Outsourcing or outstaffing

Outsourcing vs. Outstaffing Models: What is the Difference and Their Pros & Cons

Outsourcing and Outstaffing IT models have evolved to serve companies from all over the world. Even though in nutshell both approaches look the sameremote developers employed by another (not your) company help you with the tasks you don’t have the capacity to do with your in-house team, they are not the same. Recognizing the differences between outsourcing and outstaffing models can help you reveal the best approach for your projects.

For this reason, we have created an analytical guide that explains what outsourcing and outstaffing is and what the main differences are between them. This article will also help you figure out which model best fits your business needs and how to find high-quality collaboration partners to outsource your IT projects.

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Outsourcing IT Model: What is it? 

IT outsourcing is a model which allows you to hire a complete dedicated team of programmers, designers, QA engineers, and project managers. That being said, outsourcing is a comprehensive model where a development team is hired to remotely deal with one (or more) of your development projects.

An outsourced team can handle tasks like app creation, website development, software development, and more. The unique characteristic of an outsourcing IT model is that the development team members you choose will deal with every aspect of your project from design to testing.

In most cases, you will only interact with a project manager from the outsourcing team, whom you’ll provide your deadlines, updates, and requests.

Outstaffing IT Model: What is it? 

With staff augmentation, a company chooses to add to their team individual engineers who are legally employed by another company—outstaffing one. In this way, clients don’t have to find and select the developer(s) for their company themselves. They select from already vetted professional developers available in outstaffing company’s talent pool. By partnering with such a company, your business gets a team or worker to perform a specific task/project.

That being said, outstaffing is a model that can help a company temporarily augment its development team. Even though your company will be the one that manages the hired development team or individual, the developer’s payroll is handled by the outstaffing company you partner with.

Although an outstaffing IT model is comparable to outsourcing, engaging talent through outstaffing has different characteristics.

Outsourcing vs Outstaffing IT Models: What’s the Difference? 

As mentioned above, in both outsourcing and outstaffing IT models, a company attracts a team or individual to work on a specific project/task. Also, in both cases, those developers are working on the project remotely. Still, the main difference between those two concerns the project’s management. 

With outsourcing, a client company hires a whole development team and a manager who is responsible for running the project. Of course, the customer is still in charge, meaning they are giving all the guidelines and goals in advance.

On the flip side, outstaffing is when a company extends its development team by adding one or several engineers. So, the scope of the project is managed by the CTO or the project manager of the client company and not the development company.

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. 

Apart from this main difference, outsourcing and outstaffing have other dissimilarities concerning pricing, management efforts, and payment which we structured in a table.

 OutsourcingOutstaffing
Project ManagementThe client doesn’t manage the task/project directly as it has a project manager and a complete outsourced team from outsourcingThe client is responsible for managing the outsourced team
PricePaying for the work of the complete outsourced team is more expensivePaying for work of one or several developers for a certain piece of work is less expensive
Responsibilities The client has fewer responsibilities as the whole project is entrusted to the outsourced team; although they still should be involved to get good resultsThe client has more responsibilities as they directly manage the IT professionals working through outstaffing model
PaymentThe payment is usually handled by the company (via milestones)The outsourced individual’s or team’s payroll is managed by the dev partner and not the client company.

It becomes evident that even though outsourcing and outstaffing are based on the same principles, the two models have key differences. For this reason, it is important to explore each model’s pros and cons. By doing so, you will be able to identify which model is the best for your company. 

Outsourcing: Advantages and Disadvantages

Outsourcing Advantages

Depending on what your company needs, outsourcing might be a smart choice. The main advantages of outsourcing are:

  • Fewer responsibilities: The project manager from an outsourcing company is responsible for the successful outcome of the task, the code quality, and the outsourced team management in general. That means you have fewer management and technical responsibilities. 
  • Partners do all hiring: Outsourcing companies have big sourcing and recruitment departments, a wide network of contacts, and proven methods of engaging new talent. Thanks to all this, they can hire a new tech specialist for work on your project quite quickly.
  • No equipment needed: By working with an outsourced development team, you don’t have to provide any special equipment as it’s already included in development rates.
  • Rapid start: Outsourcing companies have a big talent pool of engineers who can switch between projects. This makes it possible to start work on your project immediately and grow your team by hiring more engineers with the time.

Outsourcing Disadvantages

Even though outsourcing has proven to be a reliable IT model for getting things done, it isn’t suitable for all companies. Let’s dive deeper into the cons of outsourcing:

  • Cost: Although outsourcing is generally more cost-effective than an in-house team, it is noticeably more expensive than IT outstaffing since you engage a remote team.
  • You don’t have full control over the project: As mentioned above, with outsourcing, your company has less responsibilities. However, the vendor/partner and the project manager of an outsourced team handle most parts of your project. Likewise, if you want to have full control over an IT project, IT outstaffing services are by far the better option than outsourcing.  
  • Communication obstacles: Since you don’t have full control over your projects or daily communication, and the team works remotely, there might be some misunderstandings concerning your guidelines. 

