In IT, outsourcing uses third-party service providers to build from scratch. A software outsourcing company forms the team on its own. That being said, if a customer has preferences, they can always influence team formation. When you hire IT employees, you do not have to pay for taxes, insurance, facilities etc.

outsourcing vs outstaffing

However, this will not create too many problems for you if the outsourcing fulfills your project tasks and your requirements. The contractor will take care of finding the most suitable candidates. They have enough personnel reserve, experience, and a way of attracting new specialists.

Outsourcing vs Outstaffing: Which is the best choice?

The best way to think of outstaffing vs outsourcing is to think of the former as another dedicated team member that just so happens to be working remotely. In fact, it could even be a full external team overseas. Think of it as hiring a self-sufficient division that just so happens to not be down the hall from your office. Outsourcing vendors have the resources, equipment, and team required to get the job done. In most cases, clients can take a hands-off approach and simply wait for delivery from their remote employees.

Also, you can ask your partners and hear out a referral. You can use social media like LinkedIn, Facebook, Upwork , and lots of job search sites, where the whole company is being featured. The team has daily standups, where each team member can speak out on what was done by him/her on the project and what has to be done next. Also, the project manager can update the team on what the client intends to say or do.

Outstaffing Advantages and Disadvantages

You can outsource any chunk of work, but if you remain in charge of the daily management of a team’s activities, you will be working within the outstaffing model. The same applies to detailed user stories provided by the client. ‘homeshore’ teams – remote software development employees working from different locations. ’offshore’ teams – the outsourced software development is done in another country.

  • The team sets different communication channels and is reporting to the client via a project manager.
  • An outsourcing provider usually operates on a project-based business model, which means that the client probably entrusts the outsourcing company with the entire project from A to Z.
  • You don’t have to handle additional costs such as recruiting, personnel maintenance, and others since it’s all on the vendor.
  • But there are certain factors that remain more or less constant across the entire business spectrum.

This arrangement is highly scalable and staff can be easily replaced. Get into detail of how to create a medical billing software system and how much it would cost. While these concepts are widespread, they can sometimes be confusing. If you want to explore these models in more detail or select the one that suits your company, read our article. We will reveal the aspects of these concepts and also tell you how to apply them in practice without any risk. Our specialized staff’s mission is to assist you in assembling a team of talented software engineers and QAs, and get your project off the ground as quickly as possible.

Outsourcing IT Model: What is it?

Usually, but not always, the outsourcing party is abroad. Generally, outsourcing is a long-term relationship between companies, for a period of 1 year or more. Temporary staffing.The need for temporary staffing arises when there is a temporary project of 1 week to 3 months periods. It may also be necessary to temporarily replace a full-time employee.

Instead, we form a dedicated team and manage employees. This guarantees the clients a clear and transparent workflow, while they can focus on solving their business problems. At the same time, our customers work in close cooperation with us. They don’t have to be technicians, as they can rely on us. But they easily control the project, make comments and edits, ask questions, and receive full reporting, since they have access to any tool or project management system we use.

outsourcing vs outstaffing

Of course, the effectiveness of outstaffing largely depends on the agency that you will contract. Ideally, that agency should have a powerful recruiting department, mature HR processes, and proof that confirms the quality of their work. Startups and other fast-growing companies often have problems with scaling because they can’t find additional staff quickly enough. Contracting an outstaffing company is a way to rapidly scale up.

How to Building Distributed Agile Development Teams in 2022

Determine your requirements including your budget, target audience, time at disposable, selecting the right service provider with experience, clients, scalability. This lets you decide whom to hire, possible repercussions, and potential benefits. Whether you are going to outsource or outstaff, the procedure of hiring a software development company is similar. You will need to research the available options and communicate face-to-face with the selected provider to ensure they can meet your requirements. The outsourcing model involves hiring a software development company to carry out a project from the first stages till the launch. You, as a client, are not involved in the everyday problems and cooperate with the third-party’s project manager to make big decisions.

By partnering with such a company, your business gets a team or worker to perform a specific task/project. An outsourced team can handle tasks like app creation, website development, software development, and more. The unique characteristic of an outsourcing IT model is that the development team members you choose will deal with every aspect of your project from design to testing. The outsourcing company can keep distance, handling the project on their own and reporting progress to you throughout the development cycle. Or they can be a team player, interacting with your specialists along the way. One of the benefits of contracting an outsourcing company is a pool of talent they offer.

outsourcing vs outstaffing

Does this mean software development is out of the client’s control? It is a business model that involves an employee being hired by one company and working for another one. Literally, the hiring company provides an employee with a workplace, bonuses, a wage, and other perks, while the client provides tasks for execution.

Tell us about your Project

Cooperation with an outstaffing service provider can signal the deficit of expertise needed to bring a great idea to fruition. Now you have confidence and can go on expanding the team with QA, mobile app developers, etc. to make it a full-scale offshore software development team. In software development outsourcing, you commission an external offshore or nearshore company to execute your project from A to Z. In other words, you are choosing an outside service provider to carry out tasks that have been accomplished in-house. Outsourcing and outstaffing are also often confused with offshoring. Offshoring is a model that involves transferring a part of business to a foreign country.

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When it comes to outsourcing, for instance, our company has a dedicated team that can quickly present you with strong solutions. Throughout the years, we’ve participated in a large number of outsourcing and outstaffing projects. Big success cases include projects such as Cordian, Bookmaker, Ruuster, and Brainable. Outsource staffing is a type of remote hiring model in which you hire a dedicated team of developers to work on your project.

Software R&D Center as an Alternative Option to Outstaffing

So, the biggest difference between outsourcing versus outstaffing development is who plays the role of manager over the team performing your assignments. Typically, for outsourcing, software outsourcing and outstaffing this role is taken on by a manager who is a part of the team you are hiring. On the other hand, the outstaff model only works when the client controls the extended team.

And it is 1 per team of developers, designers, and testers. What concerns personal testing, there are various types of testing. Some companies tend to test out of the box, but this testing for quality can be limited. So, a client can also order personal testing that his/her outsourced team can carry out with delight. Some vendors focus on a single service, more often on IT team augmentation. Waverley Software, with 28 years of experience, 230 engineers and over 150 completed projects, is equally proficient at both models.

The offshoring model involves hiring a permanent, remote team in a different country. The difference between offshoring, outsourcing and outstaffing is that the offshored team is officially employed by you. First, you don’t have to waste resources hand-picking a professional to work for you. The contractor handles the human resources for you.

Managing remote teams might be challenging, especially with timezones getting in the way. You will also have to plug the outstaffed team into your company’s network, which might be an issue. You’re taking a huge part of the control into your hands, so the project manager costs are cut from the equation. You also don’t have to pay taxes, insurance and create a workplace.

It resembles a leasing agreement, yet you lease the whole team. For example, if you don’t have in-house tech expertise, outsourcing is the best way to go. But your development partner will take care of everything you need. Although an outstaffing IT model is comparable to outsourcing, engaging talent through outstaffing has different characteristics. The gap between the demand and supply of software professionals is a reality.

However, it is much more similar to in-house development. The reason is that, within the outstaffing model, hired developers are fully managed by a client as they would be managed as employees. The client basically hires outstaff developers for the needed time. The cost of the dedicated team is determined by the number of working hours, the cost of the hired developers, the duration of the project, post-deployment maintenance and support. Before choosing between outsourcing vs. outstaffing models, you should be aware of the strengths and weaknesses of each approach.

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