Modern IT companies actively use various forms of remote collaboration to remain flexible and competitive. Among the most popular models are outsourcing, outstaffing, and nearshoring. Outsourcing involves the complete transfer of a project to an external team, which is convenient when there is a shortage of internal resources. Nearshore outsourcing companies allow you to attract specialists from neighboring countries with a close time zone. Outstaffing offers a different approach — integrating individual external specialists into your team, while maintaining full control over the project. In this article, we will focus on the outstaffing model in more detail and consider its advantages.
What Is IT Outstaffing?
IT outstaffing is a format of cooperation in the field of web or mobile development, when the customer engages individual specialists from another company to perform tasks as if these employees were working on their staff. Legally, the employees remain employed by the outstaffing company, but in fact, they perform the customer’s tasks, usually under its management and control. The outstaffing company deals with the selection, training, retention of specialists, salaries, taxes, vacations, dismissals, and maintaining all personnel documentation.
For example, you need to develop a service, but the team lacks two specialists of a certain stack. You contact the nearshore outstaffing company and select the people you need, then include the specialists in your work process — issue tasks, and control their implementation. In other words, with outstaffing, you pay for the work of employees, and not for the actual provision of the service.
Outstaffing is often called developer outsourcing, but this is not entirely true. If we are talking about adding one or more specialists to your team, then this is outstaffing. When outsourcing, you give the project to an external team. The project is managed partially or completely by the contractor company.
The Difference Between Outstaffing and Outsourcing
Both of these concepts relate to external development, and they are often confused. We tried to collect their differences by two main factors to show the difference:
The Purpose of Hiring
The purpose of outstaffing is to supplement your team with external specialists with a certain expertise to work under internal management. The purpose of outsourcing is to hire a contractor to create, develop, or support an IT project.
Project Team Management
In the case of outstaffing, development management is entirely on the client’s side. His company interviews developers and is responsible for the final result.
If the client has chosen outsourcing, then the development team is completely external, and the contractor manages the process. For this, outsourcing companies have team leads and project managers.
Pros and Cons of Outstaffing
The outstaffing model has both advantages and disadvantages, which are always considered in comparison. We will compare with such development options as hiring specialists on staff and outsourcing.
Advantages of outsourcing compared to hiring full-time:
- Flexible and prompt scaling of the team if necessary. Perhaps this is one of the main advantages of outsourcing compared to hiring full-time. You can hire the specialists you need for a certain period in just a few days and terminate the cooperation when you no longer need them.
- Expanding the team with the help of IT outsourcing will be faster than selecting and hiring missing full-time employees. You will interview a more limited selection of specialists, each of whom, on average, will be a better fit for you than the average candidate who responded to a regular vacancy (which means you will find the right specialist faster).
- High quality of project execution. Of course, there are also reverse cases, but if you cannot afford to hire only technical gurus full-time, then the quality of work of external developers can really be significantly higher. Software outsourcing companies usually employ specialists with extensive experience in various projects. They can offer interesting solutions, and their IT horizons are usually much higher than those of internal specialists. In addition, in addition to the customer, the contractor often monitors the quality of the outstaff developer’s work: it is in their interests to do the work well, retain the client, get a good review, and case.
- Quick start of the project. Experienced companies that deal with outstaffing quickly organize interviews, sign a contract, and a specialist (or several) start working. You practically skip the probationary period and onboarding. This allows you to quickly start working and minimizes the time for preparing the infrastructure and setting up processes. Outstaff specialists can also offer you some proven solutions to speed up the development process.
Advantages of outstaffing compared to outsourcing:
- Full control and direct project management. Since the management is on the customer’s side, they have the opportunity to monitor each stage, as well as independently control the quality of the work performed. Also, with outstaffing, the customer can change the requirements for the project more quickly, which provides greater flexibility in management.
- Lower cost. Subject to certain conditions, IT outstaffing will be cheaper in terms of costs than outsourcing. Reducing the final project budget is possible due to your own project and development team management, that is, only if you have an experienced project manager and team leader on staff. With poor management, you can drain all the savings and get higher costs due to improper planning, delays in deadlines, and inefficient distribution of project resources.
When Is IT Outstaffing Needed?
Outstaffing is suitable for companies that:
- have their own internal development team;
- a competent team leader and project manager;
- well-structured internal management of IT projects;
- clearly formulated project goals and expectations from the work.
Below are examples of situations when outstaffing specialists may be needed to develop a project:
- The company is starting to develop a project in a new area or on a new stack, and the in-house specialists do not have the necessary competencies.
- The project is in full swing, and you suddenly have two developers drop out of the work process (for example, they had to be fired due to unsatisfactory code quality).
- The management has set the task of promptly launching a new project and taking advantage of the market situation. At the same time, almost the entire in-house team is busy working on another project, and there are not enough resources.
- You need to unexpectedly implement a small project by the date of an important industry exhibition, and you are short one or two developers for a couple of months.
- A strategic decision has been made at the company management level to control and limit fixed costs in order to be able to quickly reduce overall costs, and you need additional developers.
Final Thoughts
Outsourcing, nearshoring, and outstaffing are different strategies of remote cooperation, each of which is suitable for solving specific business problems. Outsourcing is convenient for transferring the full development cycle, nearshoring is for interaction with teams from neighboring countries, and outstaffing allows you to quickly strengthen your internal team with external specialists without hiring them on staff. If you are interested in one of these cooperation models and are looking for a reliable technology partner, we recommend paying attention to N-iX, one of the leaders in the field of IT services, offering flexible solutions for your business needs.
