Outsourcing vs Outstaffing Models in IT: What is the Difference?

If you decide to choose an outstaffing model, get ready to take more responsibility. It is recommended to have tech-savvy experts in the team to manage a project more efficiently. Many people mistakenly believe that outsourcing and outstaffing are substitutable concepts. This misconception is widespread because both methods imply the process where customers entrust certain work to remote employees. As a result, rather than working on many projects, an outstaff team member would focus on only one client. Furthermore, there’s nothing stopping them from working with someone in a similar field.

How does outstaffing work

Ability to attract highly qualified remote workers from anywhere in the world. Since the choice of an outsourcing agency is not limited by location, there is always access to many specialists with unique skills. It should also be understood that in outsourcing, some concepts are divided into outsourcing of personnel and outsourcing of business processes. Outsourcing has proven itself, especially in the IT sector, as recruiting a developing team is tricky, energy-intensive, and often unprofitable.

Time-consuming hiring and management

With outstaffed employee often working remotely, or at least separately from the rest of the team, communication might raise some issues. Outstaffing is a type of remote employments when a hired person carries out all the job duties for a company being officially employed by another company . While the latter one acts as an employer and is, therefore, responsible for wages, bonuses, equipment what is outstaffing granted to a worker, a client company provides a worker with tasks and assignments. You don’t need to direct a working team; neither you have to dive into technical specifics of your project. However, you ought to control it, usually by collaborating with a project manager. Most often, outsourcing means that your contractor will do the whole scope of work – not just a task or two.

How does outstaffing work

The key thing when opting for this service is to find a skilled, qualified provider who is able to provide quality service without coming into contact with existing labor laws. With outstaffing, there are no communication barriers between you and your team. This increased transparency leads to greater efficiency and fewer delays caused by miscommunication. Like in the case of outsourcing, you might start faster if you turn to outstaffers, as software companies often have engineers available right away. Now, let’s move to the advantages and disadvantages of outstaffing.

Key factors for choosing an Outstaffing company from Ukraine

Besides paying for the developer’s salary, companies must allocate a budget for workspaces, software licenses, and ongoing upskilling. With outsourcing, the offshore vendor will manage these overheads and the administrative tasks that come with it. There might be communication gaps between the outstaffed and in-house teams because they are in separate locations and possibly a different time zone.

How does outstaffing work

This means that you can focus on your core competencies while outsourcing the work that is not a part of those competencies. By hiring an outside company, you’re able to ensure that the people who perform your services are qualified and capable of handling them effectively. And if something goes wrong, it’s not up to you to fix it — your “vendors” will handle the issue instead. In a series of https://globalcloudteam.com/ previous articles, we’ve covered the many aspects of software development outsourcing, including offshore and nearshore approaches. When a company outsources a software development project, it usually looks to offload an entire project to a providing partner. One of the newest outstaffing trends is linked to companies moving to cloud-based technologies for better security and scalability.

Digital bits: Crypto Wallet Development

Leaders in the industry are well aware of the difficulties in attracting and maintaining outstanding talent. Quality is crucial in pharmaceuticals or other health-related companies as every smart manager understands. Quality flaws can lead to many problems, sadly landing on the sponsoring organization’s shoulders. Many blockbuster medications have lost their patent protection in the last ten years. This posed a significant challenge for pharmaceutical companies, bringing products to market considerably quicker. Software development market statistics of the tech countries — Poland, Ukraine, Romania, Czech Republic, Hungary, Bulgaria, Belarus, and Croatia.

On the other hand, if you have well-defined processes and a proper management to handle the remote team, then you are welcome to stick with outstaffing. To turn a great idea into a working digital product, you need the right people on your team. Qualified candidates in IT are not very easy to find and, if found, to keep on your team. Instead of building an expensive in-house team, many companies opt to outsourcing and outstaffing. Also, the software development service provider is responsible for hiring, maintaining the team and, as mentioned, payroll. Outsourcing and outstaffing are the practices largely widespread and approved.

The main differences

You can employ exceptional developers without paying hefty recruitment charges, hourly rates, or taxes. Product launch delays can have a significant impact on revenue. According to one CEO, a one-month delay in delivering a $150 million product can result in a $12 million drop in final sales. Your inquiry will be directed to the appropriate team and we will get back to you as soon as possible.

How does outstaffing work

The report highlighted the attractiveness of software outsourcing and outstaffing models. Both provide businesses the flexibility to access a vast talent pool and fill missing skill gaps in their team. The mediator takes on the tasks of payroll, taxes, labor law compliance (hiring, sick leave, firing, etc.). At the meantime, employees devote all the time to projects for the client company.

Drawbacks of Outstaffing

Outstaffing has lower rates than other business models, and, most importantly, it gives you access to a large global labour pool. Leaders in IT businesses are understandably concerned about compromising or losing essential skill sets. The organization’s existence and expansion will depend on technology research, development, and innovation. Currently, ever-changing labor demands are met in several methods based on the work required, the skill level necessary, and the duration of a certain project. Most talent is acquired through outsourcing, self-sourcing, or insourcing. Additionally, in-house staff may be more likely to be Loyal to your company.

  • With all we know about IT outstaffing, the only thing left is to determine which companies are most suitable for the method.
  • On the other hand, if you have well-defined processes and a proper management to handle the remote team, then you are welcome to stick with outstaffing.
  • There are a number of reasons for this, but one of the most common is scalability.
  • As a result, outstaffing can be an excellent way to improve your business’s IT capabilities without breaking the bank.
  • This often comes with getting experts who will work for lower wages.
  • Therefore, outstaffing companies should be more careful in hiring technical staff and ensure that their employees perform their duties at the proper level throughout the whole contract.