Outsourcing vs. Outstaffing: What’s the Difference?

A Quick Go-Through

Choosing to outsource vs. outstaffing model is one of the effective ways embraced by businesses to reduce their workload and get better outcomes. Therefore, we can see a great rise in IT outsourcing services worldwide. The article below will provide insights about outsourcing and outstaffing, including their key stats, pros & cons, and differences. It will help you to be ready for the future and pick the appropriate option between both of them for your next project. Keep scrolling to learn more-  

An Overview: Outsourcing vs Outstaffing

“Outsourcing and outstaffing”—are”you acquainted with these terms? Do you know how these can help you improve the development process? If not, don’t worry; we are here to help you get all the answers! 

In the continuously changing realm of modern technologies, enterprises must keep updated with the latest trends and apply new strategies. Obtaining outsourcing or outstaffing services benefits businesses in numerous ways, such as saving time & money, smoother & faster development, and many more. 

In layman’s words, outsourcing refers to hiring a software development company to produce a quality solution. In contrast, outstaffing describes hiring a few dedicated developers with specific expertise to lessen the work capacity.  

It would be best if you went through this blog to discuss outsourcing vs. outstaffing thoroughly. Let’s start-

Key Takeaways and Statistics of Outstaffing and Outsourcing

• The worldwide market size of IT outsourcing services was valued at US$639.59bn in 2022, and it is projected to evolve at an 8.0% CAGR between 2023 and 2030. 
• 92% of G2000 firms choose IT outsourcing services to speed up the development process. 
• 37% of small-level ventures prefer outsourcing to complete at least one development task.
• Companies’ spending on outsourcing services was valued at $731 billion worldwide in 2023.
• Outsourcing and outstaffing have facilitated businesses’ access to a wide range of talented experts, ensuring cost-effective and quality solutions.
• These models help to reduce operational costs as ventures hire external resources to streamline and complete specific tasks.
• Outsourcing and outstaffing help businesses with extended skills and knowledge while supporting them with an agile and flexible development approach. 

Overview of Outstaffing vs Outsourcing Model for Software Development

In software development, the outstaffing vs. outsourcing model leads businesses into a solemn dilemma as they must choose one of the viable options to complete their tasks. Talking about outsourcing refers to handing over a whole software development project to another firm, enabling businesses with advanced expertise to complete it. Benefits provided by this model are advanced knowledge & expertise, higher flexibility & agility, risk mitigation, and many more.

On the other hand, outstaffing encompasses hiring only specific remote software developers required to do a particular task. It empowers businesses to escalate their team’s strengths according to project requirements. This model is advantageous for businesses as it provides better cost efficiency, direct workforce control, and discards challenges relevant to the hiring and management processes. 

While selecting outsourcing vs. outstaffing, there are multiple factors, such as project scope & complexity, required level of control & skills, long-term goals, and budget limitations. Based on these, you can decide which model is best for you. 

What is the IT outsourcing model?

Want to know about the “outsourcing model”? It is hiring a software development company from outside the firm for a fixed time to complete definite tasks or manage the entire project from conceptualization to development to testing. This model is preferred by businesses that want to focus on other responsibilities. Some outsourcing services include software development, website development, app creation, advertising, etc. 

Advantages of Outsourcing

• One of the top benefits of the outsourcing model is reduced expenses due to hiring remote software development companies from countries where development costs are very low. Also, businesses can cut costs by spending less time searching for and hiring talented resources and employing fewer staff. 
• When you decide to outsource software development services, you contact other experts and specialists to achieve the desired outcomes. Those experts will also provide feedback regarding anything too risky or unsuitable for the project to mitigate the risk factors.
• Time management is the key benefit of the outsourcing model, as businesses have all the time to do their most profitable tasks because they have outsourced the tasks that are not included in their core competencies. It helps firms boost their efficiency and productivity. 
• By choosing outsourcing services, you can connect with other professionals worldwide. It provides a competitive edge using modern technologies and trends, compared to your competitors using an in-house team. 
• IT outsourcing companies have a large pool of experts, making switching between projects easier. It implies a faster and smoother development process with the rapid start of the project. 

Disadvantages of Outsourcing

• Though companies sign a legal written agreement before assigning any projects to another firm, there is still a risk of stealing your confidential data or project information. Hence, you need to ensure that your outsourcing partner implements robust security practices for data protection.
• When you outsource a particular task or development process to another firm, you have less control over the day-to-day procedures. It can result in potential challenges in managing the tasks efficiently. 
• A higher level of quality and on-time delivery can be the biggest concerns when you are seeking outsourcing services, as you can’t expect results similar to those of your in-house development team in this model. 

What is the IT Outstaffing Model?

Let’s talk about the “outstaffing model.” It enables businesses to hire remote programmers from another company to execute specific tasks. It allows you to go beyond your in-house team and hire other firm’s resources as your employees. This practice will help you get adept online resources to do tasks like development, testing, digital marketing, or others. 

