Modern companies promote their services with the help of websites, applications, and other digital products. But to develop such projects, organizations need professional experts. To find these temporary employees, companies use outsourcing and outstaffing models. It would seem that these terms exist as synonymous words, but they are completely different. Understanding these differences between outstaffing and outsourcing can help you choose the most beneficial hiring method for your business.
What is outstaffing?
The outstaffing model means a company hires a temporary IT professional through an outstaffing company. Then, it becomes responsible for their entire time on your team. It’s like hiring permanent employees but more smoothly and unproblematic. Instead, the freelancer works only with the client during an entire project, while the client takes care of all the employee’s costs in their own time: benefits, bonuses, and so forth
There are two outstaffing models, and companies can choose which one they prefer.
“Cost” model–the client pays a certain amount for the employee hired, which covers all his costs, including wages. The client doesn’t know how much money goes into this activity. The company that provided the employee to the client manages this money;
“Cost Plus” model–according to this model, the client himself disposes of the costs of salary, equipment, vacation, and other employee’s needs. However, the customer company still doesn’t do it. The outstaffing company bills him, and the client ensures they pay everything. It’s important to make sure this process is smoothly organized.
What is outsourcing?
Companies resort to IT outsourcing when they have a project idea but don’t have the resources or capabilities to do it themselves. You can outsource to another company if you don’t want to build your own IT team. You will get the product you wish for without the hassle of paying a certain amount.
This option is great for many companies. Startups use this hiring model because they want to focus more on other processes of their business. Also, established companies resort to outsourcing if they want to make their business more digital.
The beauty of this method lies in implementing any idea you have and deciding if it is appropriate for further development. In doing so, you don’t have to form and maintain your IT department. This saves you a lot of time.
Our team of experts at Centum-D is always ready to provide you with outsourcing services, selecting specialists who align with all your wishes.
Why do companies resort to outsourcing and outstaffing?
Digitalization of business and attention to the IT sphere is increasing. For this reason, companies may have difficulties finding a budget for hiring permanent IT experts and knowledge to choose qualified professionals.
That’s why outsourcing vs. outstaffing is so hot right now. Above all, these hiring models provide the following benefits:
Expert knowledge–you may need to have the knowledge your in-house experts do not
possess. IT Outstaffing company allows you to find qualified employees who will do their jobs correctly;
Scaling–Any company wants to expand its influence on the market fastest without
sacrificing the quality of its services. That’s why they choose options of
outsourcing and outstaffing to develop digital solutions that help ensure rapid scaling;
Effective brainstorming – Organizations constantly look for ideas to streamline their workflows. Outsourcing /outstaffing team effectively develops software with all the client’s needs in mind;
Speed–By relying on the outsourcing team, organizations can be sure that they will do all the work on time. Regardless of the deadline, you can hire temporary specialists and know they will do their job quickly and with high quality. At Centum-D, we focus on picking up a suitable expert for your exact needs.
The major difference between Outsourcing vs. Outstaffing Models
It can be tricky for companies to determine what is outstaffing and outsourcing and which hiring method would suit them. Mostly, this is because it is difficult for entrepreneurs to understand the difference between the concepts of outstaffing vs. outsourcing. Below, we will highlight the major differences between them.
The main outstaffing definition
Large projects that may involve one or multiple part-time or full-time IT professionals
Direct contact with temporarily hired employees
Controlling the working process of temporary workers at the permanent IT staff level
Hiring an expert as a contract employee
The main outsourcing definition:
One Time or intermittent IT service needs, such as website or software development
The outsourced employee manages all resources
Infrequent contact with the client
Turnkey work; the client only accepts it when it’s delivered, and doesn’t involve in the work processes in any way
Advantages and disadvantages of outsourcing and outstaffing
Below, we will highlight the strengths and weaknesses of both models of hiring temporary employees. It will help you understand the basic principles of each of them and decide which suits your company better.
The major advantages of outstaffing are:
Flexible hiring process–you hire people for exactly how long you need them. If you need one person for three months and another for the rest of the year, so be it. You do not sign employment contracts at IT outstaffing services, but say goodbye to your employees without obligations;
Process control–working with outstaffing companies, you don’t feel any difference between them and your IT team. You have daily contact with your outstaff employees and merge them with your regular employees;
Complete access–as you act as a project manager and have full access to all information related to the project;
Lower costs – the management burden is on the client’s shoulders, which means he saves a decent amount of money.
Disadvantages of outstaffing:
Communication problems–you should involve the IT outstaffing team in your business during the project. To do this, you must set up communication channels and ensure the outstaff’s accountability is transparent. Otherwise, you’ll deal with frequent inconsistencies;
All blameworthiness is on the client–since all project management is on the client, he is as well responsible for the project;
You must deal with hidden costs–you may pay for overtime, a change of employment, or even the rate itself may go up during the process. So it would help if you were prepared for that.
The main pros of outsourcing are:
All responsibility rests with the vendor–the outsourcing company is at the head of the quality of the work. You, as a customer, are not involved in the management, and if you don’t want to invest your time in that, this is an enormous advantage;
The client is not involved in the management–as mentioned above; the supplier handles all project management processes; you accept the finished work;
Hiring and firing processes are the responsibility of the outsourcing company–the distribution of salaries, benefits, hiring, and other HR responsibilities are on the supplier;
You don’t have to buy the hardware/software–the client doesn’t pay for the equipment required for their project. The vendor handles this issue;
A wider range of resources–outsourcing employees are easily interchangeable. That brings more flexibility and allows vendors to bring in different specialists easily;
More efficient fulfillment – given the flexibility of the outsourcing model and access to a rich resource, your order is likely to be completed many times faster. At that point, you don’t pay hidden costs like overtime.
Cons of outsourcing:
Lack of control–the flip side of the responsibility deprivation coin is a lack of control over the situation. However, it depends on the client’s wish for how much they want to be involved. A professional company always ensures you are heard;
Higher Cost–With the outsourcing model, you pay an hourly rate to IT professionals and project management managers. Typically, these rates are much higher than usual. However, every penny is worth it, as you get your work done much faster by professionals.
Outstaffing or outsourcing: which is better for you?
There are many subtleties to consider when deciding such a question. First, think about the infrastructure of your business: how easy would it be to incorporate an additional team into your existing unit? What size of budget do you have? Can you handle the day-to-day management of IT professionals? How will your permanent employees work with temporary employees?
Why is outsourcing right for you?
Why is outsourcing not right for you?
Why is outstaffing right for you?
Why is outstaffing not right for you?
Project responsibility lies on the service provider
You control all the processes and quality of the product
You’re responsible for everything on your own
Faster turnaround time
If you aim at a long-term project
Need of bigger management resources
The work is turnkey; you do not waste time on its development
If you prefer integrated or dedicated working models
Easy way of hiring
Thus, both outsourcing and outstaffing have their pros and cons. The question is only about your preferences. If you want your request to be fulfilled quickly and with high quality without using resources from your company, then outsourcing is perfect for you. Centum-D team will help you draw up your project development plan to the smallest detail and select qualified employees ready to start their job at once.