but they also offer a comprehensive suite of services:

 

  • Employee lifecycle management. Service providers take care of an employee: onboard and train engineers, monitor performance and cover administrative tasks.
  • Ongoing support. They ensure that outstaffed employees remain productive with project progress and stick close to the company’s goals.
  • Bridging the gaps. Outstaffing providers help to cover cultural and communication gaps between the remote employees and the in-house team boosting productivity and motivation.

Outstaffing Teams May Pose Information Security Leaks

Data security is a serious concern for any company comparing the need to outstaff vs outsource. The most important thing here is to choose a reliable partner. Professional service providers guarantee confidentiality and robust security measures. Pay attention to the details of non-disclosure agreements (NDAs), choose secure communication channels, always send encrypted data, and choose the vendor that commits compliance with international standards like GDPR or ISO 27001.

The outstaffing companies are constantly working with international clients and often have more robust security protocols and measures than the client enterprises. Outstaffing engineers are also well-trained to keep their work and communication secure.

Outsourcing vs. Outstaffing

As you can see, there are many misconceptions. That’s why it’s really necessary to examine these two models in detail: staff augmentation vs project outsourcing. We have some tips for you on how to make the right choice. First of all, analyze your requirements. What do you want to get as a result? What is your budget? Are you ready to entrust the project completely, or would you like to retain control over its implementation? Are there specialists on your staff who could check the quality if you choose to outsource? Having the answers to these questions, you will understand which model will suit you best.

Reliable IT Outstaffing with Talmatic

We mentioned the importance of choosing the right partner above. If you work with a reliable agency, you will get great results and be satisfied. If you decide to contact a provider with a dubious reputation, do not be surprised if problems arise during the collaboration.

Do you need professional developers to carry out your future project? Are in house software development or outsourcing not the best choices for you? Contact Talmatic. Our managers will be glad to assist you in finding developers, designers, programmers, engineers, and other skilled specialists. Every specialist undergoes strict moderation so you can be sure of their expertise.

Being an expert in IT staffing solutions, Talmatic will find the most efficient way to achieve your goals. Main reasons why Talmatic can boost your success:

 

  • Top Engineers Available. With our broad internal base we give clients access to a variety of specialists across countries and technologies.
  • Cost-Effectiveness Achieved. Recruitment, onboarding and operational costs are on us, you pay for the hours worked.
  • Quality Guaranteed. We are responsible for picking the staff that will cover your needs and are ready to replace the developer within the project by request.

Frequently Asked Questions

Looking to hire remote software developers but have a few questions unanswered? We are sharing our list of frequently asked questions by our clients when hiring software developers.

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It’s all simple. If you choose the first model, you add staff to your company. If the second model is better for your purposes, you transfer the project to another company entirely.

Outsourcing can potentially help reduce expenses and save time. It also gives you access to expertise. However, with this approach, you have less control, and there is a possibility of communication challenges.

Choosing outstaffing means you hire external professionals temporarily. You can control all processes, as well as the quality of work at each stage.

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