Custom Software Development: Outsourcing Vs Outstaffing


Outsourcing and outstaffing are relatively new terms. Both firmly stepped into the IT sphere, and sometimes get confused. Indeed, they both involve remote work; after all, IT is all about remote work nowadays. But the core difference is that where outsourcing hands a whole business process (read: software project) to a third party, outstaffing presupposes hiring dedicated employees of a software company to work on the project controlled by the business owner.

What Is Outsourcing?

Outsourcing is basically handing projects, functions, or activities to a third party, which has all the available resources to conduct it – such as qualified staff and equipment. With the importance of IT growing, businesses from various industries hand IT services to remote contractors which offer high-value IT products and services for lower labor costs.

The actual task of outsourcing is not saving money, but rather the opportunity to free the available resources and focus on new directions of core business activities, or develop those which need extra attention.

Why Is Outsourcing So Popular?

If IT is not the core activity of a business (which can be said about the overwhelming majority of businesses around the world), outsourcing is a reasonable solution to control the budget, avoid extra costs, help by lack of local resources, eliminate the need for hiring and/or training IT staff, and allow remote and efficient work in any part of the world.

There are several obvious pros to outsourcing that keep it running:

• lower costs of salaries and procurement (the latter is often left to your software contractor);

• you don’t have to overtake the HR record keeping, taxes, etc.; generally more responsibilities are delegated to your contractor;

• your contractor hires IT professionals and has the necessary equipment for development; therefore you get an easy way to access the state-of-the-art technologies and high-class IT professionals;

• your contractor manages and supplements project documentation – you receive it at the end of development, along with the source code and the deployed product;

• you are enabled to free your internal resources for core business activities.

The drawbacks include increased amounts of time required for communication: discussing details, clarifying requirements, and so on. Your contractor will have to adapt to your business environment and expectations. However, the problems of distance is what outsourcing successfully struggles with, and the more streamlined the contractor’s work processes are, the more successfully they overcome these problems.

What Is Outstaffing?

Outstaffing is much less talked about, yet has occupied its place in the IT sphere. The general mechanism is as follows. Your business hires the outstaffer’s employees, who continue working at their regular workplace, but basically ‘change’ their employer. In a nutshell, these are designers/developers/QA engineers who work on the tasks that you give directly. That’s the main difference from outsourcing.

Where outsourcing is the complex support of the whole project, outstaffing is all about hiring – the rest is a matter of contract and its details. Generally outstaffed employees work on a remote basis; sometimes people are invited to relocate and join the team permanently. The client may say, ”I need this person for further work, I don’t want to hire anyone else, and I’m fully satisfied with his/her work.” Actually the companies that work in outsourcing, receive such proposals as well, but in most cases they cannot guarantee that the same developer will be free when the client needs him/her. Outstaffing also presupposes problems of psychological tension, motivation, and adaptation (especially for new employees from different countries).

Which One Is For You?

These two options can provide high efficiency by urgent need. The choice of the method depends on the situation. Hiring a dedicated specialist makes sense if you are ready to guide their activities and take more responsibility, since you are in full control here. And if you require a certain amount of workforce which you don’t have at the moment, outstaffing can be the means of getting it.

If you are already acquainted with these employees and satisfied with their work, you may hire them to continue their work, for example, regularly maintain and/or test your website.

If you have a whole project to be completed (the actual majority of all cases), it’s more reasonable and convenient for you to outsource it to a competent team. Even if you don’t have any experience of work with an offshore software company, there are freelance marketplaces that ensure the needed level of transparency, and NDAs for protection of your confidential business information that might be disclosed to your contractor for the successful completion of the project. Outsourcing is more of a partnership, and very often the business and the software company grow fruitfully together through lasting business relationships.



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