Software development

Outsourcing vs Outstaffing Models: What is the Difference?

So, working through an outstaffing model requires a better understanding of the tech side of the project on your side, as you are the one managing the outstaffed professionals. Staying in ‘commodity’ keeps prices (and in turn salaries) limited by the market. Too many Outstaff service providers competing to maximize the revenue can exhaust the labor market and lower the entry criteria. That’s pretty much what is happening in the Ukrainian IT labor market. And like anything else in this world, all approaches have their pros and cons. Clients buy an hour of work; the vendor gets their profit from hours sold.

outstaffing model

In this way, outstaffing can complement existing skills and knowledge, helping to further the capabilities of internal teams. The majority of businesses aim for quick development in order to launch their products as soon as possible. Outsourced teams can produce high-quality software considerably faster than in-house teams since the onboarding process is so quick. The Azoft team has 19 years of outsourcing experience and 800+ completed projects. We provide consulting and full-cycle development services in web, mobile and MVP.

Why Businesses Prefer Outsourcing and Outstaffing

It happens that way mainly because skilled and experienced developers in the US are becoming more and more expensive. In the meantime, experts from developing countries with the same skill level charge less. Statista forecasted that the IT outstaffing revenue would hit US$395.00 billion in 2023, emphasizing the attractiveness of the software outstaffing model. Running a successful business means constantly looking for new talent and opportunities. Whereas the latter come and go, sometimes without us being able to control this process, finding the right talent is what we can manage more effectively.

outstaffing model

Thus the client is ultimately accountable for any team success or any team failure. Of course, this is also the advantage of outstaffing, so whether you find this point, a Pro or a Con depends on your perspective. Outside of the abject scarcity of local talent, outstaffing is also becoming particularly popular due to the cost of local talent as well. High salaries (at least in America and Western Europe) mean the cost of using local engineers is infeasible for most small tech companies or those with a limited budget. Software companies frequently skate on to thin ice in their pursuit of accelerating, scaling, and supporting innovation through technology.

Disadvantages of Outsourcing

Whenever you partner with a third-party company, there is always a risk related to corporate information security. So it is worth asking questions about security measures that the company takes.

In outstaffing, the overheads are relatively low since it only incurs the expenses of resources (I.e., payment for the outsourced team’s time and expertise). The entire recruitment process may be free of charge, depending on the initial negotiation between the two parties. We operate as a marketplace for startups on one side and development companies on the other. Only those dev shops that passed through our high criteria and have proven success rates appear in our talent pool. We did it to ensure that we can find the best talent for our clients in the shortest time possible.

Free Internal Resources

This allows a client to “employ” a dedicated IT outstaff team member. At the same time, the IT services provider acts as the official employer that pays benefits, bonuses, equipment, holiday pay, and employer taxes. At the very first glance, outstaffing and outsourcing may seem much alike. Their shared foundation in external collaboration and support often leads to them being used interchangeably.

  • While you may know what you want to accomplish, deciding how to get it done is difficult.
  • However, you might often have to deal with the communication and make your in-house team intrude to erase the implementation mistakes.
  • For company founders who want to begin the software development process as soon as possible and avoid delving deeply into the technical aspects of the projects, outsourcing is the ideal solution.
  • Additionally, it is obvious that outstaffing is definitely more cost-efficient than the employment of new in-house specialists.
  • For example, the client may need to augment its team with three senior JS full-stack developers and one senior automation QA engineer.

Their recruiter uses candidate portraits and makes pre-screening calls with suitable candidates. When a candidate matches the corporate culture of the client and their experience is relevant, the recruiter sends their CV with comments to the client and waits for feedback. Quick response is crucial at this phase, as the client and the recruiter have to synchronize their vision on the prospective team member. It’s worth mentioning that in outstaffing, each tech engineer is recruited exclusively for the client, not taken from the bench. As a result, the client gets a perfectly-matching team member with the right type of expertise. The first phase of collaboration begins right after the client chooses an outstaffing vendor and makes initial contact.

Outsourcing helps companies that don’t have money, time or a reason to assemble their own in-house team of developers. Such services can be good for both short-term and prolonged cooperation, yielding a quality product. Outsourcing helpscompanies that don’t havemoney, time or reason to assemble their own in-house team of developers. Such services are good for both short-term or prolonged cooperation yielding a quality product. The business owner chooses to contact a company that specializes in mobile app development. For a cost lower than the in-house team would cost, the contractor develops an application in a short time.

Therefore, they totally concentrate on it, and this contributes to the quality and speed of their work. Besides, the fact that the client company supervises their work also fuels specialists’ performance and helps to keep them on the right track. Our clients have the option of choosing the engagement model which best suits their requirements, including team extension, dedicated teams, pod teams, and remote development centers.