Outsourcing vs Outstaffing. What is the difference, and which is the better choice?

Offshore Development
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5 min

Outsourcing vs Outstaffing. What is the difference, and which is the better choice?

To outsource or to outstaff, that is the question. We're just paraphrasing Shakespeare here, but the dilemma for many company execs is no less real.

It is a valid quandary, of course, whether to embark in outsourcing or outstaffing. It is a big decision, too, with significant implications and ramifications, so going one way or the other does require a certain degree of forecasting and rational thinking.

Outsourcing and outstaffing do crossover, but each practice has important differences that need to be taken into account.

This piece delves into the outsourcing and outstaffing concepts, including pros and cons of both, and why should businesses choose one over the other.

Differences between outsourcing and outstaffing

These two concepts are nuanced, but here's the key difference.

When a company decides to outsource (its helpdesk, software development, or whatever other service or department it might be), the company effectively commissions a third party (a specialized agency, or another company, for example) to do the work for them. Usually, but not always, the outsourcing party is abroad.

On the other hand, when engaging in outstaffing, a company does not commission a third party to do the work. Rather, it enhances (some say, augments) its own internal department (helpdesk, software development, etc.) with the services of remote teams. Also, and this is a very significant nuance of this model, the outstaffing service provider effectively becomes the employer. It provides the salaries, benefits, bonuses, hardware, etc.

How Outsourcing and Outstaffing teams structure work

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Outsourcing vs outstaffing: pros and cons

Each company is unique for many different reasons. Their type of business, their location, corporate culture, etc. All these factors do affect how a company operates, and also have an impact on which option (outsourcing or outstaffing) suits them best.

Here are a few pros and cons for these business models

Outsourcing pros

  • The service provider assumes responsibility for the product's quality. In helpdesk example, this would be the quality of the customer service. In a software development scenario, the quality of the code.
  • The client does not have to engage in management duties, or hiring processes
  • The service provider is responsible for the provision of suitable equipment and infrastructure

Outsourcing cons

  • The client relinquishes control over its department/product offering, which might lead to quality issues or reputational damage. This is particularly acute when entire helpdesk departments are outsourcing to countries where English is not a native language.
  • Far more expensive than outstaffing model
  • Hourly rates -particularly for software development work- tend to be higher than outstaffing

Outstaffing pros

  • The service provider assumes responsibility for payroll and HR duties
  • Greater flexibility for hiring
  • Complete control over development work
  • Access to a global talent pool
  • Lower costs

Outstaffing cons

  • Potential disconnection between staff and the manager, due to cultural or other issues
  • Project management part is the client’s responsibility, and therefore requires a tech representative tasked with managing the remote developers. If this rep is not there, outstaffing will likely not work.

What to choose outsourcing or outstaffing?

So the question remains, which option is the best? Which is more suitable, more apt? This is quandary that many managers have been confronted with.

As explained earlier, every company is its own ecosystem. Each line of business has different requirements in terms of investment, expansion plans, corporate relations, and so on. But there are certain factors that remain more or less constant across the entire business spectrum. More (and better) control over the work being done, greater results in the long run, and of course, cost efficiency. These three aspects can be found under the outstaffing umbrella.

For many companies, it is a better choice to opt for outstaffing because it enables the client to simply augment their existing teams, which enables greater control and a better result overall over the long term.

Why choose outstaffing with AllSTARSIT

AllSTARSIT provides best-in-class outstaffing services for a range of international clients just like you. We have the experience, drive, and know-how to create a tailored solution for your project.

  • We offer faster hiring timelines that support a cost-effective, quick-to-market strategy.
  • Our specialized staff's mission is to assist you in assembling a team of talented software engineers and QAs, and get your project off the ground as quickly as possible.
  • AllSTARSIT has outstaffing down to a fine art.

With our help, you can have your team hired and running faster than your competitors.

Find out how AllSTARSIT help you grow

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