Outsourcing vs Outstaffing: Whats the Difference and Which Should You Choose?

On the other hand, they are responsible for their part in the client’s project. So if any developer is fired from the project, it will be a red flag for the outstaffing agency and a reason to fire them, too. You can augment your tech team by hiring a developer from an outstaffing agency and have a full team assembled to start your project. But what if you have a tech team that misses a specialist with certain skills? Let’s see its pros and cons and what difference it may bring to your business. While you may share the guides and ideas with the teams, the outsourcing companies’ contracts usually limit the client’s intervention in the development process.

According to a recent Deloitte survey, 70% of participants reported that they use outsourcing as a cost-cutting tool. Another 40% stated that outsourcing provides organizational flexibility in regard to remote work and fast-paced digitalization. Many businesses wind up selecting software providers that are either under or overqualified, depending on their budget. The client’s in-house team will also stay benefitted as they can enhance their know-how by closely collaborating with external specialists.

Team Extension Model – IT outsourcing, outstaffing

Outstaffing is a good way to go for projects where it’s easy to weave external talent into your company processes. If you feel that you cannot integrate new team members seamlessly, it’s best to consider handing off to project to the outsourcing provider. Both outsourcing and outstaffing are aimed at reducing the exorbitant cost of building and maintaining an in-house staff.

software outsourcing and outstaffing

Although an outstaffing IT model is comparable to outsourcing, engaging talent through outstaffing has different characteristics. In most cases, you will only interact with a project manager from the outsourcing team, whom you’ll provide your deadlines, updates, and requests. One thing about code is that it must be uniform to make a quality software program.


We can also take up urgent projects where we’d need to start urgently! We are happy to hear you out at to receive a quote and talk about your project. I’ve also learned to ask what local conferences or Meetups the candidates belong to. Voluntary self-education is one of the leading indicators I’ve seen in how much value a developer will bring to our projects over the long run. Everything you need to know about the most effective hiring model of today. 48 hours to find the best matching developers for your company.

Now you have confidence and can go on expanding the team with QA, mobile app developers, etc. to make it a full-scale offshore software development team. The principal difference between outstaffing vs. outsourcing often boils down to who will run the team. If your goal is to build a product without personal involvement – outsourcing is a more reasonable step. On the other hand, if you want to strengthen your internal team with the skills you lack within your organization, outstaffing is a more fitting solution. Many of our clients chose outstaffing vs. outsourcing, as it’s more comfortable for them to be included in the SDLC first-hand.

IT Outsourcing vs. Outstaffing: The Ultimate Guide

In July 2017, Slack had a total valuation of$5 billion raised from a $250 million investment. This was possible because Slack outsourced the development of its beta version to Metalab, a Canadian design team. This allowed Slack to focus on just receiving feedback which has helped to grow its number of users. This seamlessness allows you to plan toward the actual use of the software. In the case of outstaffing, it can be a contract for a term necessary for the performance of certain works.

Outstaffing is an offshore development model where the client hires a contractor from a software outsourcing firm to carry out development tasks. The employee works full-time on their project but is paid by the third-party company. With outsourcing service, the project development falls on the shoulders of the outsourcing agency. However, it shouldn’t be the reason to abandon the projects. The development team still requires guidance in terms of the client’s business model, their long- and short-term goals, and features prioritization.

Under the contract of outstaffing, employees receive a monthly salary. Moving business/services overseasresults in lower costs because of the more favorable economic situation. In this model, we develop a software product for you from start to finish. The only two things you should provide us with – are your ideas and budget. Moreover, Ukrainian developers can effectively embrace all the new technologies and make innovations work for your business. Saying something like “managing the project is up to the client” sounds great to many business owners until it actually comes time to manage the project.