Advantages of Outstaffing Model

• There is better project control, monitoring, visibility, and administrative activity by the firm because of the complete access to every aspect of the team while having fewer burdens due to divided responsibilities. 
• Outstaffing is a perfect option in terms of interceding the overall costs. Firms choose it as a more cost-effective option than the outsourcing model because they manage the workforce. They primarily opt for it to alleviate overhead costs and personnel expenditures.
• By getting access to more team members and expert software developers, firms can launch their projects rapidly or even before the deadline.
• Outstaffing services give businesses more flexibility as they can hire specialists, particularly for development, marketing, accounting, etc. It will benefit companies by allowing them to accomplish projects quickly while maintaining high-quality standards. 
• Due to faster project development, outstaffing saves a lot of time for software development companies. Outstaffing will allow them to work on two or more tasks simultaneously, which will help them complete the process easily and rapidly. 

Disadvantages of Outstaffing Model

• You can’t be sure of better quality control when outstaffing or hiring a remote team or experts. Though you can monitor the whole process, somewhere you have to settle for the delivered solution. 
• While going with an outstaffing model, some issues may be related to communication and collaboration. Firms must be more attentive while interacting with them, as miscommunication can lead to many other problems for both parties. 
• However, companies have full control over the staff they hire, but this benefit comes with great responsibilities. It would help if you looked over all the aspects, such as quality, speed, time, and the right execution of every function & feature. 

What is the Difference between Outsourcing and Outstaffing Model: Quick Comparision Table?

We have curated this quick comparison table below to go through the detailed differences between the outsourcing and outstaffing models. Check this out:

Features	Outsourcing	Outstaffing
Cost	It is a little expensive compared to outstaffing, as the client has to pay for hiring the entire team.	Less expensive due to only hiring the required staff or developers.
Management	Processes are managed by hired outsourced firms completely.	Processes are completely managed by hired outsourced firms.
Control	In outsourcing, there is less control over the client while executing tasks and other processes.	Full control of the client in terms of executing any specific task is due to in-house hiring.
Communication	Frequent communication with the project manager only.	Direct communication with the other team members and staff.
Flexibility	Higher flexibility in hiring skilled experts based on different project requirements.	Less flexibility when hiring dedicated staff.
Responsibility	The entire responsibility for task completion is on the outsourced company.	The client has direct responsibility for team and task management.

Things to Consider While Choosing an Outstaffing or Outsourcing Model

To convert a unique idea into a high-quality digital solution, you need to pick the right software development partner. Proficient and adept experts are hard to find, as you have to go through a lot to search for and hire them. If you are thinking of outsourcing or outstaffing services, then you’re at the right place. 

Here we are guiding you through some of the important things you must look at while choosing an outstaffing vs. outsourcing model. Have a look: 

Think Through the Project Goals

Before deciding on outsourcing or outstaffing service providers, you need to efficiently evaluate the project’s scope and long-term goals. First, have a look at the tasks you want experts for, and then determine whether your project has long-term goals or short-term goals. 

If the goals are long-term, hiring outsourcing services would be very costly. Hence, it would be best if you adopt the outstaffing model for hiring dedicated developers. For projects with short-term goals, you need to consider the budget constraints when choosing outsourcing services. Also, clearly understanding project requirements will help you choose the most appropriate model. 

Analyze Technical Expertise & Experience

In the current technologically advanced era, hiring experts with deep knowledge of the latest technologies and trends is significant. Whether you are selecting outsourcing or outstaffing, assess their technical expertise & experience in the relevant niche or industry. You can ask for their portfolios, testimonials, and other references to evaluate and validate their previous work. It will ensure the scalability and quality of your future project. 

Consider Time Zone & Location

Different time zones and locations have a great impact on your project in terms of overall consumed time, overhead costs & resources, etc. Thus, it is important to get aligned with your outstaffing or outsourcing partner. Hire someone by estimating the geolocation and timings appropriately to facilitate smooth & real-time communication and collaboration with your remote experts easily. 

Evaluate Costs & Contracts 

When it comes to outstaffing vs. outsourcing, contracts, and cost evaluation a key aspects to follow. You need to compare the pricing structure, including calculated project costs, hourly rates, contract making, etc., to find the most cost-effective model to accomplish your requirements. Also, you need to consider contract agreements comprising intellectual property rights, SLAs (service level agreements), termination clauses, and others. 

Control & Communication

Consider which model provides you with better control over the team and project management between outsourcing and outstaffing. Having complete control over the process is essential to ensuring the quality of the project. Assess the communication skills and language adeptness to lead a seamless discussion about the project scope and objectives. Choose a provider that has a grip over multiple languages or similar languages like yours to interact fluently. 

Why do companies choose outstaffing and outsourcing IT models?

With the enhancement in technological advancements, businesses have been more cautious about the online presence of their brand. For this, they are leading towards obtaining software development services and staying competitive in the digital realm. It has upsold the demand for IT services as well as experts who are capable of providing them with efficient solutions.

Continuing this, software development companies have also found a way to alleviate their workload, as they are now taking advantage of IT outsourcing and outstaffing services. It lessens their burden and allows them to focus on other, more important things. 

