Outsource VS. Outstaff: Comparative Description and Decision Making Tips

IT workplace

Hiring employees is always one of the most difficult processes for many companies. With the current scenario, hiring has become a bigger challenge, as the needs of employers and expectations of employees have changed. When it comes to IT companies, in particular, employers deal with the old age questions - Should they hire an external team abroad or give the entire project to a service provider? Outstaffing vs. outsourcing, what’s better? The answer is not always definite, but there are some ways by which you can make the right decision. Read on.

Why Do Companies Look for IT Talent Outside?

As mentioned in an article by ProCoders, when Deloitte conducted a survey and asked companies to share their opinion on outsource vs outstaff, many companies gave cost as a primary reason for relying on external teams. By working with external vendors, companies are able to save overhead costs for in-office workers, like electricity. Plus, countries like Ukraine have low hiring costs as compared to countries like the United States and Europe.

However, it is also important to note that IT talent is surging all across the world. As the industry is growing, people all across the world are becoming competent in various streams of work, such as software development. A company that is unable to find the required talent in its country can always look for competent individuals abroad.

Outstaffing vs. Outsourcing: What’s Better?

What is Outsourcing?

Using an outsourcing model, companies hire a dedicated team of programmers, project managers, engineers, and designers to work remotely on the company’s development projects. An outsourced team can handle a variety of projects, including website development, app creation, software development, and many more.

What Is Outstaffing?

When a company decides to work with a hiring company to source them, employees, the company relies on an outstaffing model. In other words, outstaffing means hiring individual workers who are already legally employed by an outstaffing company. Employers can simply discuss their requirements with the outstaff team, who can recommend professional individuals from their talent pool. In this way, your company can optimize its hiring process and hire professional talent quickly.

What is the Main Difference Between Outsourcing and Outstaffing?

Both software outsourcing and outstaffing involve hiring an external team remotely to work on a specific project or task. The main difference is how the project is managed. In outsourcing, your company will hire an entire development team and a manager to run the project. As an employer, you will coordinate with the manager and ensure the project is running smoothly.

On the other hand, outstaffing will entail that you are extending your existing development team by hiring one or more individuals. The project will be managed by your own project manager, who will coordinate with the outstaffed development team. This means companies who wish to outstaff need to have a technical understanding of their own projects, as well as an in-house development team already.

Advantages & Disadvantages of Outsourcing

Outsourcing significantly reduces the burden of the project from the employer’s shoulders because the entire project is managed by the external team. Accordingly, outsourcing is the right choice for your company for the following reasons:

  • No need for daily management of the tasks, as the IT team will coordinate amongst itself to manage the project on its own.
  • No requirement to buy software or hardware because the outsourced IT team will already have the required resources to handle the project.
  • Your outsourcing partner will do all the hiring to quickly complete the project.

However, there are some disadvantages of outsourcing as well:

  • Even though outsourcing is more cost-effective than hiring an in-house team, it can be more expensive than outstaffing.
  • You won’t have complete control over the project since the project manager will be managing most elements of the project.
  • Since you won’t be coordinating with all the individuals in the team and only the project manager, there can be problems in understanding the guidelines.

Advantages & Disadvantages of Outstaffing

Outstaffing is also emerging as a preferred IT model for many companies. Here are some benefits of outstaffing:

  • You can have full control over your project since the project manager will be located in your own company.
  • Outstaffing is more affordable as compared to outsourcing since you can decide how many individuals you need in the team.
  • Outstaffing is a very flexible IT model since you can build your own remote team from scratch.

However, just like outsourcing, there are some cons of outstaffing as well:

  • You will have more responsibilities since you will have to manage the team daily.
  • As with any remote team, it can be difficult to manage the project if your team is located in a different time zone.
  • Your hiring process might take up a lot of time.

Final Takeaway

Outstaffing vs. outsourcing, what works best for your company depends upon its resources, hiring requirements, and project needs. For instance, if you don’t have technical expertise available, you can depend upon outsourcing. But if you are only looking for a temporary team to work with you, outstaffing might be the best way for your company.




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