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Outsourcing vs Outstaffing Models [2023]: Top Differences, Pros & Cons

Outsourcing vs Outstaffing Models-Top Differences, Pros & Cons

It would seem that there are two concepts of collaboration: remote and internal. There are various formats for remote collaboration: Outsourcing and Outstaffing.

These two models help companies accelerate development and optimize staff costs, as well as tap into the valuable experience of IT professionals around the world. Therefore, Grand View Research, Inc. calculated that the cost of outsourcing and outside staffing would grow by 7.7 percent per year. By 2027, global spending will increase by $936.3 billion as a result of this.

The model you choose depends on your company’s needs and tasks. This blog will help you understand the main differences between outsourcing and outsourcing. Also, identify the main goals and capabilities of these two models.

What is Outsourcing?

Outsourcing is a type of offshore software development where one company (client) hires another company, i.e. software outsourcing company, to outsource the entire scope of the project: from planning to development and tests. Team management is handled by the offshore software development company when outsourcing occurs.

What Does IT Outsourcing Involve?

The outsourcing model involves hiring a mobile app development company to carry out a project from the early stages to launch. You, as a customer, are not involved in day-to-day problems and cooperate with the third party’s project manager to make important decisions.

IT Outsourcing typically looks like this:

  • Find a company with whom you would like to work.
  • The team takes full responsibility for the technical part while you just organize the process.
  • You discuss the terms of the project, and your technical and business needs.
  • The outsourcing provider does the recruiting for you to build a dedicated team.

Pros And Cons of Outsourcing 

Outsourcing help companies that have no reason to assemble their own internal team of developers. Such services are good for both short-term and long-term cooperation that produces a quality product. Following are the advantages and disadvantages of Outsourcing:

Pros of Outsourcing 

Outsourcing has many advantages, the main ones being that the development team has a wealth of experience, a broad portfolio, and years of experience. When handing the project over to the outsourcing team, you should expect quality work and impeccable timing. Let’s discuss the advantages of outsourcing in detail:

  • Time-Saving 

Outsourcing saves time in two ways. First, you don’t have to waste resources choosing a professional to work for you. The contractor handles human resources for you. Second, by outsourcing business processes, you can focus on saving time to run your business with fewer distractions. The service provider works on the project, which requires minimal effort on your part.

  • Efficiency

The speed of production will increase with the help of competent workers. Outsourcing company developers have vetted professionals in their field. You do not need to train them beforehand; they will be incorporated into your project immediately.

  • Flexibility

You only pay for work completed and hire a company when it needs to handle a certain business process. When the project is finished, you can lay off the company until you need them again.

Cons of Outsourcing

Although outsourcing has great advantages, it is important to take into account the drawbacks of this model:

  • Lack of Control

The outsourcing team does not work for you, they work on your project. As a customer, you will not be able to directly command the development team. You can still influence the process through the project administrator.

  • Risk of Important Data Leakage

By transferring data to a third party, you risk data leakage. Therefore, it is very important to look for bona fide and reliable contractors with good reputations and reviews.

  • Lack of Concentration

Outsourcing service providers often works with multiple clients simultaneously. Your development team might be managing a bunch of different projects, which could reduce efficiency and product quality.

What is Outstaffing? 

Outstaffing is a type of offshore software development in which a client hires a contractor from a software outsourcing company to carry out development tasks.

It can be said that offshore developers literally become remote internal developers for the client company during the entire period of cooperation with offshore agencies.

Outsourcing is generally best for clients who have a strong internal team and want to find an expert in a certain area or save some money on hiring new employees.

What Does IT Outstaffing Involve?

The outstaffing model means that a company invites software engineers from an external provider to its internal team. You sign a contract with an app development service provider to obtain the necessary specialists by avoiding recruitment, onboarding, management, and other HR-related processes. However, you will need to handle task management and decide which part of your team, internal or remote, needs to complete specific tasks.

IT Outstaffing follows these steps:

  • You find a software development agency
  • You express your technology needs and who you need
  • The provider offers candidates from its internal pool to complete your team
  • You manage the overall distribution of tasks between internal and remote teams, while vendors handle smaller administrative processes.

