Outstaffing and Outsourcing: The subtle differences leaders should know


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In IT and technology, the debate called outsourcing vs. outstaffing is well-known. Especially during the pandemic, when industries have witnessed exponential growth – the use of these terms became more frequent than ever. While outsourcing implies that parts and portions of a company’s operations are transferred to some ‘specialized’ third-party executive organization, outstaffing on the other hand is all about a company leasing professionals who would serve only for a certain project.

Apparently, both these terms might sound easy, but to achieve efficacy and efficiency in business – it’s imperative to have a thorough understanding of both from authorized professionals. Choosing a software development company is fairly easy. But the onus lies on the software model – outsourcing or outstaffing. To arrive at a better decision for your need, here’s what you must know in details and proceed accordingly.

Outsourcing vs. Outstaffing: A Complete Guide

The world of Outsourcing

To start with outsourcing software development- it’s a more complex approach. Just in case you have no in-house team for development, or technical socialists at the company, the process to develop a software product can get highly difficult. If the project is single, you can simply complete and close in a few months’ time. But then why recruit in-house developers? The issue arises even when you decide to invest optimally in hiring, onboarding, and training and also off boarding. Most professional engineers are not open to the idea of beginning the work on a full-time basis for a short period of time. Hence, it’s better when you are outsourcing employees or relying on an experienced external developer team. By doing this, you offer your software product idea to a remote development team, and they in turn, offer you a final product. Depending on your project requirements, the composition of the outsourcing development team will be fixed. So it might or might not involve UI/UX designers or business analytics. But whatever comes, QA specialists, project managers and software engineers are a must. After you have partnered with outsourcing companies, you can then choose whether you would like to monitor the project yourself, or fall back upon a project manager.

Pros and Cons

Firstly, it’s a convenient work. The focus lies on core functions only, and key directions. So you can assign others the secondary work.

Second, since the most vital functions are now outsourced to contractors, so you get the exact corporate results via external efforts.

Third, by assigning duties and responsibilities to a partner, the company can heave a sigh of relief knowing it doesn’t have to pay its own employees. Thereby, considerable money is saved in the process.

Coming to the cons, outsourcing employees offers lesser control when it comes to quality. By entrusting the performance of few functions to a partner, you somewhat disrupt the corporate unity of the organization. If contractors fail to produce the desirable results, the company is likely to face unprecedented losses and risks. No wonder, most experts would suggest you to outsource to India.

The world of Outstaffing

The reason/s why you would resort to outstaffing is/are highly different. If you at all rely on outstaffing, having an in-house development team is mandatory. Suppose you have a mixed team of designers, developers, testers, project managers and all such experts who you hired permanently, and those who worked full-time with you. But imagine a situation where you have few urgent development requirements, and your team has a severe dearth of time or resources to manage them. Under these circumstances, hiring a full-time specialist would serve you better. This works true if the enhanced scope of work is likely to persist. However, if the workload increase is just a temporary phase, then engaging in outstaffing is recommended. Here, you recruit someone on a remote full-time or part-time basis. He or she would act as just a temporary member of the in-house team. Depending on your project requirements, you can hire a couple of experts or a large software development specialist team. But one thing is certain – in outstaffing, the total project management work is ensured on the company’s side.

Pros and Cons

Firstly, personnel management in outstaffing is quite simplified. Alongside, sick leaves, salary payments, vacations, and compliance with all such social and bureaucratic issues can be better managed with the outstaffer company.

Secondly, employers lose no valuable time searching for a prospective candidate, simply because the outstaffing company finds a suitable specialist within no time.

Third, the cost reduction factor always stays a top draw.

Now, for the cons – you’re still dependent on your in-house team. As much as you would love the idea of using your outstaffing service to ease the overall workload; the in-house employees help keep the company’s policies and strategies moving in the right direction.

Similarities & Differences existing between Outsourcing and Outstaffing

While differences between these two exist, there is one common feature that links outsourcing to outstaffing, and vice-versa. In reality, both are targeted towards minimizing of personnel and financial risks for the client company. While there’s no doubt that outsourcing employees is highly favoured between the two, it’s a great choice when you have fewer resources to finish a secondary work. But if any insured event happens, or an employee quits and an urgent replacement is more than necessary- an outstaffer would pull you out of the rut.

Some prime differences between the two are enlisted below:

  • In outsourcing, the staff or contractor is mostly subcontracted. But you simply do with the staff registered with the contractor company, as per the skill sets of the professional concerned. However, you choose the people you need, rather than the ‘full package’ that contractors offer.
  • In IT outstaffing, the staff is much more qualified and hence, paid monthly (or even fortnightly). But it’s usually from the agency, and not the client company. Contrarily, everything depends on contract in outsourcing.
  • Thankfully, in traditional outsourcing, communication is well established. But for outstaffing, the customer has to work on building relationships from scratch. Using the services of a skilled manager helps in this regard.
  • Work process differs markedly. There’s no control over what outsourced employees do, so quality suffers often. For outstaffers, you control the work completely. They don’t get assignments from the company, but the company’s manager.
  • Also, in outsourcing, there’s clarity. But outstaffing is tricky, and not all the situations will be conducive to cooperate with the special contractor agency for recruiting labour resources.

It can be a Herculean task finding the more apt of the two – but outstaffing is a better option when you need to keep a track on the workforce. However, reports show the global market size of IT sourcing is growing, and hence more sought after.


The battle between outsourcing vs. outstaffing will continue. It depends on your organization, specific needs and budgetary constraints, as regards your decision about the choice is concerned. While both have its set of pros and cons, you need to assess the values and interests of your business, and thereby outsource to India, for better deals.

John Tie
John Tiehttps://www.virtualemployee.com/
John Tie is working as a Digital Marketer and content strategist with Virtual Employee, offering affordable and scalable remote staffing solutions for mainly Small and Medium Businesses (SMEs) around the world in over 150 domains. He is a versatile tech writer and loves exploring the latest technology trends, entrepreneur and startup column.


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