Hiring third-party service providers or external companies to conduct high-quality development projects is common these days. Earlier, all these issues were completely handled by in-house employees, but that is no longer the case, especially after the evolution of concepts such as outsourcing and outstaffing. After the massive COVID-19 pandemic, the need for outsourcing and outstaffing has increased to a great extent, and it shows no signs of slowing down.
Now, can you tell me what one of the most important tasks is for any business or project these days? It is to optimize business procedures that ensure the smooth performance of valuable actions, and for doing so, you no longer need to put in unnecessary efforts. It doesn’t matter what type of development project you are willing to proceed with, be it software, web development, mobile, outsourcing, or outstaffing; these projects won’t be a concern at all. Delegating IT tasks is no longer a huge concern.
Here’s an eye-opener for you! According to Grand View Research, the global expenditures to outsource and outstaff might surpass $936.6 billion within a few years down the line. Many of you tend to use these two concepts pretty casually and interchangeably, but both are different in terms of meaning. The following post can assist you in understanding their meanings well.
Now it doesn’t matter whether you are running a small, medium, or large-enterprise business; looking around for faster, cost-efficient ways to grow is pretty obvious. This is where they end up at a crossroads, whether to choose outsourcing or outstaffing. And let me tell you, it is a never-ending debate, making a random choice won’t do any good. Opting for outsourcing or outstaffing, choose the former or latter one; unfortunately, there is no straightforward answer to it. However, the entire post is an attempt to make your decision-making process easy and successful. After all, there is no harm in seeking all the options available to scale up your existing operations and pursue rapid growth. Let's try understanding both terms in detail.
What is Outsourcing?
Well, it is a well-known business concept or practice where legitimate companies tend to hire third-party organisations or individuals, mostly known as freelancers, to perform services and tasks that were previously handled by the company’s own employees. The third-party service providers don’t necessarily have to be located within the same country or region; they can exist overseas or offshore.
Businesses widely consider outsourcing due to a plethora of reasons, such as cutting costs, improving efficiency, and focusing on core competencies, among others. What kind of tasks are mainly outsourced?
Manufacturing: Production and assembly of goods.
Information Technology (IT) - Software development, network maintenance, and help desk support.
Customer Service: Call centres and online chat support.
Human Resources (HR): Payroll processing, benefits administration, and recruitment.
Administrative Tasks: Bookkeeping, data entry, and content creation.
Now there are usually two types of outsourcing;
Onshore outsourcing - When you delegate work to third-party providers within your country, this must be taken into account when you need real-time collaboration or cultural alignment.
Offshore outsourcing - Offshore is all about reallocating tasks to different countries due to lower labor costs and favorable economic conditions within developing nations.
Benefits of Outsourcing
Reducing labor costs
One of the most crucial benefits offered by outsourcing includes reducing labor costs. Yes, labor is one such unseen aspect that can cost you an arm and a leg. In fact, it may quite interest to you to know that employee payroll doesn’t include the total compensation costs; this also includes training, healthcare, travel, technology, and equipment.
Quick access to global talent
The next benefit is having quick access to global talent. The market is growing pretty tough and competitive, and companies are striving every now and then hard to hire skilled labor to make up for their workforce shortages. It doesn’t matter whether you are a startup or a well-established business; having easy access to global talent is something everyone craves. Scaling up has become the need of the hour, but at the same time, it turns out to be extremely difficult. However, it is always possible to fill the void using outsourcing.
Gone are the days when companies used to ask the candidates to relocate; it is now possible to work remotely. Eventually, the ultimate objective is to succeed, and outsourcing can certainly help you in getting there.
Enhance team efficiency
The more the merrier. By outsourcing, you can successfully expand your company’s reach in no time, as well as its productivity and efficiency. As soon as you begin taking advantage of a remote or global workforce, you can have instant access to global markets, ensuring more accessibility and, of course, lower prices.
In addition to enhanced productivity and efficiency, you can eliminate costly relocation packages, equipment needs, and renting offices.
Focus on Core Competencies
You no longer have to do it all! Yes, there was a time when businesses had to do it all. However, this is no longer the concern anymore since there are a plethora of trustworthy third-party service providers or development companies that have the knack of taking care of such projects and ensuring high-quality outcomes in no time.
And since your needs are completely taken care of by these experienced programmers, all you need to do is focus highly on your core competencies and nothing else. So nothing can stop you from gaining a competitive edge.
24/7 support
Yes, another benefit of outsourcing is that you are bound to receive 24/7 support services. Outsourcing means you have availability beyond the traditional eight-hour workday. Not just that, you have this golden opportunity to create a 24-hour production cycle.
Also, you have a sure-shot way to enhance the customer experience and grow your business. You see, when profit margins are tight, providing better customer service or quicker turnarounds on projects can make a huge difference in client acquisition and retention.
What is Outstaffing?
Outstaffing is about scaling tech teams most flexibly. Yes, most of the time it can be considered as a B2B cooperation where one company hires another one to source technical professionals, interview them at the same time, handpick the best ones for approval, and become a regular employee.
