The world is digitizing rapidly, and companies are desperately looking for IT professionals to build apps, websites, and deliver digital services. This means that IT developers can command huge salaries in tech hubs Silicon Valley, making the market even more competitive. Companies are turning to different solutions to find affordable staff that can complete their projects, including hiring developers through the outsourcing or outstaffing model.
Both solutions deal with the delegation of software development services to outside parties, but the considerations for outstaffing vs outsourcing are very different. Let’s dig into outsourcing and IT outstaffing services to find out which model is right for you.
What is Outsourcing?
When you outsource software development to another company, they are contracted to carry out the entire project from start to finish. The main difference between software outsourcing and outstaffing is the client’s involvement. With outsourcing, the client is hands-off. He doesn’t lead the development team or process, doesn’t supervise the work, or solve any technical issues that crop up along the way. It’s a great solution for companies that don’t have technical skills in-house. They are presented with a finished solution, with no real insight into how it was developed, although some companies may set up communication tools or an operational interface to receive more regular updates. Naturally, outsourcing has its pros and cons, as does outstaffing.
The Advantages of Outsourcing
Outsourcing company has several advantages, especially for non-technical companies. This includes:
- Outsourcing is hands-off in terms of management. The company doesn’t have to organize or oversee recruitment, administration, training, HR or any other activities.
- The outsourced company will oversee the technical project and the client can purchase a finished product built to their specifications.
- The outsourced company will give the client access to skills and technology they may not have been able to acquire on their own.
The Disadvantages of Outsourcing
Before making a decision about outsourcing, it’s important to consider the disadvantages, which includes:
- Outsourcing generally costs more than outstaffing.
- There is no direct control over the development team and the development process. While this could be a plus for some companies, others may prefer more visibility and input.
- As a client, you don’t benefit from the skills of the outsourced staff in any other way than gaining the finished product. When outstaffing, the outstaffed team can train and teach existing in-house staff.
What Is Outstaffing?
When you hire an outstaffing company, you are essentially expanding your internal development team. You’ll add remote developers to your own, existing in-house developers to make up for skills shortages or a lack of manpower. You don’t need to employ your own staff as the outstaffing company will take over human resource management and recruitment for you. As the client, you can preselect your remote developers and lead them during the entire process.
Think of the outstaffing team as bolstering your own for an agreed timeframe but without going through the necessary recruitment, induction, payroll, and employee management. The developers are usually highly qualified and available right away. It’s more affordable than hiring full-time staff.
Advantages of the Outstaffing Model
Outstaffing offers a pool of qualified developers with multiple specialties.
The Advantages of Outstaffing
- There are no recruiting, training, admin, or HR costs or activities required from the client.
- The cost is lower than insourcing or outsourcing.
- The client retains direct access and complete control over the development team and process.
- The in-house team can learn from the experience and guidance of the outstaffed team.
The Disadvantages of the Outstaffing Model
Outstaffing doesn’t really work for companies that want low or no involvement in the development process. Disadvantages include:
- There’s additional effort to set up processes for both the in-house and external outstaffed team to follow.
Whether or not you follow the outsourcing or outstaffing model is entirely up to your business. If you want something that is entirely hands-off and only want the finished product, outsourcing is best. If you want a model that is affordable and helps your team grow their own skills, outstaffing is for you.
Ingrid Maldine is a business writer, editor and management consultant with extensive experience writing and consulting for both start-ups and long established companies. She has ten years management and leadership experience gained at BSkyB in London and Viva Travel Guides in Quito, Ecuador, giving her a depth of insight into innovation in international business. With an MBA from the University of Hull and many years of experience running her own business consultancy, Ingrid’s background allows her to connect with a diverse range of clients, including cutting edge technology and web-based start-ups but also multinationals in need of assistance. Ingrid has played a defining role in shaping organizational strategy for a wide range of different organizations, including for-profit, NGOs and charities. Ingrid has also served on the Board of Directors for the South American Explorers Club in Quito, Ecuador.
