Natalia Shpitula

Edited at September 04, 2022

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Outstaffing vs. Outsourcing: Which One to Choose?

Launching an IT project involves strategic planning. Business owners have to decide on setting objectives, defining budgets, staffing, and setting deadlines. 

When it comes to acquiring talent, every business owner should be aware of the engagement models for tech teams. Choosing a proper engagement model helps effectively reach established objectives and reduce the time to market for an IT product.

In this article, we’ll focus on outstaffing and outsourcing differences and how to choose the most efficient engagement model for your project. 

What are Outstaffing and Outsourcing?

Although the terms “outstaffing” and “outsourcing” have been in business for a while, they still confuse many project managers and business owners. So, before we go any further, let’s clarify them in short. 

Outsourcing is a type of cooperation when your company hires an outsourcing company that allocates experts to help you solve a specific business task. 

Outsourcing is a cost-saving measure that’s usually applied when the company needs to focus on an area of its expertise. The external team handles the tasks for which the company does not have sufficient resources.

Outstaffing is a type of cooperation when your company hires specialists from the other company to enrich your in-house staff with talent. The outstaffed team becomes a part of your permanent team. 

The outstaffed team is employed by an outstaffing service provider and works on the provider facility or remotely. However, the team is completely your subordinate, so you can establish direct communication and make project development flexible.   

Comparing Outstaffing and Outsourcing 

Outsourcing and outstaffing are similar because both models involve engaging an external team in your project. However, they should be targeted to achieve different goals in your business strategy. Let’s point out key differences between outstaffing and outsourcing regarding the following characteristics. 

Cost-effectiveness

Outstaffing and outsourcing are excellent models to arbitrate budgets. Outsourcing is usually used when you don’t have enough resources to perform a task yourself, such as marketing research or product manufacturing. You won’t need to obtain special equipment or software to do the task – the outsourcing team will handle the full cycle. 

However, due to internal management processes outsourcing is more expensive than outstaffing. With outstaffing, you won’t be charged for project management, because you’ll have the opportunity to do it yourself. Besides, the outstaffing team earns a regular wage, while the outsourcing company will charge you once the task or milestone is completed.  

Business owner involvement in management

An outsourced team doesn’t have to be shepherded. You’ll need to set the objective and check the results when the work is done. So, the responsibility for the work lies fully on the outsourcing team. 

Outstaffing gives you all the instruments for managing the team, assigning tasks, setting deadlines, and assessing work quality. However, full control means full responsibility. 

Flexibility

Outstaffing and outsourcing are relationship-based engagement models, which means management strategy defines its advantages and disadvantages. Outstaffing allows business owners to engage closely with a team, making a development process more flexible. Unlike working with an outsourcing team, you can adjust business goals and change project direction having an outstaffing team quickly adjusted to changes. 

If you work in a fast response environment, outstaffing might be an engagement model you need. Outsourcing suits better for projects with fewer risks involved.

Quality of work

There’s no common rule which team makes their work better. However, when hiring an outstaffing team you have more opportunities to check the quality of work during the project development process. Outsourcing teams usually have an internal project manager who’ll report the information about results and complications. You’ll have to trust outsourcing team members are top-notch professionals. 

Besides, outstaffing teams dedicate their time only to your tasks, while outsourcing teams may be involved in other projects. 

Hiring process 

With the outsourcing model, you get a fully staffed team. You don’t have to be involved in the recruitment process which may be convenient in some cases. But, if you want to expand your in-house team with employees that will share your culture and values, outstaffing should be your choice. Outstaffing gives you a chance to learn more about your future team players’ experience and skills and find a perfect fit. Of course, you will have to invest more effort and show leadership, but so you can build strong relationships with subordinates in the long term.

Many agencies, including Talentica, provide full-cycle staffing services for you to extend your team without a hassle. We’ll take the trouble of sourcing talent based on your business objectives, budgets, and demand for staff for you. 

Want to extend your team with top-notch developers?

How to Choose an Engagement Model for an IT project?

Outstaffing and outsourcing are widely used in software development. Both models suit IT projects, but with different goals. Below you can find a simple checklist that’ll help you define the perfect engaging model for your business. 

Can you provide management by yourself?

  • Yes. Outstaffing is a good choice if you have project managers at your disposal. 
  • No. Outsourcing suits you best when you have no time or resources to manage an external team.

Do you need to extend your in-house team or hand over some tasks and get results?

  • I need team players. Outstaffing lets you hand-pick employees, with the skills you require and the values you share. 
  • I need results. You can hand over a particular task to an outsourced team and expect results under the contract terms.

What experts do you need? 

  • Developers with specific skills. Outstaffing allows you to hire talent to close the gaps within your team and make it stronger.
  • BPO and support. An outsourced team can handle tasks outside your expertise for you.  

Conclusion 

Outstaffing and outsourcing engagement models suit different business goals. Outstaffing helps businesses acquire professionals with skills and expertise they lack to improve their internal teams. Outsourcing, on the other hand, takes care of an entire business process for which the company hasn’t enough resources. 

September 04, 2022

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