Little has changed in software development: just like 20 years ago, there are many entrepreneurs that prefer saving both money and time by partnering with offshore software development companies. There, programmers cost less but usually deliver products of the same or even superior quality. As a result, two distinctive approaches to offshore software development emerged: outsourcing and outstaffing. As both models have advantages as well as drawbacks, many entrepreneurs become puzzled in choosing between the two. What exactly are outsourcing and outstaffing? Which model is better suited for the entrepreneur’s specific needs? Which one is cheaper? Which one is more efficient and professional? Today, we are going to compare outsourcing and outstaffing and discover which model is better for specific purposes.
Before getting down to the comparison, let’s define each of the two models.
In simple terms, outstaffing is all about selling labor – a hired person carries out the job duties of a client while officially employed by its outsourcing agency. The client runs the team, calculates the costs, time, and everything else, while developers just do their work as a part of that team, although remotely. In such a case, an outsourcing agency is responsible for salary, bonuses, and required equipment for the worker, while a client company is the provider of all the tasks and assignments.
Outsourcing, on the other hand, stems from the combination of “outside” and “resourcing,” and it implies not just providing developers but rather offers comprehensive completion of tasks, which may be small short-term ones as well as large projects (that’s what we deal with at Idealogic).
Among the pros of outstaffing are:
1. Since it is a vendor who is responsible for hiring and payroll, outstaffing provides a client with the ability to have professional developers in the project team without having to pay high prices and taxes.
2. Clients have full control over the development process while also having the flexibility to increase or decrease the number of developers depending on the project size and complexity.
3. Outstaffing is usually cheaper than other business models.
As for the downsides to the outstaffing model:
1. Clients bear all the responsibility for the product delivered. It can sometimes be the case that developers are not skillful enough or a client’s vision lacks comprehensiveness and professionalism – as a result, such a project ends up dead.
2. If the communication channels or processes are not qualitative enough, there may be issues in understanding and delivering both the assignments and the result.
Just like outstaffing, outsourcing has its positive and negative features. The pros of outsourcing are:
1. Since outsourcing is all about delivering a comprehensive product to the client, a software outsourcing company is responsible for all the aspects of quality and delivery. It receives a task, decides how to complete it, agrees on it with the client, and bears all the responsibility for the end result.
2. If a client finds an outsourcing company with a good reputation and is sure in its expertise, he can be sure of acquiring a qualitative partner, who is not only able to realize the boldest of ideas but also can advise on some technical as well as business aspects.
3. Just like with outstaffing, no additional employees have to be hired for the completion of tasks or projects. It means that a client spends neither time nor money on the hiring process.
Of course, there are also some cons of outsourcing:
1. The rates for outsourced software development are usually higher than that for outstaffing.
2. The client has much less control over the development process (however, it is often considered more of an advantage as less attention and time is needed from the client’s side).
Summing up, both outsourcing and outstaffing have their advantages and disadvantages, and the choice between the models should always depend on what a particular client needs. There is no one-size-fits-all solution – one should always evaluate his needs and resources.
At Idealogic, we are fans of outsourcing. We always prefer quality over quantity and provide our clients with the expertise and minds of our team instead of merely selling as many developers as possible. We are firm believers that a software development partner is to grow and nurture the client’s idea instead of providing him with non-initiative labor that doesn’t really care about the project and the idea itself. We prefer to form autonomous teams for projects and run them from the very beginning to the delivery of the end result. We do everything to ensure that our clients don’t have to bother about the routine issues and always strive for delivering the best results possible.
However, although Idealogic focuses on outsourcing, we always evaluate clients’ projects and tell them whether our model is suitable for them or they should better stick to outstaffing. We are not trying to convince clients to stick to outsourcing if they don’t really need it. Should you have any questions or need some advice on what model is better for you – feel free to get in touch with us and be sure that we will help you.