Technology has changed industrial norms for many trades to follow. One prominent example is the IT industry, where engineers have been working with companies located on an all different planet in a sense from the comfort of their homes sitting on their favorite bean bags. The shortage of engineers, the high costs attached and complications of affording a huge workspace have given this solution where working remotely is the primary choice of IT engineers and IT companies mostly prefer outstaffing to leverage many benefits.
Still the old traditioned folks won’t agree with this and are always reluctant to adopt this practice. I too was perplexed when one of my cousins told me that he is working for some IT company based out in London. I was surrounded by questions like, how do they pay him, what about the confidential data and the tough one was is it even a real job. Times changed and we came to know about this growing new normal embraced widely over the globe.
This post intends to share some knowledge about the outstaffing, outsourcing, benefits of outstaffing, and basic understanding on outstaffing vs outsourcing. Many are many times confused on this and aren’t able to understand the basic differences between the both and hence can leverage the benefits individually or for their growing organizations, in which both outsourcing and outstaffing are being adopted for many benefits.
Outsourcing Vs Outstaffing
So, first things, let us get you out of the confusion. There are primarily two methods to pace-up the growth and development of your organization with an external workforce – outstaffing and outsourcing.
Both of the models are highly in demand with both large tech and small startups looking for remote engineers, the main difference is that the outsource model enables the company to hire external workforce to deliver a solution on a turnkey basis. It means that the company will be fully entrusting the project’s success to a third-party service provider. They’ll be responsible for every stage of the development process, including a team structure, tech developments, frameworks and workflow.
In outstaffing, the company hires the required type of specialists. After signing an outstaffing contract, the hired specialists will perform the assigned work for a customer while being on the provider company’s staff. The latter will address all the issues related to personnel selection, hourly rates, and enrolment.
Benefits Of The IT Outstaffing Model
In the IT sector and the software development industry, this widespread model has gained wide popularity. To a greater extent, it happened because of the COVID-19, the popularity for remote work has risen, IT companies have enhanced their capabilities, and have adopted a set of tools which allow them to optimize remote work on a project for the whole team. Some of the growing benefits of the model are discussed below;
1. Cost Reduction
The accounting and HR department expenses will lower down, because a major part of their operational functions will no longer be required. Companies expenses on equipment, software, corporate events, bonus payments, training will also cut down.
2. Access To Technical Expertise
Most of the outsourcing companies usually have an array of expert-level specialists who are proficient in a comprehensive technology stack. Customer companies spend plenty of time and HR specialists to find suitable personnel directly. Whereas, the IT outstaffing makes it easy to filter and select specific specialists in a much lesser time.
3. Staff Management Flexibility
IT companies onboard as many people as they require to match the current work volumes. Expert industry personnel do not sit idle due to low workload, and if tasks suddenly increase then the software development and other IT service providers can quickly widen their development teams. If any of the employees do not meet the requirements for any reason, providers will then look for replacement staff for free.
4. Guarantees And stability
Customers offer insurance in a situation where any specialist suddenly resigns. Primarily, they are always bound by a contract with the outsourcing company and secondly the service providers always have candidates on standby in case of any such compensation.
5. Risk Reduction
In case of insurance or other contingencies which are related to staffing, taxes, or regulatory reporting then the outstaffing companies handle such issues by using only their own means.
6. Key Expertise Focusing
Business efficiency is mostly undermined because of the resource scattering on various small or unimportant tasks. Further, entrusting them to efficiently outstaff developers, customers can then easily focus on their primary business objectives and rest assured other technical issues are in trusted hands.
Who Can Benefit From IT Outstaffing Model?
Companies around the globe are adopting Outstaffing, which has been proved as a good solution under varying circumstances. Most of the companies have insufficient staff to implement a certain project. This model have emerged as a sound choice in the many cases like:
- If any company is looking forward to strengthening the team they have deployed for their small IT department but mostly the need or opportunity (limited local market) to hire new people is less.
- The growing startup needs to always experiment with some hypotheses, for instance, develop a new specification or programme and check on user feedback for improvement.
- If the project has been started or launched late, and the deadline is approaching, or sometimes because of the low number of staff onboard then in order to speed up the whole progress it’s best option.
- Most of the IT companies look for specialists for a single project only and to quickly employ some staff to cut the ice and unblock the flow of their project.
- To make your mark as a growing organization you sometimes need to showcase your narrow expertise, but it takes money along with long and hard efforts to select the suitable job candidate independently.
Pros & Cons Of IT Outstaffing Model
The outstaffing model suits best to those companies who wish to include dedicated specialists or their entire teams. Flexibility, supervision of the outcomes, and cost-effectiveness are the three pillars which helps to team enlargement with outstaffing.
PROS:
Affordability
Most of the customers don’t always have to create a dedicated workplace, which attracts taxes or insurance, or hiring of other supervision staff like a project manager.
Full Control
An outstaffed or remote employee will be fully under your supervision. They won’t be freelancing or working on any other projects, which means complete focus on the tasks assigned by you. Routine communication, task distribution, and the overall success of the project will be in your hands.
Going Global
It’s not always guaranteed that you will get appropriate professionals in your location only. Which will require you to hire specialists from any corner of the world where services are more efficient and affordable, hence, without any advertisements or marketing you landed your organization in another nation, later you can think of some physical office space.
Convenience
The nature of the outstaffing model requires the third-party agency for handling all the HR and administrative concerns, which allows you narrow focus on your project without any distraction.
CONS:
Communication
While your outstaffed specialists or professionals might be working for you from other nations and in different time zones, it’s crucial to establish effective interaction between every single member of your extended team. It’s also recommended that you hire professionals from global language speaking nations or everyone has to speak the same language, e.g., English.
Additional Management
Amidst all the efficiencies the outstaffing model requires the customer company taking care of management. Personal involvement in every development aspect is crucial, along with strong managerial and technical skills.
Data Leakage
The nightmare of any organization working with an outstaffing model, is that you’ll need to provide them with access to sensitive corporate information, project documentation, software, etc. as a part of the ongoing project process. When you undertake outstaffing employees, taking respective security measures is always advised and forming up a comprehensive NDA is also a crucial part of the process.
Conclusion
The concern remains whenever the new working model or any advancement to the existing nature of the specific technology is introduced, here the concern is about the replacement of the in-house teams. However, there are companies that always look for people to work for their projects and be a physical part of their team. This is however, near to impossible with software outsourcing and outstaffing, where most of the specialists are officially employed by the third-party located in some other country. Investing time and money in the training of third-party contractors instead of advancing your own in-house team is also something to think about.