Pros And Cons of Outstaffing 

External staffing can be a boon to a company that does not have enough resources to support internal employees. Flexible and under your control, contract workers will bring benefits to your company. But before you search for staffing service providers, learn the pros and cons of this model.

Pros of Outstaffing 

By hiring an outstaffing agency, you receive a specialist or a team of specialists who will be at your disposal. From the beginning of your contract in your project, they will work exclusively for you. Understaffed developers are an asset to the existing team, extending their experience and capabilities.

  • Scalability

You can manage the number of employees working on the project based on the current task. Hire an expert for a short time and let him go when you no longer need his services.

  • Human Resource Management is Made Easy

The outstaffer company takes care of all the documentation, from the registration of vacations and sick leave to the writing of reports. This reduces the burden on the administrative department and accounting departments of the client company.

  • Total Control

Additional staff are at your disposal. They may be in a different location and from a different company, but they will be working as your own employees. You will communicate directly with your auxiliary team, distributing tasks and managing them on a day-to-day basis.

  • Hire From Anywhere

You can outperform workers from all corners of the world.

Cons of Staffing

As far as downsides, outstaffing doesn’t have many of them. More precisely, they are the following:

  • Communication Problems

As in the case of outsourcing, when working under the principle of outstaffing, problems may arise associated with a misinterpretation of certain tasks. Therefore, it is very important to establish and maintain communication channels that are convenient for both parties.

  • More Managerial Work

While it is nice to have full control over workers, this power comes with responsibility. Agreeing to hire outside staff also means that you will be responsible for overseeing the speed, quality, and implementation of completed work.

  • Information Leaks

When working with the remote team, you will have to trust them with your documentation, software, and projects. Careless transfer of documentation can lead to leaks. Be sure to include required security measures when hiring an outstaffing company.

Outsourcing VS Outstaffing – A Detailed Comparison 

Outsourcing Outstaffing 
Time Take a little extra time to get the right team’s specifications.Faster development starts 
Payment The company typically handles the payment.The payroll of the outstaffing professional or team is handled by the development partner, not the client company.
Best For Projects at any stageLong-lasting cooperation
Hired ExpertiseVarious Depends on a worker
Project ManagementThe client has a project manager and an entire outsourced team from outsourcing, so the task or project is not managed directly by the client.The client is answerable for dealing with the outstaffed team

What Model is Best for Your Company?

Now that we’ve identified the pros and cons of each model, it’s time to explore which one is best for your business. The global IT industry is growing rapidly and is expected to reach a whopping size of $410 billion by 2027.

This includes both Outsourcing and Outstaffing models. However, selecting the best option for your company can be challenging. The first step is to ascertain your requirements and budget.

For instance, if you don’t have in-house technology experience, outsourcing is the best way to go. Of course, this solution is more expensive. However, your development partner will handle everything for you. 

On the other hand, if you need to temporarily augment your internal IT team, the best way to do it is to hire app developers or a complete staff.

Quytech As Your Outsourcing and Outstaffing Partner 

Quytech is a full-cycle web and mobile app development company that supports outsourcing and outsourcing models for different scopes of engagement. We can assemble a dedicated team for you, outsource to our app developers, or complete fixed-price tasks.

We have over 200 professionals proficient in .NET, Ruby, Angular, iOS, Android, React, Blockchain, Metaverse, and a wide range of other Microsoft, Web, and Mobile technologies. Therefore, finding an available app developer for your project will take minimal time.

Since we have years of outsourcing experience, we know how to organize a smooth work process remotely. Take a look at our portfolio and see the projects that we have carried out successfully.

Final Verdict 

Outsourcing VS Outsourcing is not an option. Depending on your company’s needs and resources, you can use any model. However, as a general rule of thumb, while small businesses with internal teams benefit more from hiring outsiders, large projects call for outsourcing.

Therefore, before you decide which way to go and choose an IT staffing company, you should consider what you need: a dedicated team of developers of specific applications. Therefore, contact us and we will help you find a reliable technology partner.