A Quick Go-Through

An Overview: Outsourcing vs Outstaffing

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

What is the IT outsourcing model?

What is Outsourcing

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?

What is Outstaffing

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?

CostIt 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.
ManagementProcesses are managed by hired outsourced firms completely.Processes are completely managed by hired outsourced firms.
ControlIn 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.
CommunicationFrequent communication with the project manager only.Direct communication with the other team members and staff.
FlexibilityHigher flexibility in hiring skilled experts based on different project requirements.Less flexibility when hiring dedicated staff.
ResponsibilityThe 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

Think Through the Project Goals

Analyze Technical Expertise & Experience

Consider Time Zone & Location

Evaluate Costs & Contracts 

Control & Communication

Why do companies choose outstaffing and outsourcing IT models?


Global Pool of Talents

Round-the-clock Support

Outstaffing vs. Outsourcing: Which Outsourcing Model to Choose?

The Cost of IT Outstaffing Services

Common Myths about Outsourcing and Outstaffing

  • 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?

Final Thoughts

FAQs: Frequently Asked Questions

What’s the Difference Between Outsourcing and Outstaffing?

The difference between outsourcing and outstaffing is when a business picks out an entire software development company to work for them or provide services, it is called outsourcing. On the other hand, outstaffing refers to hiring some proficient employees from another firm to perform specific tasks. The major difference between them is cost as outstaffing is lower than outsourcing due to only hiring the required staff.  

Which one is better for my software development project, outsourcing or outstaffing?

While choosing between outstaffing vs outsourcing, you need to consider numerous factors such as skills & expertise, the level of project management, long-term project goals, determined costs, and others. These will help you to make the right decision and select the most suitable approach. 


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