Outsourcing and Outstaffing Models: What Suits Your Business More?

In the software development world, the question ‘outstaffing vs. outsourcing’ is often asked. What’s better? What model produces better results? What is the difference between outsourcing and outstaffing models? Is the outsourcing model better, or should your company use the outstaffing model? A company in need of IT experts would need first to understand the structure of the company. Do you want to handle all payments? Do you have an in-house IT team? What is your budget? Are you looking to hire for the long-term? What are your core needs? Can you work with tech talents from other countries like Eastern Europe? Let’s explore software outsourcing and outstaffing and determine the best.

What is Outsourcing Model?

In the outsourcing model, the IT outsourcing provider is in charge of a project and handles it from start to finish. The client entrusts his IT needs to the outsourcing provider and, in normal circumstances, would not have access to the team the outsourcing provider uses to execute the project. Normally, the outsourcing provider would hire different IT experts to handle different parts of the project and would be in charge of each expert.

Let’s break it down:

You need a team to work on an app. For the app to come together, you need:

1. A flutter developer
2. An Angular developer
3. A lead full stack developer
4. A UI designer
5. A Figma designer

If you hire an outsourcing provider, the provider will hire each of these team members and assign project parts to them. The outsourcing provider ensures and assures you of the success of the project. If a team member underperforms, the onus is on the outsourcing provider to either find a replacement or hire a new member. Your job as the CEO is to request updates from the outsourcing team. You pay the outsourcing provider, and the provider pays the team.

The Features of Outsourcing

1. The outsourcing provider hires the team on behalf of the client.
2. The team does not work full-time for the client (they often have several projects they work on).
3. The outsourcing provider is entirely in charge of the team.

What is Outstaffing Model?

Outstaffing is a type of outsourcing service. In this case, a client hires an outsourcing team to build a staffing team nearshore. In this case, instead of the staff working part-time, they work full-time for the client, but the outsourcing company provides working space, legal, equipment, and the environment the staffs need to perform their duties.

Features of Outstaffing

1. With outstafffing, you are in direct communication with your staff. The staffs work for you full-time; however, the outsourcing company handles the hiring process, legal, equipment, and environment needed for the staff to work productively.
2. Onboarding: Your outsourcing partner is in charge of the onboarding process, including setting up the environment for work.
3. On-going: The outstaffing company or partner will help the client in regular meetings, project tracking, resolving work issues, and handling other work-related activities like staff emergencies and HR.

Outsourcing and Outstaffing Models: Pros & Cons

In the outsource vs. outstaff discussion, you should examine the benefits and respective pitfalls of the two models to determine which is the best for your business.

Pros of Outsourcing

• The outsourcing provider is in charge of hiring and management.
• The outsourcing company is responsible for the quality of the development project.

Cons of Outsourcing

• You do not have direct control over the staff.
• Outsourcing is more expensive than outstaffing.

Pros of Outstaffing

• Outstaffing is a cheaper model than outsourcing.
• You communicate with the staff.
• You have more flexible control over the project direction.
• While you are in direct contact with the staff, the management process does not fall entirely on you.

Cons of Outstaffing

• The development process falls on you.

Outsourcing Vs. Outstuffing: What Model Fits Your Company?

Both outsourcing and outstaffing are hiring models that help cut the costs of traditional hiring; however, outstaffing comes at a cheaper cost than outsourcing. If you don’t want the pressure of managing a development team, you can outsource; however, if you want to streamline the budget further, you should go with the outstaffing model.