Using an outside vendor saves not only benefits and overhead on employees but base salaries for IT workers when you combine outsourcing with offshoring to countries with a low cost of living. If you’re looking to do the cost-plus model for outstaffing development, you’ll get more say over how your outstaff team members are paid, but you may see more ups and downs in your expenses. Hiring from Asia and India offers lower cost for outsourcing software development. In fact, the client is responsible for keeping track of assigned tasks, managing the progress, communicating with a developer or a team of developers, and accounting. Your projects probably won’t be the first your team is working on together.
All in all, make sure that the company has a stellar reputation on the market and an incredible track record. Outstaffing enables companies to engage brilliant IT specialists located in different corners of the world. As long as in certain countries an average salary rate can be much lower than in yours, you can save some money. Moreover, compared to outsourcing rates, outstaffing rates exclude management costs. Now when you know the difference, let’s talk how to apply this difference to your business. Whether you need an IT outsourcing agency or it’s better to go with an outstaffing company fully depends on your needs.
The Outstaffing Model: Key Risks To Manage
Computer Economics claims that 65% of businesses outsourcing application service will continue to do so and plan on further increasing their involvement in outsourcing. Explore how businesses improve production control quality with Ionbond – an automated visual inspection, classification, and anomaly detection solution. Through more effective warehouse management, Softengi boosted a client’s business efficiency by 34%. With such a model, all you need is to give the team a list of requirements for your project.
- Sign the outstaffing agreement and formally onboard the outstaffed developers to your team.
- However, in this case, you also might want to reconsider outsourcing development and try building your own in-house team.
- It comes with two core business models – ‘Cost Model’, and ‘Cost-Plus Model’.
- As they deliver the product and the contract is complete, the service provider stops working with the business owner.
- You don’t do this directly, as the outstaff team member is still an employee of your IT outstaffing provider.
- Outstaffing, as opposed to outsourcing, allows the client to directly monitor the performance and operation of the outstaffed workforce.
- Your projects probably won’t be the first your team is working on together.
In fact, these new employees become a part of your in-house team but they are still legally employed by an outsourcing agency. Sign the outstaffing agreement and formally onboard the outstaffed developers to your team. Provide clear guidelines, task scopes, and expectations to ensure they can be productive as soon as possible.
IT Outstaffing: Pros and Cons of This Model in Software Development
Normally you will be presented with demos of what has been done during a certain timeframe. Managing a remote worker can be both an advantage and a disadvantage. With the skills to handle a remote developer, managing quality web developers is a plus. But if you’ve never been in the shoes of a project manager, then it can be viewed as a disadvantage.
At the same time, the IT services provider acts as the official employer that pays benefits, bonuses, equipment, holiday pay, and employer taxes. Increasingly, companies are turning to outside vendors both at home outstaffing model and abroad. And when you consider outsourcing or outstaffing, you’re considering improving the technical capacity of your project, adding more third-party expertise, and ensuring that all deadlines will be met.
Step 1 – Define the project scope
Outsourcing is the delegation of business tasks to third parties who are specialists in a particular field. These two concepts legally secure the existence of outstaffing in Ukraine. Outsourcing allows businesses to scale up as needed without having to hire additional employees or make major investments in equipment or building space. When you outsource, you have the option of hiring workers from different countries or states.
If you are interested in either of these approaches, welcome to this brief guide on outsourcing vs. outstaffing from Riseapps. Or you’ve already opted for one of the models but want to know all about its pitfalls? But this first part of finding and retaining top talent is the real bugbear. Assembling qualified developers feels like a Herculean task because there’s such a small talent pool to choose from, especially if your field of vision is only local.
Pros and Cons of Outstaffing
Outstaffing company provides you with qualified resources and creates the required comfort and productive environment for them. As a result, you stay more focused on your project and requirements and efficiently run your remote department. In most cases, you will only interact with a project manager from the outsourcing team, whom you’ll provide your deadlines, updates, and requests. Processes, web development guidelines, prebuilt solutions and pipelines, and much more – are the solution accelerators. By keeping standard things standard, the company can avoid reinventing similar wheels for multiple projects.
When you hire IT employees, you do not have to pay for taxes, insurance, facilities etc. It also allows you to alter the number of professionals at any time, depending upon your project requirements. However, you might often have to deal with the communication and make your in-house team intrude to erase the implementation mistakes. Clutch allows you to sort companies by budget, price, location, and other features, check out reviews. It also can offer a custom shortlist of web design and development agencies based on your requirements. If, on the other hand, you simply would like to receive regular updates on the project’s progress, there is no significant difference between onshore and offshore companies.
What Model is Best for Your Company?
However, you’ll benefit more from engaging an outstaffing company if you have a capable in-house IT manager and well-established software processes. This is true when you’re trying to strengthen your team with skilled specialists. Some companies have an existing IT team, while others, such as startups, choose to operate without one. If you lack technical capabilities and can’t lead a team of developers, outsourcing is the better option. It allows startups to focus on other key business areas while getting their apps to market quickly.
However, such an expert can be too much for the staffing budget to handle, especially if you’re an aspiring startup. This is where knowing what is outstaffing may become very useful. Running a successful business means constantly looking for new talent and opportunities. Whereas the latter come and go, sometimes without us being able to control this process, finding the right talent is what we can manage more effectively. Explore the possibility to hire a dedicated R&D team that helps your company to scale product development.
Need well-skilled app developer?
Finally, they decide on hiring the service an offshore software development agency and get confused with a bunch of terms like software outsourcing, outstaffing, dedicated team, and others. Outsourcing (unlike outstaffing) is a contracting process where businesses delegate entire software development responsibilities to an external IT company. The contracted IT agency is responsible for recruiting and managing team members, handling administrative tasks, and submitting project deliverables.