IT Outstaffing: Pros and Cons of This Model in Software Development

The service provider has a diverse team of specialists. If the project requires additional expertise, the company will rapidly engage them in your project. You won’t have to search for and hire additional experts. Take note that, much as with the outsource team, the workers you outstaff are officially employed by a third-party.

The time and material approach can also be called a flexible one. In this case, the dedicated development team offers you an approximate description of the necessary costs. You, in turn, pay for the overall results and the materials/time involved in the development. This approach is generally safer for all the relevant teams. If you overestimate the cost of the project, it’s possible to deliver it at a lower price.

outsourcing vs outstaffing

Furthermore, it brings an obligation to comply with standards and achieve the KPIs. In the end, each business practice has its advantages and disadvantages, so there’s no universal answer to the «outsourcing or outstaffing» question. So let’s look under the covers of outsourcing and product development services based on what we know about the IT sphere and IT market. We’ll also go over the outstaffing practice further in the article. On the other hand, large and public companies tend to position themselves as in IT outsourcing, but only in the Product Development Services and Managed services areas. As time goes on even small companies reject «outsourcing» positioning using «custom software development» instead.

Outstaffing: The Pros and Cons It

One of the things that worries clients attempting hands-off outsourcing is what will happen if the code simply doesn’t work? To them, it’s a bit like buying a product off the internet sight unseen with no possibility of getting a refund. That means a client company will entrust the outsourcing agency with an entire project, which they will then complete from A to Z. 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.

outsourcing vs outstaffing

As a result, it’s important to carefully consider the risks of downtime before making a decision about IT support. Outsourcing and outstaffing are both beneficial for businesses. Anyone looking for a long-term solution to their staffing needs, however, should consider outstaffing. One of the biggest problems with outstaffing is quality control. When you outsource work, you’re essentially giving up some control over the final product.

What is an outsourcing service?

Finally, they decide to hire an offshore software development agency and get confused with a bunch of terms like software outsourcing, outstaffing, dedicated team, and others. Any company needs good specialists, but not everyone has all the necessary capabilities and resources to recruit and maintain a vast staff. That is why many companies use outstaffing and outsourcing services.

Without a doubt, the most significant advantage of outstaffing is the optimization of a company’s economic model, as well as cost savings. Outstaffing lowers costs and keeps your company’s non-core business expenses to a minimum. Furthermore, this strategy allows you to eliminate the expenditures of employee finance and resource upkeep. If you’re willing to put in the extra effort, the savings can be substantial.

What does it mean when a country is outsourcing?

On the other hand, they can request, say 3 devs, a QA engineer, and a designer from an outstaffing agency. When their job is done, their company will simply reassign them to different projects. 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.

The main differences between software outsourcing and outstaffing are the scope of the project and the side responsible for the management of development activities. Some people are gifted with either technical or managing skills. Nevertheless, entrepreneurs underestimate the complexity of outstaffing. They believe that they’ll be able to communicate, manage and assign tasks to remote employees, and manage their business at the same time. As it turns out, about 300,000 jobs get outsourced out of the US each year.

In this case, the client personally controls the scope of work and hires employees from another company. At the same time, the issues of wages are decided by the contractor and everything that deals with bonuses and equipment. When it comes to software projects, you may find that outstaffing gives you more responsibility than outsourcing. With outstaffing, you’re managing the project, so you’re accountable for its success or failure.

outsourcing vs outstaffing

When most of the items from the above list are true for your company, you can safely implement this model in your work. But we just so happen to know one reliable DevOps provider. You might have heard of software outsourcing and outstaffing them on Clutch, Upwork, AWS partners list, or elsewhere. In our article, you will find the best JavaScript framework comparison so that you know for sure how to choose the right one for your project.

The hidden costs of hiring an employee on contract

Interestingly, it’s as simple as leasing (exactly, ‘leasing’) teams to be responsible for separate activities in the company. Customers may prefer this approach when they already have a technical team, but lack experts, so the problem cannot be completely solved in-house. So, this practice means that the organization providing a service in this way takes over the work in full. For example, if this is an app, they will complete everything from specifications to maintenance.

The main difference between outsourcing and outstaffing is that outsourcing refers to the entire project support, while outstaffing provides hiring and maintenance of experts. The type of offshore development highly depends on your project needs. If your team is having trouble solving a couple of tasks, then outstaffing is preferable.

  • It just takes too many resources to invest in hiring, inducting, and training an in-house team.
  • Organization of work.Specialists working under an outsourcing contract have a flexible schedule and work on their territory.
  • Also, pay attention to the campaign’s reputation, profile, and experience.
  • Dedicated software development teams can arrange convenient processes and adapt the methodology of choice.

Many people believe that there is no distinction between offshore outstaffing and outsourcing development models. However, the chosen model may significantly impact your project. With the outstaffing approach, the client has full control over management.


In various organizations, outsourcing and outstaffing can mean very different things. In Ukraine, the majority of small and mid-size IT companies call themselves IT Outsourcing. There are three factors that determine whether outstaffing would benefit your business more than other models.

An Insider’s Guide To Outsourcing And Outstaffing Software Development – Forbes

An Insider’s Guide To Outsourcing And Outstaffing Software Development.

Posted: Wed, 16 Jan 2019 08:00:00 GMT [source]

If this rep is not there, outstaffing will likely not work. Short-term projects are common in the outstaffing world. However, many clients have noticed that the model actually lends itself better to long-term collaboration. This is because it might take some time to get the communication where it needs to be. Apart from this main difference, outsourcing and outstaffing have other dissimilarities concerning pricing, management efforts, and payment which we structured in a table.

Instead, the can hire a firm to do all the relevant work for them. The construction team works according to your accepted plan but does so independently. You can come to the construction site from time to time and see if everything is alright, introducing some corrections. It’s possible to leave the whole process to the professionals in this case. The remote team will do everything alone, allowing you to enjoy the final result.

Outsourcing vs Outstaffing: What to Choose?

Since an employee concludes an employment contract with an outstaffing company but not with a customer, the latter does not deal with these matters. This approach reduces the load on the customer company’s administrative and accounting departments. How oustaffing model worksFrom a legal perspective, a specialist has labor relations with an outstaffing company but not with a customer company. While the outstaffing company provides services to a customer according to the contract, a customer company pays for them.

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. We believe that clients, if necessary, should be able to communicate not only with the manager but also with any member of the team, whether in Slack or on general calls. A dedicated offshore team consists of two or more high-quality developers involved in the development of a particular part of the project.

However, there are multiple one-time tasks that do not require you to hire a specialist on a long-term basis. Or have you ever found yourself in need of a specialist but you really can’t ensure a long-term position? THIS is what outsourcing and outstaffing are there for.