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Blog
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OUTSTAFFING vs OUTSOURCING
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Introduction
- As we covered in the previous article, the core of any business is people. One of the most frequent questions that we hear from our clients is: “We desperately need tech staff for our upcoming projects as our team is not enough.” Or sometimes it doesn’t even exist as the tech forces simply were not needed for the company. Such occasions appear to be pretty common as the hiring process can be time-and-money-consuming, especially when your project, for instance, requires plenty of engineers of different stacks and levels and you lack expertise in attracting the right specialists for the job.
- Therefore, the problem of staff or expertise shortage for software development with limited HR resources can be reduced to a single question - IT outsourcing or IT outstaffing? In other words, what would most efficiently cater for your business needs - to hire an external team from a contractor or to order a full-cycle software development from the service provider?
- Let’s straighten it out!
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What is what – quick outlook
According to Cambridge Dictionary, OUTSOURCING is “a situation in which a company employs another organization to do some of its work, rather than using its own employees to do it”. The key moment is that usually outsourcing agencies work on a project-based business model which means that most likely the client entrusts the outsourcing company the whole project from A to Z.
Software or mobile app development, complex infrastructure solutions, hardware setup – all these tasks and many more can be conducted by the outsourcing agency. The main focus of the client is the result they will get from the agency. What the approach to the whole process is, what engineers are hired, how they are managed is the agency’s responsibility. Clients may have a basic idea of the internal process itself; however, their main focus is on the final outcome of the project.
Software or mobile app development, complex infrastructure solutions, hardware setup – all these tasks and many more can be conducted by the outsourcing agency. The main focus of the client is the result they will get from the agency. What the approach to the whole process is, what engineers are hired, how they are managed is the agency’s responsibility. Clients may have a basic idea of the internal process itself; however, their main focus is on the final outcome of the project.
OUTSTAFFING, however, is a type of remote employment when a hired person carries out all the job duties for a company (client) being officially employed by another company (outstaffing agency). The latter one act as an employer, thus is responsible for wages, bonuses, equipment granted to a worker, while a client company provides a worker with tasks and assignments. While using outstaffing services, the main focus of the client stays within the project and the company – the corporate culture, scope of work, relations within the teams, management style – every part is controlled and decided by the client.
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First conclusion
- From these two basic descriptions we can conclude that the key difference between outsourcing and outstaffing lies in the staff managing model.
When companies work with outsourcing agencies, communication with external development team mostly is run by the agency's project manager with whom they together set the goals, identify the scope of work, deadlines and milestones. The client rarely has the access to the development team itself which actually solves the client's business problems. To put it in other words, control over the client’s project implementation fully belongs to the agency.
Meanwhile, if companies use outstaffing services, the control over the project implementation is owned directly by the client, while the outstaffing agency is responsible for hiring process and maintenance of a software development team which is fully at client’s disposal. Basically you hire your own remote employees who become a part of your in-house team. This remote software development team can be managed either by your in-house people or you can have remote managers as well.
WHAT’S MORE – let’s get a bigger picture of what exactly these two services can offer to your business.
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Outstaffing
Rapid adaptation is the key, especially in the tech industry. You started your project with 50 additional engineers but within a few months realized you need to double them up? Or, on the contrary, the project scope has changed and now only 30 engineers will do fine. Or instead of one middle java engineer you’ve decided to work with three junior specialists? Or, by any reason the project was closed down by any economical or business reason and now you have 50 additional staff with not knowing how to employ them?
Any “or” is covered by the outstaffing agency providing hiring, replacing or calling off any staff at any time to meet your changing business needs. Your vendor is always up to date with your business needs and at any time can add up, substitute or take back the employees by your request. In other words, outstaffing provided custom-tailored service upon every change in your projects.
Any “or” is covered by the outstaffing agency providing hiring, replacing or calling off any staff at any time to meet your changing business needs. Your vendor is always up to date with your business needs and at any time can add up, substitute or take back the employees by your request. In other words, outstaffing provided custom-tailored service upon every change in your projects.
As easy as it is – you only pay for what you need - and you need people. When the company hires employees on their payroll, the company covers all the commitments related to each worker – salary, insurance, onboarding, taxes, etc. While you work with the outstaffing agency, all of these duties are handled by the vendor directly. Clients pay only for the exact number of needed employees which have a fixed price.