Outstaffing Advantages and Disadvantages 

Outstaffing Advantages

As with outsourcing, outstaffing is the ideal IT model for numerous companies. The main advantages of choosing an outstaffing company are:

  • Full control over your project: With outstaffing, you get to decide what your developers do and how they do it by managing them daily. Even if this brings more responsibilities on your end, it is a better option for companies that have the technical skills required to directly manage an IT team.
  • Cost: Outstaffing is more affordable than outsourcing since you choose how many experts you need. Also, your partner is managing the salary payments, and you don’t have to worry about that.
  • Hiring through a partner: Good outstaffing provider has a built-up process of finding and vetting the right developers for each client’s needs. So they help you by handling the hiring effort.
  • Immediate start: As with outsourcing, outstaffing allows you to quickly hire the right team for an upcoming IT project. 
  • Hiring flexibility: Outstaffing is by far the most flexible IT model, and it allows you to adjust your hiring process ad hoc.

Outstaffing Disadvantages

Let’s dive deeper into the cons of outstaffing:

  • More responsibilities: As mentioned above, outstaffing is great for large companies or startups that need to have daily control over an external IT team or individual. However, that also means that the project management lies with you. So having a tech representative who has the capacity to manage remote developers is a must.
  • Communication obstacles: Since your outstaffed engineers are working remotely and sometimes in different time zones, there might be some misunderstandings concerning your guidelines, goals, and needs. 

What Model is Best for Your Company?

Now that we have identified the pros and cons of each model, it is time to explore the best one for your company. The global IT industry grows rapidly and is expected to reach an enormous size of $410 billion by 2027

This stands for both outsourcing and outstaffing models. However, choosing the best one for your company can be challenging. The first thing to do is determine your needs and budget. 

For example, if you don’t have in-house tech expertise, outsourcing is the best way to go. Of course, this solution is more expensive. But your development partner will take care of everything you need.

On the flip side, if you need to temporarily augment your internal IT team, then outstaffing is the best way to go.

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How to Find and Hire Outstaff or Outsource Developers?

There are many ways in which you can find and hire outstaff or outsource cooperators. Web infrastructure in this field is rater developed, so you can easily find a lot of listings and review websites that will contain information about your potential partner. Take the time to make a small research on the company you find interesting, collect reviews from their clients, and book an intro call to make sure that they can provide you the service you need.

Our own company, YouTeam, could be a time-saver in this situation. 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. But there are many other advantages for companies that choose to hire through YouTeam. Let’s have a look at them.

Software Outsourcing and Outstaffing with YouTeam

YouTeam is the best outsourcing and outstaffing marketplace to cooperate with because:

  • YouTeam provides unlimited options: Our marketplace allows you to choose from 20,000+ professional IT workers and dev teams quickly. YouTeam operates in Eastern Europe and Latin America—locations that have the biggest IT talent pool and a good level of coding skills together with English.
  • Quick candidate sourcing: YouTeam needs only 48 hours to find the best matching developers for your company.
  • Top-tier vetted developers: Developers in our talent pool have passed a few stage selection processes. But at your request, we can run a HackerRank for Work test to verify their current skills.
  • Full control over the hiring process: YouTeam allows you to host interviews with as many developers as you need. But we recommend not to think for too long if you like a developer because due to current market conditions they receive multiple offers in a short time.
  • No hidden costs: When you choose to hire a developer through YouTeam, the sourcing and interview process is entirely risk-free. You pay only for the developer’s work after the contract is signed.
  • Reviews from previous clients: YouTeam clients fully trust the platform’s vetting process and choose to stay with YouTeam after partnering with us.

Wrap Up

Outsourcing and outstaffing are two of the most widely used IT models nowadays. Outsourcing is an amazing idea for companies that need a complete team of IT specialists to undertake a specific project. And outstaffing is the best choice for those who want to have full control over the management of an upcoming IT task and temporarily extend their development team.

Depending on your company’s needs, you can choose one or both of the models for upcoming programming projects. No matter which one you choose, the vetting system of YouTeam, the flexibility our marketplace offers, and our top-tier service partners make YouTeam the best choice to remotely augment your development team via outsourcing or outstaffing.

Written by
Svetlana Shevchuk

Digital Marketing Specialist at YouTeam, a Y Combinator-backed marketplace for building remote dev teams.

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