IT Outsourcing vs. IT Outstaffing – which one is better?

Acclaim/Blog/Articles/IT Outsourcing vs. IT Outstaffing – which one is better?
  • 13 minutes of reading
  • Comments icon
    0 comments
  • 478 views
Share

Are you debating between IT outsourcing vs IT Outstaffing for your next software development project? Each of these models comes with its own unique benefits and disadvantages. The form of engagement and cooperation is also very different. Let’s break down these two models, to help you choose the best one for your business.

Man thinking about outsourcing vs outstaffing

For many companies completing projects on time can be challenging. So you may look for a different solution. You may wonder if you should pick an Outstaffing company vs outsourcing.

While both options have their pros and cons. It’s important for companies to understand the differences between the two models in order to make an informed decision. IT outsourcing involves hiring an external company to handle all IT-related tasks. While IT outstaffing involves hiring remote specialists to work as a part of your in-house team.

In this article, we’ll take a closer look at the benefits and drawbacks of each approach, so you can decide which one is right for your business. Whether you’re a small startup or a large corporation, finding the right IT solution is crucial to your success. So, let’s dive in and explore the world of IT outsourcing and outstaffing to determine which one is better for your company.

IT outstaffing services meaning

IT outstaffing services refer to the practice of hiring personnel from outside the organization to work on a specific project or task on a temporary basis. This approach is commonly used in the IT industry, where companies need access to specialized skills for a short period of time. IT outstaffing service providers offer a range of skilled professionals who are available to work on a contract basis. They are offering services that are tailored to meet the specific needs of the client.

The IT outstaffing meaning is simple – it is a way for companies to augment their existing workforce with external resources. The outstaffing model is different from traditional outsourcing. This not a model where entire projects or functions are outsourced to external vendors. With IT outstaffing, the client retains control over the project and the team. While the service provider handles recruitment and staffing.

However, IT outstaffing services can be used for a variety of purposes, including software development, web design, cybersecurity, and data analysis. The benefits of using IT outstaffing services include cost savings, access to specialized skills, and flexibility. IT outstaffing allows companies to scale their workforce up or down as needed, without the need to hire and train full-time employees.

When to use the Outstaffing model?

The IT outstaffing model is a popular approach for companies looking to augment their existing workforce with external resources. Most of the time these external resources are carefully tailored to the need of the customer company. The staffing company wants to provide you with developers that will push your project forward.

Some other scenarios in which you want to consider using outstaffing include:

  • a project that lasts a minimum of 3 months
  • want to support and empower your in-house team of developers
  • need help finishing projects on time

What is IT Outsourcing?

Outsourcing refers to the business practice of employing an outside company that carries out a development project that may be traditionally carried out internally. In some cases, it can take on software development projects that are completed in-house for various reasons.

Software outsourcing developers working together

When to use software outsourcing?

There are a few situations where it’s worth choosing to work with an outsourcing agency. An outsourcing model can help if you have a project that does not fit the core of your business, but you still need it completed.

Another scenario where this option makes sense is if you do not have the internal resources to complete the project. Perhaps you are missing certain developers, or you do not have the infrastructure to complete the project.

Lastly, you may reach out to an outsourced team to complete a project if they need to offload tasks.

Key differences between outsourcing vs outstaffing

Let’s explore the key differences between outsourcing and outstaffing.

What is the purpose of outsourcing vs Outstaffing?

You may decide to turn to an Outstaffing company if you are looking to add skilled developers to your in-house team. They can help you hire remote developers for your team to help move projects forward.

Whereas, outsourcing will take on a software development project completely without your internal resources. They are able to complete a project from start to finish and hand off a finished product. This frees up time, money, and resources for you and your company.

Who is in charge of management outsourcing vs Outstaffing?

Project management in the Outstaffing model is on the side of the client. So if you hire developers via outstaffing, they will work under your project manager. These new professional employees will work with your team and it is your job to assign them tasks. Also, you will want to monitor their time and the tools they use. You will want to onboard them with your in-house communication and organizational tools.

