The 21st century is the best thing that could happen to businesses of all time. We have video calls and conferences. And, communicate via emails and multiple professional social networks. It is a pleasure no businessmen could imagine in the past. The engagement models have transformed so much that it’s hard to collect ten people who wouldn’t work in a company providing software outsourcing and outstaffing services.
In this digest, we will discuss the difference between outsourcing and outstaffing. These are the two major types of B2B collaboration popular in the modern market. Before we launch our “which is better outsourcing or outstaffing” tirade, let’s refresh our knowledge about the two notions.
In the IT sphere, the collaboration with the outsourcing company looks like this: a service provider (an IT company) and a client sign an agreement where the service provider is responsible for the quality and process of development of particular software. An outsourcing team is comprised of well-synchronized members who have been working with one another. The outsourcing company then provides a project with the PM, a required number of developers, and manages the process from the beginning to the end.
Things go differently when it comes to outstaffing since an outstaffing company is a supplier of developers who work for the client directly. The core idea of outstaffing is to escalate the size of the existing team of the partners in the shortest time possible. In addition, in outsourcing an employee can only work for one company on a full-time equivalent job basis, meanwhile, in outstaffing, an employee can work for different companies being hired till the project is over.
Outsourcing vs outstaffing: what’s best for the client?
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Outsourcing is better for the majority of businesses as it predicts more determination and responsibility from the IT companies. The high-quality and satisfactory result of the collaboration directly affects the reputation of a company. In other words, the better the result – the more clients a company attracts. To leave a client satisfied, IT companies conduct the full cycle of product development: beginning with the business analysis, estimations, status meetings, and ending with the product testing.
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Pros of Outsourcing IT Services
Among the pros of outsourcing vs. outstaffing model one can find:
1. On-time delivery of the project
In outsourcing, the software development estimation of the project delivery is set, documented in detail, and set before the parties sign a contract. It includes every iteration, demo, and any risk factor that exists during the software development lifecycle. But the very timeframes are not vague, they are precisely assessed, and the team is obliged to meet them.
2. Good communication with the client
This is one of the core features of outsourcing. The team sets different communication channels and is reporting to the client via a project manager. It can be once a week, every two weeks, or whenever the client needs updates. However, according to the agile processes, there is one project iteration every two weeks which is followed by a demo. At the demo session, the team showcases what was done so far to the client.
3. Regular status meetings
The team has daily standups, where each team member can speak out on what was done by him/her on the project and what has to be done next. Also, the project manager can update the team on what the client intends to say or do. This allows the team to be aware of their tasks.
4. Rapid response to occurring problems
Outsourced teams work according to the defined iterations, where they deploy one feature at a time. This allows a better look at the problems and their elimination right away. So, when most of the features are deployed, testers have already tested these features and ensured there were no bugs.
5. Providing additional services like personal testing or project manager
In an outsourced team, the main person to maintain contact and communication with the client is the project manager. And it is 1 per team of developers, designers, and testers. What concerns personal testing, there are various types of testing. Some companies tend to test out of the box, but this testing for quality can be limited. So, a client can also order personal testing that his/her outsourced team can carry out with delight.
6. No time overlaps
Working additional hours has been considered a negative side of software development. But, with the right outsourcing model and defined timeframes, there is no way developers will be engaged in time overlaps. There are seven stages in SDLC and the team carries out these with precision, with early testing. Unless there is a sudden change in requirements in the middle of the development (which is a rare occasion in fixed contracts), then time overlaps are a one-time activity.
Cons of Outsourcing IT Services
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There are so many pros of outsourcing. But don’t forget that there are two medals of a coin. And, cons are also there. Especially, when the company is young and its processes are still under constant development and changes. So, here, outsourcing would be at a disadvantage when there are:
1. A poor cost estimate
Sometimes clients rush in with the idea and expect fulminant results. This makes a team pretty pressed for time. To win over the customer the team may present a project cost estimate (and delivery steps) within a couple of days. But, would this estimate be reliable? It is better to take time and provide solid project research. Give your outsourced team time so as not to waste your budget afterward to fix different problems. Instead of saving money, which is a benefit of outsourcing, you might lose it.
