Outstaffing VS Outsourcing. How to choose the right model
Today more and more businesses prefer to work with external developers, instead of expanding their in-house teams, when they do not have enough resources for the realization of their software project. The reasons can be different in each particular case but, in general, working with a company that provides outsourcing or outstaffing services helps to reduce costs, avoid time-consuming recruitment processes, and enjoy greater flexibility.
In this article, we’d like to explain the difference between outsourcing and outstaffing models and tell you about the principles that we follow at Softacom.
Why do companies work with external service providers?
To begin with, we offer to focus on the theoretical aspects related to these business approaches and analyze the key reasons why companies prefer to rely on IT partners instead of adding new specialists to their staff,
- Access to a global pool of talents. When you use outsourcing or outstaffing services you can work with experts from all over the world. In such a case, borders do not exist. Both outsourcing and outstaffing presuppose working with teams in a remote format that’s why it will be completely okay to establish cooperation with developers from another continent. Of course, there can be some issues related to language barriers and different time zone. But the majority of programmers today speak (or at least actively learn) English. For example, our developers have excellent language skills that help to avoid misunderstandings. Moreover, we are very flexible when it comes to working hours. Even if there is a huge time difference, we can adjust the time schedule so that it will be possible to have at least an hour or two for real-time communication. It means that you are not obliged to look for the necessary skills only locally.
- The possibility to reduce costs. When you have access to specialists from all over the world, during your search, it is possible to focus on some particular regions where the rates of specialists will be affordable for you. That’s why you will have freedom of choice.
- More time and resources to focus on core business activities. As the majority of administrative, hiring, financial, and further related tasks will be fulfilled and managed by your partner, you will be able to concentrate more on other spheres of your business.
- Enhanced product and service quality. When you have the possibility to hire the best experts from all over the world, you can expect to have amazing results of their work. For example, our company is a trusted Embarcadero Technology, Consulting and Training partner and a certified partner of TMS Software. These partnerships provide us with access to the most up-to-date base of relevant tech solutions and open the possibility of close interaction with the professional community. Thanks to this, our developers can find the most appropriate and efficient tools for delivering solutions that bring the highest value to businesses.
Even if you have already decided that you need to find external developers or other tech experts, it’s necessary to choose the correct format for this cooperation. Let’s have a look at the options that are available today.
IT outsourcing market
The outsourcing model presupposes relying on an external service provider in various IT tasks, including, but not limited to software development, app modernization, cloud migration, tech support, and maintenance. A company can delegate a whole project to a service provider or some particular functions, it is also possible to work only with one vendor or entrust different tasks to several vendors at the same time.
The popularity of IT outsourcing services is gradually increasing which is also reflected in the growing revenues of the global IT outsourcing segment. In 2022, the revenue of this segment managed to reach $395.05 billion (just compare: this figure in 2016 was at the level of $285.51 billion). Experts are quite optimistic about the development of this market. It is expected that in 2027, the global IT outsourcing revenue will hit the mark of $587.30 billion.
And we have a solid ground to suppose that this segment will keep growing being boosted by all the advantages that companies from different industries can enjoy when they start using outsourcing services.
Pluses of outsourcing:
- You have the possibility to fully transfer responsibility to another entity. If you delegate an entire project to a vendor, you do not need to spend your time and resources on managing your project. In such a case, you will need only to prepare accurate requirements and provide them to a software development company that you will work with.
- You can participate in selecting the best experts for your project. Though you will not manage the team, as a rule, you can participate in approving the composition of a team that will be able to deal with the project tasks.
- There is great flexibility related to the team composition. The composition of the team can be changed even after the start of the project in order to adjust it to the ongoing needs. This flexibility is also important for keeping the project within a set budget.
Minuses of outsourcing:
- You will have limited control over your project. While for some clients, this point can’t be viewed as a disadvantage, many companies prefer to control the development process directly. Nevertheless, it is important to mention that you will still have the possibility to oversee the progress and provide your feedback.
- You will also have limited access to the codebase and the tools used by the team. As your in-house team doesn’t work on the project, your staff may have little understanding of how everything is being done. Nevertheless, at Softacom, we can organize so-called knowledge transfer sessions so that your team will be able to get all the necessary information regarding the tech side of the project and a full understanding of the code written by our programmers.
Outstaffing services are also based on working with external developers who are officially employed by another company but there are some peculiarities. Outstaffing can be explained as renting a developer (or a team of experts) that will work on your project and will be a part of your in-house team. Even though these specialists will still officially work for your IT partner, you will have the possibility to fully manage their work just as if they were your in-house employees.
At the same time, you, as a client, will have the possibility to fully focus on your core business activities and the needs of your project.
When you start cooperation with us, you will be asked to prepare a list of your requirements for your future development team (or separate developers and other experts) that we will need to choose for you. The candidates that we will offer to you will have all the relevant skills and expertise so that they can perfectly fit your team and your project.
Main advantages of this model:
- You, as a client, can fully track and control all the steps of the development process. Outstaffed developers will work as a part of your in-house team, even though they will work remotely. The team will report to you directly and will fully follow all the instructions provided by you.
- This model also ensures great flexibility. You can easily scale your team up and down when it is required due to the continuously changing needs of your project. This flexibility allows you to smartly plan and allocate your budget.
- Outstaffing is also a very feasible solution as you do not need to deal with additional costs related to hiring, such as taxes, paid leaves, bonuses, medical insurance, etc.
- You will need to manage the entire development process on your own and there can be some challenges related to the necessity to work with in-house developers who work in your office and remote specialists at the same time.
- It is very important to find a vendor that offers comfortable conditions to employees. Otherwise, there is a risk that experts will leave the project during the development process. At Softacom, we are proud to have access to a pool of highly qualified professionals and we know what conditions should be ensured to retain specialists, as a result, the risk that we will need to replace team members during the development process is very low.
Despite the fact that these two models both presuppose engaging experts provided by a vendor, they have some differences that are related to how your project team will be managed and what involvement in the project is required from your side.
At Softacom, we have rich expertise in providing services of both types and have gained an excellent understanding of how to opt for the most suitable model in different cases. That’s why if you are interested in working with external developers, do not hesitate to contact us for getting a consultation. Our experts will analyze your business needs and the peculiarities of your project to offer the most appropriate variant of cooperation with an IT partner. We are always open to communication and we will be happy to tell you more about our company and our services.