However, when working with an outsourcing company all project management processes take place with the vendor. You really do not have any responsibilities with outsourcing. And you are also able to take away some of the workloads from your project management team. The outsourcing company will only contact you to make major decisions, but otherwise, everything is done externally to you.

Calculating-the-cost-of-using-outstaffing-vs-outsourcing

What is the cost of using Outstaffing vs outsourcing?

Let’s compare the cost of Outstaffing vs outsourcing. Is the price of either model worth the money and what exactly do you get from that free?

Using an outstaffing company to hire developers is budget friendly and in most cases this cost is predictable. You only pay for the developer you hired. And you only pay for as long as they work for you. Once the developer is done working for you, you are no longer burdened with that cost.

Outsourcing tends to be more expensive as there is more involved than just hiring developers. You have to consider the fact that an outsourcing firm will use its internal infrastructure, employees other than developers, etc. This will hike up the cost of project outsourcing.

Pros and Cons: Outstaffing vs Outsourcing

To help you make a decision let’s discuss the pros and cons of Outstaffing vs outsourcing. Let’s start with the benefits of outstaffing vs. outsourcing. And then we will move on to the advantages of using outsourcing.

Pros of Outstaffing

The benefits of using IT outstaffing services include maintaining control, access to specialized skills, flexibility, cost-effectiveness and so much more. Let’s review each of these in detail so you can understand why outstaffing is worth it.

Control over project & developers’

When choosing outstaffing you are hiring employees to join your existing team on a temporary basis. So you have control over the development process along with control over the developers you hired.

Your project manager is responsible for assigning these additional coders tasks, managing their time, and showing them which tools to use.

Access to specialized skilled developers

This model enables you to hire developers with specialized skills and in many cases niche skills. You are able to choose from a fan of 👉 different tech stacks 👈 to hire the best developer for your project.

You can access these coders and have them join your team in as little as one week. Whereas if you were using traditional in-house recruitment you may not be able to hire such as developer for 3 to 6 weeks, if not longer.

Not to mention how hard it is to hire niche developers who are few and far in between, using typical recruitment methods. An out-staffing company gives you access to these developers with these skills quickly.

You can add a developer who specializes in Artificial Intelligence, Machine Learning, or IoT to your dedicated team in a snap as opposed to waiting for a long time.

Hiring flexibility

The out-staffing model offers you more hiring flexibility than other 👉 team extension models 👈. You are able to hire, switch or remove experienced developers as you see fit. Or as your project changes.

Also, you are able to hire developers for the time frame that you need. You are not tied down by having to employ someone on a permanent full-time basis. If you need a developer for 6 months, then that’s fine. You hire them for 6 months, and once their role is done, they move on to another project. Here at Swyply, we only require that our developers work with a given team for a minimum of 3 months.

Moreover, we offer you a 👉 14-day risk-free trial 👈 to help you test out developers and see if this hiring model works for you. If it doesn’t you can terminate our cooperation and you won’t pay a penny for the first two weeks.

Less expensive

Using an IT Outstaffing company is less expensive than outsourcing or other hiring solutions. You 👉 only pay for hired developers 👈, which is typically a daily rate, multiplied by the number of days worked within one month. Here at Swyply, we give you two weeks to pay the invoice.

You do not have to worry about taxes, health insurance, sick leave, vacation time, etc. All that is covered by the vendor. The only other thing that you have to pay for and provide is software tools that are used by your company internally. So if you use Jira or Asana for communication and organization, then you have to pay to give remote developers access to these platforms.

The vendor is responsible for payroll, you only pay an invoice

When you hire outstaff team members, you only pay the invoice. All payroll procedures are taken care of by the vendor. You do not have to worry about paying health insurance, taxes, sick leave, vacation time, etc.

This is not like with in-house employees where you need an accountant to take care of payroll. Plus you do not have to worry about hidden costs with this model. You know upfront the daily rate that you need to pay.

