Outsourcing and outstaffing are two terms that are often used interchangeably, and no, they do not mean the same thing. The terms became frequent in the tech jargon after many companies like Microsoft, Facebook, and Google became household names. They began running hundreds of projects that the in-house developing team could not handle alone. Today, we are often asked about the difference between these two terms, their pros and cons, and the things a company should look out for before selecting a model.
In the article outstaffing vs. outsourcing Riseapps team describes the primary differences of these hiring models, and we are here to cover pros and cons of both models:
What is Outsourcing
Outsourcing is a business model where a company hires an agency or a service provider to run a project from A to Z. The implication of this model is that the hired company entirely manages the outsourced project, and the hired company handles every part of the project—including putting together team members for the project, with very little oversight from the hiring company.
Let’s take a practical example:
Company A outsources a project to Company B to work on a ‘Building a web framework.’ Company B will be in charge of:
- Hiring its team members to begin and complete the project.
- Pay its team members.
- Hire managers and supervisors for the project
- Handle project development, accounting, and sometimes, legal.
- Report progress to company A.
Company A on the other hand, will play minimal oversight. Company A will not have direct contact with the team members company B hires.
- When a company outsources a project to another company, it does not worry about oversight or management. It only awaits a progress report.
- Outsourcing a project means taking a large weight off your shoulder. Finance and legal are also handled by the company the project is outsourced to.
- If the company a project is outsourced to is competent, it will create an environment for team members and improve productivity.
- Outsourcing can quickly become unbearably expensive.
- With little oversight, a company may become a victim of an overpriced service provider that will not get the job done.
The outstaffing business model is in play when a company hires remote workers who work on a project. Sometimes, outstaffed staff may work within the company—and with the company’s in-house staff. In outstaffing, the project is often monitored by in-house supervisors and management.
- Outstaffing is mostly cheaper than outsourcing. This is because people hired through the outstaffing model often work to complement the efforts of the in-house team. A company looking to develop a program using the Laravel Framework may decide to outstaff a full-stack web developer to oversee the efforts of the in-house developers.
- Our staffed team members are not permanent staff, so the hiring company has less worry. Issues like tax, pension, insurance, are often not included in the hiring contract. Also, at the end of the project, the company will let go of all outstaffed clients.
- Without an extensive management team, outstaffing may become a nightmare. This is because, with remote workers, you must find a way to ensure that they deliver quality and on time.
Which Is Better for Your Company?
Choosing between outsourcing and outstaffing depends on the needs of your company. If you run a media firm looking to expand into the tech world by building an app, you may need to outsource the whole app building project to another tech company. That way, you don’t have to worry about oversight—and obviously, your in-house team knows nothing about tech. If, however, you have a management team that can handle more employees—for a short time, you can always out staff the project and closely monitor the progress of the project.
We hope you enjoyed our piece. If you want the outstaffing model, ensure that you have a sound management team and manager—one that is able to seamlessly blend the in-house and the outside team without hassle. If you decide on the outsourcing model, select a company with a proven record of quality delivery. It’s not enough to just choose the first company that pops up on your Google search list. Research extensively on each potential company you will hire. To outsource to the best company, follow the tips below:
- Check their track records.
- Verify testimonials.
- Ensure that they have the experience to handle a project as big as the capacity you want to achieve.
- Schedule an interview with the prospective company heads you want to hire.