Companies sometimes arrive at a point in their advancement when hiring remote specialists to fulfill their needs. Those may be suppliers from third parties or remote workers. Depending on the priorities and the nature of the sector, either outsourcing or outstaffing might fulfill the customer’s needs.
REASON FOR PREFERENCE
There are many reasons for the growth of outsourcing and outstaffing trends, namely, the expense of hiring permanent IT staff and a deficit of qualified workers.
Cost primarily is one of many reasons. Using an outside vendor saves not only benefits and overhead on employees. But basic salaries for IT workers in lower-cost countries like Ukraine can be as much as 50 percent less than what you’d pay for similar talent in the United States or Western Europe.
People always get confused in choosing between outsourcing vs outstaffing. Here is a detailed guide that explains the benefits of both briefly.
In the 1990s, outsourcing policy became an integral feature of international business economics, having since achieved worldwide prominence. An outsourcing provider operates typically in a project-based business model, which implies that the customer more definitely entrusts the whole project from A to Z to the outsourcing firm.
Outstaffing, or subcontracting, involves employing to provide certain functions from an outside contractor or company. It is an older term than outsourcing, which commonly applies to cases where it is impossible to handle a job internally. By the completion of the program, outstaffing businesses or staff work directly with the suppliers.
Outstaffing is a type of remote job where a hired worker does all the assigned tasks for a company (client) who is officially employed by another company (outsourcing agency). The latter functions as a contractor, and it is responsible for a worker’s salaries, bonuses, supplies. At the same time, a client organization gives duties and responsibilities to a worker.
In the case of outsourcing, it’s usually a project manager of the hired team (outside of your company) who directs and controls the full scope of work. When it comes to outstaffing, clients manage their extended team themselves, as it is entirely at their disposal. Usually, specific tasks are handled, which cannot be performed by a client’s existing team.
The distinction is also that this service means that your software development service company must recruit and retain a software development team entirely at their disposal. They hire their remote workers who are members of your in-house unit. This remote software development team will either be controlled by in-house persons or can even provide managers.
In outsourcing, often, a client doesn’t have direct access to their team. Communication is maintained via a professional such as a project manager. While in Outstaffing, most often, a client manages and controls their extended team directly.
Outsourcing is more expensive as the scope and work are performed via a self-managed team. On the other hand, Outstaffing is less costly, as you assign tasks and control performance yourself. Often vendors work on the pay per milestone basis. The development can be planned according to sprints (about two weeks). While Under the contract of outstaffing, employees receive a monthly salary.
RESPONSIBILITY AND ACCOUNTABILITY:
Till the end of the project, outstaffing firms or staff work directly with the companies. On the opposite end, an outsourcer is responsible for the project’s outcomes. It is not expected to collaborate regularly with the employer in the process. Outsourcing copes, then, with the whole task, while outstaffing involves recruiting workers to work remotely on your projects.
In outsourcing, minimal skills are required as usual. It’s enough to formulate the requirements for future products. While, in Outstaffing, considerable technical skills are necessary, as you directly manage a team of IT experts.
For companies who don’t have in-house experts that can adequately satisfy their demands, outsourcing and outstaffing can give excellent results. These techniques would also help organizations that do not have the requisite technical expertise to carry out their growth initiatives. For some firms, though, there would be a gap.
So, the main difference is that outsourcing refers to full project support. At the same time, outstaffing provides the hiring and maintenance of individuals. Your true north will remain untouched, as, in both models, it’s the client who manages the process, but in different ways.