Pros of Outsourcing

Alright, now that we explored the advantages of outstaffing, let’s take a look at the pros of using project outsourcing. Some of these benefits include giving you more time to focus on the core of your business. Moreover, you are not paying to hire additional people or buy more infrastructure. And lastly, there is no project management effort on your part.

Workers at an IT company working on a computer

You can focus on the core of your business

When you outsource a software development project, you have more time to focus on the core of your business. You do not have to worry about that specific project as it is being handled by a third-party company.

Also, if the project does not fit the core of what your business handles then outsourcing will help you. You won’t be wasting time on something that just isn’t the right fit. So, you can spend your time working on other projects, while this one-off project is completed for you by someone else.

You do not need to hire additional people or pay for infrastructure

With outsourcing, you are not hiring people to join your team. You are paying for a service to be completed on your behalf. So you do not have to worry about employee costs, infrastructure costs, etc.

You only pay for a completed project and chances are the rate was agreed upon at the start of your cooperation with the outsourcing agency.

No management effort

Outsourcing is a great option if you are looking to relieve your project management team of some of their duties. When outsourcing companies take on projects, they also take on the management aspects. So your project managers do not have to worry about that aspect internally.

Cons of Outstaffing

Let’s review some of the disadvantages of hiring an outstaffing company to extend your team. Some of these cons include more work for your project managers, communication issues, and the need for onboarding.

More software developers to manage

The addition of any new employee will create more work for your project managers. You need to make sure that your existing project managers can take on additional experienced developers.

Moreover, with outstaffing team members, they may have to learn how to manage a remote team if your in-house employees work in the office. As a business owner, you need to make sure that your management team can deal with the extra workload.

Possible communication flaws

When hiring software engineers using this model, you may want to put together an outstaffing development plan. This plan will help with communication, task completion, and overall project scope.

When you set clear expectations from the beginning it will make building the whole project a lot easier and avoid any misunderstandings. Now, if you have communication issues with one of Swyply’s developers, you can always let us and we can try to resolve the issue. We want to be involved. We don’t want you to feel like that boat left alone in the storm.

Remote developer onboarding with new team

Needs onboarding

Regardless of the hiring model you use, you will always need to onboard new employees. It is a 👉 crucial step in the team management 👈 and software development process. The onboarding process can help your newly hired developers feel like part of the team. Also, it can ensure that the new team member knows what they are doing and what their role is on your team.

Some crucial steps in an onboarding process include:

  • introducing the new team member to your existing staff
  • show them the tasks they will be working on
  • include them in all necessary communication channels and meetings
  • make sure they know of your in-house business processes and procedures

We have had experiences where a developer will join a team and be left to figure things out on their own. It slows down project progress and makes the coder want to leave the team. Another fun practice with onboarding is assigning a buddy to any new member. The buddy can be there to guide the new developer along and answer any questions they may have.

Cons of Outsourcing software development process

There are three disadvantages of using an outsourcing company:

  • no control over project progress
  • poor quality of work
  • more expensive than other hiring models

Let’s explore each of these cons in more detail below.

No control over project development

When you outsource a project then you have no control over how it’s done. You only get the end result and it’s either what you wanted or not entirely. Of course, you can ask the outsourcing company to fix any issues but then you run up the overall cost of the project.

Unhappy man with project results

Poorer quality of work

A big concern with outsourcing projects is that the quality may not be the best. The software development project may not be the same quality as if your in-house dedicated developers completed it.

More expensive than outstaffing company

So a common myth is that outsourcing will help you save money and reduce operational costs. This couldn’t be more wrong. The truth is outsourcing is expensive. In fact, it costs more than outstaffing. This is because it requires more resources on the part of the outsourcing company to complete the project.

You also need to consider the fact that you have the number of working hours and all the people included in those hours. It’s no longer just developers, but also QA testers, project managers, product owners, designers, administration, etc.

