Software Development: Outsourcing or Outstaffing

Software Development: Outsourcing or Outstaffing

While software development outsourcing has been in the public eye for decades, outstaffing is a comparatively new concept. Both business models have much in common, including remote team management and significant cost savings. Nevertheless, outsourcing and outstaffing should not be mixed up, as they can be applied in different situations and pursue various business goals. Let’s check out each of these models to find out the difference between them, so you can choose the one that perfectly suits your needs.

How Software Outsourcing Works?

Hiring an outsourcing software development provider is delegating  the entire project to a particular outsourcing company.

Outsourcing IT development does not necessarily mean working with a company abroad, it  can be carried out either at the same location, nearshore or offshore depending on the size of cost savings the client wants to get.

The client gets the following benefits as access to skilled expertise, reduced overhead, flexible staffing, significant cost savings and many more. This model works as illustrated below:

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According to this model, nearly all communication and project management on the development process is handled by the Project Manager of the outsourcing organization. The client rarely has access to the entire development team and the team members can be involved on several projects simultaneously.  In the end the client gets a turnkey project. The final cost of the project may go beyond the allocated budget depending on the engagement model chosen.

How Outstaffing Model Works?

Outstaffing is extending your team with remote employees officially working at your outstaffing provider location. Basically, you hire a team 100% dedicated to your project and working as a part of your in-house team. The client will have full control over the IT team or an individual during the whole contract period. Usually this model results in high-quality code and fast completion of the project with no extra charges. Sketched, an outstaffing model looks like this:

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In contrast to the outsourcing model, you have a choice to manage this remote team by yourself or hire remote managers.

Which One to Choose?

When it comes to the question of which model is better, the outsourcing or outstaffing one, the answer is: it depends. The illustration below compares the main features of each model.

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As seen, there are two options to choose from, which one is closer to your company depends on the needs. In general, it goes as follows:

  • If you already have a team of properly managed in-house IT developers but you need extra hands for some project, then outstaffing model will suit you best.
  • If the company needs a tech solution but is not technology-focused, or it is a start up, outsourcing model can be a good choice.

The Bottom Line

To conclude, it is important to say that each case is unique, so when choosing between the outsourcing and outstaffing models, expert consultation would be your best choice.

At SCAND, we work both on outsourcing and outstaffing models and can help you to define which model suits you most. Feel free to contact us with any questions!