Outsourcing versus outstaffing, what’s the difference?

Whereas in practice we find that outstaffing and outsourcing are often mentioned in the same breath, they are anything but the same. And this confusion is not surprising. After all, both sound different. But if you zoom in on how software development processes are managed and how responsibilities are divided, there are some clear differences. Cue them!

Remote working: outstaffing or outsourcing

Finding (extra) manpower for a software development job can sometimes take months. A shame, because it wastes a lot of time. And in addition to that lost time, it also causes stress, high recruitment costs, financial worries, failure to meet deadlines, and failure to capitalize on opportunities. Instead of that tedious process and missed opportunities you may want to seek affordable software developers without the hassle that comes with hiring one? If that sounds like a plan then outsourcing or outstaffing may be the solution for you.

You choose outsourcing if you want to outsource a complete software development issue. From A to Z. The outsourcing partner takes care of all the ins and outs. What does that mean? That you can take your hands off the job completely. Think of it as ‘You ask, the outsourcing party runs’. That way you can fully focus on the rest of the business. Do realize that you really are handing everything over, and with it control over progress, quality, collaboration, etc. For the control freaks among us, this is a tough one.

Although in the corridors it is quickly seen as the same thing, outstaffing is really something else. Actually, the term explains itself when you dissect it: outsourcing staff. Bringing in an external party that finds the right software developers for you in the country in question to work remotely on your development team. You stay in control. The outstaffing partner is like a remote outsourcer. One that matches the wishes of you as a client with the knowledge and skills of software developers. Finding, training, and managing one software developer to a multidisciplinary remote software team.

In short: with outsourcing an entire software development project – and thus the control – is given out of your hands, with outstaffing you provide extra manpower remotely.

Advantages and disadvantages of outsourcing

Outsourcing, a term that comes up regularly in the business world. To be fair, in the past there were quite a few doubts and prejudices about this form of remote working. The quality of the end product was often said to be doubtful, the mentality of saying “yes” and doing “no”, bad communication, lack of project scoping, lack of project management, and more expensive than previously agreed upon. Anyway, you get the idea. Practice shows that things can be done very differently.

The advantages of outsourcing in a row:

• Cost-saving strategy. Outsourcing – if done right – takes a lot of work off your hands. Time and thus flexibility that can be put into (other) core activities. The outsource partner is responsible for project management, quality and the timely completion of ‘project x’.
• Outsourcing work to software outsourcing companies can provide much-needed innovative solutions. Solutions you and your team haven’t thought of before. The new insights can lead to additional growth and greater competitive advantage.
• Lower labor costs. After all, the remote software developers are not employed by you. Moreover, they are almost always settled in countries where wages are a lot lower than in the Netherlands.

The disadvantages of outsourcing:

• When not scoping a development project correctly, you can be in for surprises. Costs are higher or deadlines are pushed back.
• You don’t have much say in the development process.
• Communication. With outsourcing, an entire software development project is outsourced. The necessary time is spent instructing this external party on expectations, idiosyncrasies, etc.
• Quality issues. It often happens that outsourcing leads to disappointment, the quality is not always what you hope for. This is because, for example, the method of development cannot follow current standards or, because there is very poor quality code, leaving you with an end product full of bugs and issues.
• With outsourcing, hourly rates are usually higher than with outstaffing.
• Outsourcing can have a negative impact on company culture. There may be internal misunderstanding among employees as to why they feel they are being replaced or why tasks are being outsourced.

Advantages and disadvantages oustaffing

Remote working, we find, is often quite a thing for clients. A thing, until they try it for themselves. Generally, they feel that it is distant and impersonal, quality is low, communication lacks, remote communication is complicated, cultural differences are great, and management is substandard. Fortunately, this is by no means necessarily the case!

The benefits of outstaffing:

• The customer is in charge. One of the most important advantages of outstaffing is that the client has a say throughout the process. You can keep your finger on the pulse, control that is often considered very pleasant. You manage the team, determine which to-do’s will be picked up and what the priorities are.
• Scaling up or down as needed.
• Outstaffing gives access to development capacity that you don’t have in-house.
• Outstaffing can mean coming up with innovative solutions that you and your team haven’t thought of before.
• Hiring additional manpower for relatively low rates. The hourly rates are many times below the hourly rates of comparable Dutch software developers.
• Cost savings: Finding new software developers can be quite time-consuming. And no, we are not talking about weeks, but often months. By outstaffing you save on the extra costs associated with recruitment and selection.
• Related to the previous advantage of outstaffing is finding the right remote developers in no time. The outstaffing partner has a pool of highly experienced software developers.
• Efficiency: working with highly skilled remote software developers allows you to make quicker strides in the project.

The disadvantages of outstaffing:

• Communication. When outstaffing goes wrong, it often backfires on the communication piece. Since the remote software developers – often working from abroad – and the internal development team do not share the same workspace, communication struggles can happen. At CC.Talent we cover this, because our developers not only have a knack for coding technically sophisticated software, but also have the necessary social skills. Internal communication training, tools like Slack and English classes to ensure communication runs smoothly. Also a dedicated Partner Manager will be taking care of any (communication) issues
• Outstaffing requires internal technical expertise and project management.

Outsourcing versus outstaffing, which is the best choice?

So outsourcing or outstaffing has its benefits and challenges. So in which situation should you choose which method of remote working?

For start-ups and organizations where there is no in-house development team, but where there is the desire for and budget for software development, then outsourcing may be worth considering. In recent years, outstaffing in particular has become very popular. This is because of its favorable price tag and productive nature, but more importantly, it is an effective and economical way to hire new employees to augment the software development team.

The mix of in-house team and remote software developers is proving to be a successful formula for many companies. From the e-commerce industry to healthcare, and from SaaS organizations to the telecom business. Outstaffing is worth considering for every industry and software challenge. How can it be done? How does customization work?  As discussed earlier, outstaffing is all about finding, training, and managing remote software developers and we at CC.Talent are happy to help you with that!