Also, the fact that you have more people involved in this project can lead to more issues. If your customer brings you the project and you pick an outsourcing company X, which uses their dedicated team Y, with project manager Z, then the chain of communication and decision-making is long. Not to mention there are so many variables that can lead to costly mistakes.

So it might be less expensive to keep the project in-house or use an outstaffing company to supplement your internal resources.

Which is better outsourcing vs outstaffing for my tech company?

Check out this graph to help you better decide which model is the best option for your software development company: 👇

Outsourcing Outstaffing
I am looking to handle the project externally I am looking to handle the project internally
The project doesn’t fit the core of my business The project fits my business
I do not have any internal resources or infrastructure to complete the project I missing a few skills to make it possible but have some resources and infrastructure
I can afford to pay a little more to not have to worry about it I am looking for a budget-friendly option
I do not have the project management capacity to deal with another project. My project managers are happy to take on more projects and more developers
The development process is not as important as having the project completed by the deadline. I want more input in the development process along with control over staff
Outsourcing vs outstaffing

TL;DR: Summary of which solution is best for you? Outsourcing vs Outstaffing company

So let’s break down the differences between outsourcing and outstaffing. First off, outsourcing is a term used to describe the process of contracting with an outside company or individual to perform services that would otherwise be performed by internal staff. IT outsourcing is the practice of hiring an external service provider to manage specific technology-related activities and functions for your business.

On the other hand, outstaffing is using a third firm to hire professional employees to join your team on a project basis. IT outstaffing can be used for a variety of purposes such as website development, mobile development, cyber security and so much more. It is a great option for any company who is looking to fill the skill gap that exists in their organization.

Break down of the benefits for each of these hiring models

Starting with outstaffing, some benefits include:

  • You maintain control over the project & developers
  • You gain access to specialized skilled developers
  • You have more hiring flexibility
  • It’s less expensive than other team extension models
  • The vendor is responsible for payroll, you only pay an invoice

Now let’s flip the coin and take a look at some of the benefits we gain when using an outsourcing company:

  • You can focus on the core of your business
  • There is no need to hire additional people or pay for infrastructure
  • No project management effort on your part

Quick sum up of the disadvantages

Now that we have covered the advantages of both these models, its worth mentioning some of the pitfalls for each. When it comes to outsourcing you have no control over the project. Also, you run the risk of the work being poorly done. Lastly, this is a more expensive option in comparison to outstaffing.

The disadvantages of using outstaffing include an increased workload for your project management team and communication issues. Another flaw with this model is that you need to onboard new employees, but the truth is if you hire internally, you need to onboard as well. This is fairly unavoidable.

So what’s your final conclusion? Outsourcing or outstaffing?

So, when trying to decide which model you want to choose, the best question to ask yourself is whether or not you have the capability to complete the project internally.

If you answered yes, then you want to choose an outstaffing company to help you fill the skill gap on your team. Once you have hired additional experienced developers, you are on your way to completing that software development project. If you are interested in learning more about outstaffing, 👉 drop us a line 👈. Let’s have a free no obligation chat to see if we can make this hiring model work for you.

Related articles

Why Project-Based Developers Are Essential in Today’s Tech Industry?

Project-based developers are essential in today’s tech industry because they bring specialized expertise and flexibility to tackle complex, short-term projects efficiently. Their ability to adapt quickly to new technologies and industry demands ensures that businesses remain agile and competitive in a fast-paced market.

Tech Talent Nomadism: Exploring the Rise of Digital Nomads in the Industry

The rise of tech talent nomadism is reshaping the industry landscape, enabling professionals to work from anywhere in the world. This new wave of digital nomads is driven by the quest for flexibility, diverse experiences, and a better work-life balance, challenging traditional workplace norms and revolutionizing how we define the workspace.

How IT Staff Augmentation Sparks Creativity?

Discover how IT staff augmentation ignites a culture of innovation, empowering teams to explore new ideas and approaches. By integrating diverse skill sets and fresh perspectives, businesses can unlock unparalleled creativity and drive transformative change.

Comments

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.