Moreover, vendor’s cost coverage includes providing office spaces, software licenses, hardware and utilities, employee’s training, and their benefits. Not to mention relocation costs if your team is located in another city or country.
Moreover, vendor’s cost coverage includes providing office spaces, software licenses, hardware and utilities, employee’s training, and their benefits. Not to mention relocation costs if your team is located in another city or country.
As we previously covered, you hire your own remote employees who become a part of your in-house team. In case your business, while implementing an ongoing project, decides to start a new one, outstaffing allows you to hire either needed techs ready-to-start-tomorrow in a very short time due to the agency expertise and vast database; or an already-packed team which fits for the specific business needs at the exact project.
There is no need to change the vendor and go through the rounds of negotiations and approvals again which can be pretty time-consuming. You simply expand the current contract and get the team ready-to-work on your new project.
There is no need to change the vendor and go through the rounds of negotiations and approvals again which can be pretty time-consuming. You simply expand the current contract and get the team ready-to-work on your new project.
Time is money, that’s right, and outstaffing helps you to save time so you can get more money. A common myth says that companies do not want to liaise with agencies because of the costs. At first, it may seem quite reasonable as companies pay fees to the contractors. However, when they decide to use their own forces to seek for the staff, they pay with time, one of the most valuable assets.
For example, there is an urgent need for 5 middle engineers so that the project can be finished in three months. Outstaffing agency has all the capabilities to fulfill a company's need in about a week or two due to their expertise. If a company acts on its own, the process of recruiting can last only up to three months. Meanwhile, the project itself is leaking and competitors will be one or even two steps ahead.
For example, there is an urgent need for 5 middle engineers so that the project can be finished in three months. Outstaffing agency has all the capabilities to fulfill a company's need in about a week or two due to their expertise. If a company acts on its own, the process of recruiting can last only up to three months. Meanwhile, the project itself is leaking and competitors will be one or even two steps ahead.
Outstaffing model
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Outsourcing
The main outsourcing benefit is that the clients get the final product which caters to all their business needs without enlarging their in-house team and delving into those business processes they are not familiar with. Most companies outsource their software development projects when they possess time and money, but lack technical expertise. Outsourcing agencies will oversee the technical project, gather all technical requirements for it and provide a finished product tailor-made to client’s specifications using all required professional resources they possess.
Outsourcing services enable companies to stay on track with their core business activities without managing their newborn IT team and delving into new fields they have never dealt with before. Client’s IT tasks are delegated to external experts and those tasks are completed at the same time as your core business tasks. Vendors are in charge of quality assurance and making sure coding provided fits the client's project parameters. There are no daily management outputs necessary from you, at a client level which is a considerable plus. Moreover, clients don’t have to take part in the time-consuming hiring process - human relations responsibilities are delegated to the outsource provider.
There is a huge number of various stacks in the IT industry and each year some of them become obsolete while new ones are being invented. When companies are rarely dealing with IT or operating in non-IT niches, it can be a huge and laborious challenge to acquire new skills and technology on their own. Here comes the main asset of outsourcing agencies - a wide pool of specialists of all stacks using cutting-edge technologies who always have their finger on the tech world pulse.
What outsourcing offers here is the niche expertise which, considering the specifics of the client’s company, increases the competitiveness of the business.
What outsourcing offers here is the niche expertise which, considering the specifics of the client’s company, increases the competitiveness of the business.
Outsourcing model
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Conclusion
- To sum it up, if your company wants to delegate the whole process of development to the outsource service provider, keep the managing issues to the minimum and get the end product, then outsourcing is what your business needs.
If your company wants to bolster the in-house development process by hiring additional qualified staff without putting them on the payroll yet fully controlling the project, then you should consider outstaffing services.
Covering both services in IT, we can see that even though they may sound pretty much alike, the core difference between them is the approach to the software development and its management. At GitMax, we run both services for businesses of all types depending on the request of the client. Prior to work, we thoroughly study the company and its business needs to offer the best time and money wise solution. Hit the button “Contact us” below if you’re considering outsourcing or outstaffing services – we’d be glad to help you out!
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