Outsourcing / Outstaffing Web Development – Explanation

By George Fironov ·Subscribe

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. 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 hire a remote developer, 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 services.

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

Outsourcing means that you hire a specialist or an IT outsourcing company to build your software or parts of it without your supervision over the production.

First recognized as a viable business strategy in 1989, it became an integral part of international business economics throughout the 1990s[2].

An example of outsourcing is hiring a web development agency to work on the project of a graphical interface for your app.

Your involvement when outsourcing a job is usually limited to an initial briefing and feedback on finished work.

What’s a good outsourcing explanation?

Working with outsourcing providers is kind of of like ordering food – you say what you want and pay for the finished meal once it’s delivered to you.

Outsourcing is best in cases where you need something done but you don’t care about how it gets done, or don’t have the necessary in-house resources to do it.

When outsourcing, you don’t have to spend additional money to cover costs like employee insurance, overtime or any other benefits.

The good things about outsourcing are:

  • High quality and on-time delivery is 100% the service provider’s responsibility.
  • You don’t have to manage the process.
  • You don’t need to worry about securing the necessary resources for doing the project.
  • You don’t have to do any additional hiring to get the results you need.

But on the other hand:

  • You have little or zero control over the production process.
  • If you underestimate the workload required to do the project, you might end up with much higher final costs than you’d planned for.

Outstaffing provides means to hire developers from other companies to work on your project as virtual employees.

To get the right outstaffing meaning it might be easier to think of it as outsourced staffing or simply outsourcing developers.

Outside of the IT industry outstaffing is more commonly referred to as subcontracting – an older term that traditionally refers to the practice of hiring an outside company or provider to perform specific parts of a business contract or project[2].

In the past few years tech has adopted the term outstaffing, probably in order to differentiate subcontracting in IT from subcontracting in other industries.

What does an outstaffing company do? An example service would be providing a remote front-end developer to join your development team for 12 months (or as much time as you need to finish your project within deadlines), and work under your supervision.

You (and your employees) have to be much more involved in the production. Outstaffing works best when you have experts in-house but have experienced unforeseen challenges in the project, which your team doesn’t have enough time or knowledge to deal with.

Sticking to the food ordering metaphor, outstaffing would mean that you’re a cook and you order another professional cook to help you with preparing a meal.

Providers of outstaffing services aren’t responsible for the finished product.

Their role is to support you or your production team over the period of time you hire them for.

The good things about outstaffing are:

  • It allows you to add top experts to your team without worrying about the hiring process.
  • Outstaffing fees are easy to control which allows for overall smaller project costs compared to outsourcing.
  • You can easily increase or reduce the size of your remote team.
  • You maintain full control of the production process.

On the other hand:

  • It requires sophisticated communication skills (Unless the service provided includes an outstaffing manager to ensure that the client and their dedicated team are on the same page – like Talmatic).
  • Quality and delivery remains 100% your responsibility.

Let’s move on, and see what are the popular models of cooperation with outsourcing and outstaffing companies.

Popular types of outsourcing and outstaffing services

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 in order 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).

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.

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.

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, dedicated team, workforce augmentation, staff augmentation, IT staffing or IT resourcing.

This means hiring a specialized company 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.

Thank you for reading! Was this article helpful?

Let us know in the comments, and share this article on your favorite social media platform.