2. A choice of the right vendor
Nowadays, there are thousands of IT companies in the world. All of them provide services for your outsourced projects. But how to choose the right one? Where are the criteria? Wrong choices can lead to potential problems and failure. So, this is not just the process that needs haste. Don’t ever fall for short terms of development and low prices. Look at the team, and their skills, and find solid feedback about the company. Or you risk everything outsourcing a project and receiving broken software, not according to what you have expected, in return.
3. Contractual and legal processes
Being offshore, your choice of a vendor and the legal procedures around it depend mainly on the country it is located in. So, it is of great concern to settle all the legal matters and be as scrupulous as possible. Discuss everything: from the minute you share requirements to the time of the release. Focus on risks and delivery overdue. Even if things won’t happen it does not mean that they might not occur at all. It is better to be legally supported and prepared.
4. Poor knowledge sharing
To make your team on the same page as you are it is best to transmit all the requirements up to the slightest details. The team has to be aware of your expectations, have the appropriate tech skills to implement them, and show great interest in the project itself. Not enough requirements or the lack of such can cause delays and errors during production. Wasting time will only waste additional costs. So, be prepared to understand what you want and share it with the team.
Benefits and Risks of Outstaffing
To compare outstaffing vs outsourcing, let’s enlist outstaffing pros and cons as well.
Benefits of Outstaffing Model for IT
Outstaffing also has its pros and cons. Let’s find out the positive side of this project development model. For example,
- the staff are coordinated by a PM: they are dependent on a PM, and their communication and cooperation with the client goes via a PM;
- occurring time gaps and overlaps: if the team staff is put together being in different parts of the world and someone lets the team down, or there are no instructions, it is likely that the time will be flexible;
- each outstaff member is responsible for himself: there is no team spirit or team bonding, and if someone falls, the whole team struggles;
- improved team scalability: it is great as you can hire anyone to extend the software development team by outstaffing from any location in the world.
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Surely, the outstaffing companies are responsible for insurance, taxation, and official employment but they carry less responsibility for personnel management and quality of the rendered services. Whereas, outsourcing companies cover the entire scope of issues and services providing high-quality and skilled employees.
Risks of Outstaffing Model for IT
Outstaffing may be a great model if you need to scale your team. You can add anyone to support the tech knowledge and skills. But, if you need quality communication, interaction with the team, and requirements-sharing, this is not for you. Besides, outstaffing has its flaws as well.
- Poor client-staff communication
- Team perception/bonding
- A schedule that does not suit a team member
Project thinking vs Product thinking
Where outsourcing for recruitment would be an advantage?
You can outsource developers and outstaff developer almost anywhere now. But, to trust your choice, the sources of search should be, by all means, credible. For instance, to outsource a team, look through such official websites with agency feedback as Clutch, Goodfirms, and Pangea. Also, you can ask your partners and hear out a referral. You can use social media like LinkedIn, Facebook, Upwork (freelance), and lots of job search sites, where the whole company is being featured.
Getting a person to complement your team can be done the same way. The only difference is that you need to search for the IT outstaffing company worldwide. And see whether the person on a job site works according to the outstaffing model. Outstaffing requires remote work, flexible working hours according to the time zone, and more.
Among the mentioned outsourcing vs. outstaffing platforms, you can find Inoxoft. We are an outsourcing company providing web development services and the discovery phase for software development for partners all over the world. We have a great team to outsource that is tech-savvy and follows all the latest development trends. Also, Inoxoft provides 30-minute free consultations, where we can share our knowledge of where to find outsource software developers and how to outsource software development the right way.
How does a machine learning outsource team provides quality products and carry out tasks? Find out!
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The decision to outsource a product is complicated as software development companies would rather develop in-house and would consider extending the company size. What does the outsourcing model give you? Looking at the practice of the IT countries where outsourcing is most popular, it is possible to conclude that the main drive to outsource to them is that they are cost-effective, experienced, and geographically and culturally proximate. Thus, it will give your business more time to concentrate on your main job a guarantee for a high-quality end-product. To meet the needs of the clients, Inoxoft provides both outstaffing vs outsourcing model services to international partners. You can choose an engagement model for software development that works best for you. Our reputation is built on the trust and positive feedback of our clients and we are more than ready to provide high-quality IT outsourcing services.