Turning your vision into reality is not an easy thing to do! You need the best people on your team, and unfortunately, looking around for IT people as well as keeping them in your team, can be quite a difficult activity to pull up. Fret not, we have outsourcing and outstaffing at our service. So here in outstaffing, the client usually hires a contractor from any software development outsourcing agency to execute development tasks. In a way, it is suitable to call them remote in-house developers, and they are highly recommended when you want to save money or hire a workforce.
- Workflow and budget optimization
- Reducing the number of tasks of accountants and HR specialists
- Risk minimization It is truly said that outstaffing opens lots and lots of doors of opportunities, enabling different enterprises to successfully redefine their operations. Further below, I would like to mention some significant benefits offered by outstaffing.
Outstaffing Benefits for Your Enterprise
Reduces costs and maximizes budget
Much like outsourcing, even outstaffing can assist in reducing costs and getting rid of unwanted expenses, leading to making the most of the ongoing budget. Conducting a software development project is certainly not an easy venture; sometimes, businesses end up paying a hefty price for it. Fret not, because this shouldn’t be the case every time; the key is to make the right choice.
One of the main reasons to choose outstaffing is cost optimization. It simply trims or eliminates the need for in-house staffing. No need for overheads associated with recruitment, training, and benefits. In addition, you get a well-optimized budget allocation. And also, you need to understand that the essence of ROI is beyond finances.
- Predict project costings
- Reduce overhead expenses
- Pay-per-project or per-hour billing flexibility
- Avoidance of long-term commitments
- No infrastructure investment
Access to global talent
The next benefit of considering outstaffing is having quick access to global talent. I mean, what if you get to cherry-pick some of the most diligent and top-notch professionals located across the globe? How would that feel? Amazing right? Well, I mean you have a diverse range of skill sets, experts having niche specialization, Multilingual professionals, round-the-clock services, and a rare opportunity to conduct successful cross-cultural collaboration.
Choosing high-caliber talent means you are bound to have amazing project outcomes, multi-faced insights, as well as more competitive offerings as well and faster ideation procedures.
Flexibility
The next benefit that shouldn’t be ignored about outstaffing is being flexible enough to scale up whenever in need. It’s like you are having a much-needed freedom to modify team sizes. So, in case you happen to experience a sudden upsurge in the existing scenario, or pressure with a deadline looming, then all you can think of is scaling up by considering outstaffing. This means your continuity remains, and competitiveness is pretty intact. Outstaffing can result in:
- Ability to increase or decrease teams.
- Short-term contracts are likable.
- Minimizes downtime
- Real-time resource allocation
- Reduced financial risks
- Seamless integration with the existing teams and working environments
- Streamlined management irrespective of team dynamics.
It’s a great move, especially when you want to pursue new kinds of projects and innovations. A diluted company culture might be a concern, but trust me, it is manageable.
Expedited time to market
Outstaffing definitely offers a stellar head start. Speed is the sure-shot way to gain a competitive edge, and when you have a dedicated outstaff team at your service, meeting the deadlines is a given. Ensuring rapid time to market means you are bound to meet ever-growing customer expectations, leading to instant gratification and connection, which not only gives a competitive edge, but you definitely offers the market what it wants precisely and when it wants.
- Amazing momentum
- Execution of parallel tasks
- Tailored teams to work seamlessly
- Seamless communication resulting in agile decision-making
Technological Innovation at Arm’s Reach
It has been rightly said that outstaffing is the ultimate ally in the pursuit of innovation. I mean, having disruptive technologies directly at your doorstep is quite a thing, isn’t it! So, in simple words, outstaffing means you have on-demand access to highly specialized technologies so that nothing can stop you from staying ahead of the curve.
Outstaffed teams come from a vivid range of tech backgrounds, which means nothing can stop you from keeping up and setting up pace. Some of the core features to consider:
- Easy access to tech
- Seamless collaboration with tech experts
- Immediate deployment of new tech solutions
Outsourcing vs Outstaffing - The Detailed Comparison
Since we have covered the two concepts inside out, time to spot out their differences. After all, there is a big question ahead - Outstaffing vs outsourcing - what choice will you make?
So, whether to go for outsourcing or outstaffing?
Outsourcing is definitely a better choice if:
- The company doesn’t feature a core product or service, depending on tech solutions
- When you find some issues with the budget, especially if you are willing to conduct a full-stack tech department.
- Sometimes your tech team can be extremely overwhelming
- Lack of experience and expertise
Outstaffing is an ideal option for:
- If you need to supplement the tech department with a relevant specialist
- When you don’t have sufficient resources for specific phases.
- If you no longer want to get entangled with HR
- If you want to maintain control and keep a hawk eye on every development process.
Conclusion
Now we have covered all the basic aspects of outsourcing and outstaffing, still concerned about whether to choose Outstaffing vs outsourcing. Well, if the company is too much technology-focused, then you no longer have to hang in with choosing in-house professionals to keep tabs on the current working conditions with the existing development team, then outsourcing is worth taking into account. On the other hand, in case if you already have a well-defined process and proper management to handle things in a remote manner, then consider outstaffing. However, there is no cookie-cutter solution; each case is unique and different, so before making any decision, make sure to consult with a reputable and reliable development company that carries immense expertise in such an ever-evolving realm.
I hope you did find the following post worth taking into account. In case you have any further doubts or queries, feel free to mention them in the comment section below. Good luck with your project. I am sure you will have a great time conducting your first offshore development project.
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