Outsourcing and outstaff: difference and features

Modern companies often have a need for fast and efficient development of software and other IT projects. However, it is not always possible to form a full-fledged internal team to perform all tasks. Therefore, we decided to provide an answer to the question: what is outstaffing and outsourcing, so that you can familiarize yourself with new methods of attracting specialists.

Outsourcing: definition and characteristics

Outsourcing is a strategy in which certain functions or tasks of a company are transferred to a service provider that specializes in the relevant industry. This approach involves delegating responsibility for projects or tasks to a team of experts who operate outside the client organization

Characteristics of outsourcing

1. Using outsourcing allows optimizing expenses on staff search, hiring, and support, as well as creating and maintaining the necessary infrastructure for task implementation.
2. Providers of outsourcing services possess deep knowledge and expertise in their industry, ensuring the delivery of high-quality solutions and professional insights.
3. With a ready team of specialists, outsourcing contributes to reducing the time required for project development and implementation.
4. Outsourcing expands collaboration boundaries, providing an opportunity to work with service providers from different countries and regions. This opens access to diverse talents and resources that may not be available within national borders.
5. Outsourcing is an effective tool for risk management in companies. By entrusting tasks to a third-party representative, businesses also transfer related risks and responsibilities to them.

Examples of outsourcing usage

• Businesses can outsource their website development and maintenance to focus on their core business. Developers will work on projects remotely
• Companies can order user technical support or equipment maintenance to reduce the burden on their staff.
• Organizations can delegate accounting, tax services, and financial analysis to professional outsourcing partners.

Outstaffing: definition and characteristics

Outstaffing is a business model in which a company hires employees through a third-party organization or intermediary to work on their projects but formally remains employees of the partner who provides the services.

Characteristics of outstaffing

1. The client company has full control over the team and work processes as outstaffed specialists become part of the internal team.
2. The absence of direct employment contracts with IT specialists who perform the work is one of the main advantages. The outstaffing firm handles all issues related to personnel and accounting, allowing the client to avoid dealing with potential labor disputes, payroll calculations, and other aspects.
3. Outstaffing enables businesses to scale and modify the team composition according to the project's current needs.
4. Outstaffing allows integrating specialists into the corporate culture of the client company, promoting deeper collaboration and teamwork.
5. Outstaffing is an ideal solution for clients with constantly changing development requirements. The outstaffing team is always available and ready to start coding according to new requests.

Examples of outstaffing usage

• Team expansion for programmers: a company can outstaff developers to reinforce their team during project execution.
• Quality control: clients can hire outstaffers to conduct software testing and quality control of products or services.
• Project management: outstaffing allows hiring experienced project managers for effective project management.

Difference between outsourcing and outstaffing

What is the best option for your project?

The selection of an IT team hiring model is contingent upon the objectives of the business.

Outsourcing emerges as the more advantageous option under the following circumstances:

• A temporary team of specialized experts is required.
• The project is of finite duration.
• Clear deliverables are defined.
• Minimal oversight over the team is desired.

An outsourcing team functions as an independent contractor for your business.

Conversely, outstaffing is better suited when:

• A permanent team is needed for intricate tasks.
• The project spans a long-term duration.
• In-depth comprehension of business processes and the assurance of data confidentiality are paramount.
• Full control over the team, from recruitment to management, is necessary.

An outstaffed team becomes integral to your business, even if physically located separately.

Conclusion

Outsourcing and outstaffing are two different models that allow businesses to access specialized skills and resources to complete projects. Outsourcing provides flexibility and cost-effectiveness, while outstaffing provides full control and integration of specialists within the team. When choosing between them, you need to consider the needs and goals of the company. In the end, the right choice will help to achieve success in the development of projects and the achievement of business goals.