  • When you outsource, you won’t manage the team, as the vendor handles the SDLC.
  • For example, a business startup may have a concept of a product that the healthcare providers might benefit from.
  • This means you can clearly deduce who offers the best options to the customers.
  • First, companies realize the need for the services of a couple of developers, or maybe a whole team, for your software projects.
  • After all, the outsourcing company does not take instructions out of the thin air.
  • On the contrary, it’s an advantage as long as we stay balanced.

Hiring from Asia and India offers lower cost for outsourcing software development. Your projects probably won’t be the first your team is working on together. https://globalcloudteam.com/ This certainly increases the chance that the development process will go smoothly. Software outsourcing service, on the other hand, has a narrower meaning.

What is an Outsourcing Model & How Does it Work?

They believe that they’ll be able to communicate, manage and assign tasks to the remote staff, and manage their business at the same time. With the outstaffing service model, you are in charge of managing the development process. You decide on the tasks your team is working on, schedule those tasks, and manage all the development activities.

software outsourcing and outstaffing

This is an important factor because cost is one of the main reasons why people decide to outstaff or outsource their work. With the outsourcing development model, you won’t have to manage your development, but you also won’t be able to control it and track every step fully. Being responsible for the management, you are also responsible for the whole planning process. Quite often, those who have never evaluated and planned their work can’t correctly establish a software building process.

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Ukraine is extremely popular as a software outsourcing destination and its IT industry is continuing to show a fantastic growth rate. Since the client takes a more active part in managing the outstaffed team members, outstaffing models generally come with a much lower cost. There is quite a bit of bleed over in outsourcing vs outstaffing when it comes to software development services. On a company scale, outstaffing means a remote specialist acts as a temporary member of your in-house team.

Outsourcing vs Outstaffing: What is the Difference?

One of the primary reasons why companies outsource software development is because it is a very cost-effective solution. When you outsource your software development needs, you do not have to worry about things like expensive overhead costs or employee benefits. In addition, many outsourcing providers software outsourcing and outstaffing offer discounts for long-term projects. You’re an insurance company that requires a compliant customer relationship management platform to manage your client’s data and process claims more effectively. However, your tech department is either too small or too busy to deal with end-to-end development.

Since an employee concludes an employment contract with an outstaffing company but not with a customer, the latter does not deal with these matters. This approach reduces the load on the customer company’s administrative and accounting departments. How oustaffing model worksFrom a legal perspective, a specialist has labor relations with an outstaffing company but not with a customer company. While the outstaffing company provides services to a customer according to the contract, a customer company pays for them. Communication channels are critical as vendor staff frequently operate remotely, or at least separately, from the rest of the team. For this reason, it’s vital that your outstaffed team has a firm grasp of all project management software and that their reporting is transparent across corporate team members.

More Expensive than Outstaffing Services

We focus on building clear workflows and communication processes with new remote units while taking care of team members’ payroll, overhead, IT infrastructure, and general team happiness. That way, we focus on the key benefits of outstaffing, which lets the client have a personal connection with the team thanks to direct access to team members. Outstaffing comes with the responsibility of managing remote developers. Even if they’re not physically present on your premise, you manage them as if they are a part of your in-house team. They’ll coordinate tasks based on project requirements and report progress to you at a specific timeline. Statista forecasted that the IT outsourcing revenue would hit US$395.00 billion in 2022.

While this presents huge money-making opportunities for companies of all sizes, it also means they need to get their product to market as soon as possible. So, if your company is looking for IT outsourcing in a particular area or at a particular cost, you pretty much have the pick of the litter. The size of the project and if you want to form a lasting partnership with the vendor. How many engineers you have in-house and what the overall IT development experience you and your engineers have is like. Organize and manage business trips and other essential travel, organize purchases necessary for the team’s operation. Provide accounting and legal support to the team members; manage payrolls.

Here at Waverley, we provide our engineers Emotional Intelligence education to ensure this competency. As you can see, outstaffing and outsourcing have a common prefix – OUT. Does this mean software development is out of the client’s control? Companies are increasingly looking at ways to improve their performance in terms of quality and efficiency.