You may have heard about the outsourcing or outstaffing model of hiring before, but perhaps you aren’t sure how they differ or which one is best. In this guide, we’ll look at outstaffing vs outsourcing in more detail so you can determine which one suits your business.
What is the outstaffing model?
An outsourcing provider works on a project basis. The company that hires them will trust them to handle the project from A to Z. The client may never access or speak to the development team, and the team may work on several projects at the same time. So what is outstaffing, and how is that different?
Outstaffing is remote employment where an agency carries out all of the job duties for a client. The agency takes care of the wages, bonuses, equipment, and recruitment, but the client will provide the workers with direct tasks and assignments. Effectively, the outstaffed team will form part of the company’s workforce for a temporary period.
Software outsourcing and outstaffing have become very popular in the last fifteen years as the demand for software developers increased at a faster rate than new developers were entering the market.
The difference between outstaffing vs outsourcing is that your software development service provider will be responsible for hiring and maintaining your team, but they remain entirely at your service. You hire your own remote employees, who form part of your in-house team, and you can manage them yourself or hire a remote manager. If you prefer to be hands-off, you’ll probably use outsourcing instead.
The Pros and Cons of Each Model
So if you need to choose between an outsource vs outstaff model, which one is best? Let’s look at the pros and cons of each model in more detail.
The Pros of Outsourcing
- The service provider is in complete control of the quality and delivery of the project. There is no need for you to manage day-to-day delivery or budget or to deal with people management. If this isn’t your strength or if you don’t have the capacity to handle it, outsourcing is very beneficial.
- Less management effort is required from your side, which means you can focus on other things.
- Your service provider provides all of the equipment and software you need to complete the project. This can reduce your costs because you don’t need an upfront investment in equipment. This can also save time because the work can start right away.
- There’s no need to participate in the recruitment process, which saves time and effort. The service provider will have ready-made teams and proven developers on hand to complete your project.
The Cons of Outsourcing
- It’s not easy for the client to intervene or control the development process. This means that they cannot steer the project in a different direction if they are unhappy with the way it’s going, especially if the service provider isn’t very transparent.
- The project scope may not be as well-defined, and costs can be much higher than outstaffing.
- Software developers that are outsourced are usually more expensive than outstaffed developers.
Now let’s see how outsourcing compares to outstaffing.
The Pros of Outstaffing
- Outstaffing gives you access to great professionals without having to pay exorbitant prices and taxes. Staff in other countries, for example, may be highly trained but charge a third of the rate that local developers may charge.
- When you use outstaffing, you have complete flexibility. You can increase or decrease the number of employees you hire at any time, and you have complete control over your software development process.
- You’ll always have full access to your team members. That makes it easier to make adjustments during the process instead of when the project has been completed.
- The rates for outstaffing are usually much cheaper than other business models.
The Cons of Outstaffing
- When you use outstaffing, your communication and processes should be streamlined to avoid issues.
- The delivery concerns are your responsibility and not the agency’s. This can lead to conflict and frustration and take up a considerable amount of time.
Now that you know the difference between the outsourcing and outstaffing models, you can decide which one applies to your business. If you don’t have an in-house professional, outsourcing is probably the best model for you. If you have well-defined processes and in-house expertise, outstaffing is the way to go.