Let’s get to know why these two models, outstaffing and outsourcing, are so in demand by going through the following points: 

Cost-effective 

Cost efficiency is the topmost aspect businesses keep in mind while outsourcing any of their services. IT companies prefer the model that provides them with inexpensive solutions. While hiring an IT outsourcing model, companies must pay management fees, including the costs of the entire development process. This is not the case with outstaffing IT services. In outstaffing companies must pay only for management fees, proving it to be a more viable option. 

Global Pool of Talents

Apart from your in-house team, you can explore talented experts worldwide while outsourcing or outstaffing services. In outstaffing, you need to assess more carefully as here, you will control the hired staff but in outsourcing, you have less control over the team as your hired firm will take care of everything. 

Round-the-clock Support

You can have better full-time support and time management while choosing these outsourcing and outstaffing models. When it comes to outstaffing vs outsourcing, an outsourcing company with different time zones can pick up their work from where you are, which will facilitate a 24*7 working process, leading to faster time-to-market and the same goes with the outstaffing model. The outstaffing model also enables businesses to get round-the-clock support; it depends on businesses whether they want them to work in the same time zone. 

Outstaffing vs. Outsourcing: Which Outsourcing Model to Choose?

Now, that we have discussed all the significant aspects of outstaffing vs. outsourcing, including their pros and cons, along with the considerable reasons for choosing them,. Still, when it comes to selecting one between them, it is a tough decision to make. For this, you need to consider various factors such as project scope, budget limitations, language and communication skills, technological expertise, previous experience, and different time zones and locations. An assessment of all these factors will help you easily make the most appropriate decision about choosing your software development partner. 

In terms of overall costs and control, we would say it will be good to go with the outstaffing model, but if you want to explore a wide pool of adept experts, you must go with the outsourcing model. On the other hand, if you are more particular about the project and performance monitoring, hiring outstaffing developers is the best option. At last, we can say both models have their significance; thus, you need to choose the one that goes best with your preferences.   

The Cost of IT Outstaffing Services

To evaluate the cost of IT outsourcing services, you need to assess several factors, such as the size of the software development team, required resources, consumed time, hourly rates, experience & location of developers, and others. Overall, the outstaffing services’ cost can vary between $15,000 and $100,000. If we talk about the hourly rate of software developers, it would differ based on their location. In general, it will range between $30 and $80. 

Here, you need to consider that IT outsourcing costs will always be higher due to the larger size of the development team and other members and the increased number of operations. 

Common Myths about Outsourcing and Outstaffing

Businesses have chosen outsourcing and outstaffing as their preferred choice for years to assuage their burden, which involves passing delegated or specific tasks to another firm or expert by hiring them separately. Over the years, there have been a lot of myths and misconceptions about these services that we need to know about. Here are they: 

• Expensive Hiring: It is said that outsourcing is way more expensive, but this is not true, as it is cheaper compared to hiring in-house staff. Outsourcing lets you save both time and money by reducing expenditures on office infrastructure, utilities, taxes, etc. 
• Poor Quality: Many businesses believe they will get poor-quality solutions even after investing so much money in outsourcing the experts. Do you think so? Many skilled software engineers and experts are out there to help you with high-quality, adept solutions. You can outsource them from countries like India, the USA, and the UK to get help with business expansion. 
• Security Concern: There is a myth that if you outsource your project, chances are higher for security breaches. But in reality, it only depends on the service providers you are working with because multiple outsourcing firms prioritize implementing robust security measures such as encryption, compliant data protection policies, and others. 
• Communication Issues: When going for outsourcing and outstaffing, there is a myth about communication barriers, including cultural & language differences. This is not always true; additionally, you have the opportunity first to analyze their communication abilities and then, hire them. 
• Time Difference: While hiring a team of software developers globally, there is an issue of different timing, leading to a lack of smooth communication and effective project execution. But businesses can use it as an advantage as the development process can be continued 24*7, resulting in a faster time-to-market. 

Why DPH for IT Outsourcing and Outstaffing Solutions?

DeveloperperHour stands second to none when it comes to providing IT outsourcing and outstaffing solutions. We own a set of proficient and highly experienced software developers outsourced and outstaffed by us to deliver other firms an efficient solution. With years of experience, we are known as the best IT outsourcing and outstaffing service provider that provides the best services according to the client’s budget and project requirements. 

Be it anything from designing, development, testing, marketing, or accounting, our team of 500+ dedicated professionals is always here to assist you with the finest results, following the highest ISO standards and security practices. We never compromise on quality, as delivering the best in the minimum amount of time is our goal.   

Final Thoughts

In the above article, we have provided you with an assessment of the outstaffing vs outsourcing model so that it will be easy for you to choose between them. In our opinion, both models come with the highest growth opportunities, along with reduced costs, better efficiency, and an emphasis on remote work by expert developers. Now, it depends on your specific project needs which one suits best for your project. 

Get a clear understanding of your business and project preferences before evaluating aspects to select the best model. Deeply analyze the pros and cons of both and wisely go for one. As per industry standards, it is more beneficial to go with outstaffing, including small firms with internal teams, rather than choosing outsourcing by hiring multiple teams and investing more money.

FAQs: Frequently Asked Questions