Outstaffing or Outsourcing: Which One Should You Choose

With the pandemic pushing the idea of dedicated software teams higher up the agenda of tech leaders, it’s always worth exploring the different options available. Aside from the drive to diversify, the main reason for this is the fierce competition for talent.

With more and more companies being left with under-skilled developers, as the cream of the crop get hired quickly by the tech giants and bigger players.

However, nowadays, businesses are turning towards alternative development models in an effort to keep up with the competition.

Outsourcing and outstaffing enable you to work on a project with engineers provided by a software house or other outside vendor – which can be fantastic to temporarily ease the workload during an exceptionally busy period, or help on a single project.

However, a dedicated remote team might be a smarter choice when you want to increase capacity and scale quicker than before. This is offshoring, which we’ll cover later on.

What is Outsourcing

One of the more common misconceptions about offshoring is that it’s a project-based way of augmenting your team. In actuality, this is closer to outsourcing.

This is often the cheapest way of developing software with overseas talent, though this comes with a risk of a focus on quantity and price over quality and long-term value.

Additionally, with no control over development, the results can vary from excellent to poor, or in other words: hit or miss.

For many IT decision-makers and tech leaders, it’s not seen as a viable long-term solution because ultimately they want engineers fully invested in the business and the products and not just hired hands.

Pros and Cons of Outsourcing

To get to the crux of the matter swiftly, it’s clear that outsourcing is model-based primarily or even exclusively around cost savings.

This is made possible for a variety of reasons, one of them being no resources are spent on idle workers as they’re not permanently employed as company staff. This can be great for startups or businesses with unpredictable capacity and lots of flexibility.

Similarly, outsourcing can work great for non-tech companies who perhaps want to develop a one-off application without the intention of it being continually delivered.

One of the main benefits of outsourcing is that you don’t need to spend time hiring.

The primary problem with outsourcing your development operations is about ownership. Yes, the engineers are working on your project, but they aren’t working for your business. They don’t form part of your wider engineering team, but instead function as ‘outside help’, so to speak.  

You’re also able to get your project off the ground in rapid time because outsourcing providers have a massive pool of engineers to dive into and match your requirements. But, you’re not ultimately responsible for who gets hired.

On the flipside, with offshoring, you make the final decision on who gets hired, and they work solely for your business, in a way that’s ultimately indistinguishable from your employees based locally.

When offshoring your software development with a team builder like The Scalers, they handle your recruitment, administration, operations, and alignment to your engineering HQ.

What is Outstaffing?

There exist several definitions of outstaffing, and many are incredibly similar to the definition of a dedicated team extension.

It’s when an engineer performs work for one company while remaining an employee of another. In many cases, this is a software agency.

Unlike with outsourcing, while the wages may be paid by the agency – the company the engineer is assigned to is responsible for the day-to-day management of that individual.

With outstaffing, you need the technical knowledge to supervise and guide your new employee, whereas outsourcing is more of an ‘off the shelf’ solution, and often better suited to people with an idea to share but without the technical nous to deliver it.

Pros and Cons of Outstaffing

Because your business is primarily responsible for the output of the engineers you hire via the outstaffing model, it means you retain control in a way that’s not possible with outsourcing.

Extending your team in this manner can be a helpful bridge before deciding to go offshore and building a whole new team in an overseas talent hub.

The client organisation is also able to scale up the amount of dedicated developers you have, or down if needed.

Additionally, if you’ve hired an engineer or scrum team for the longer term via the outstaffing model then they’re going to be better ingrained into the wider engineering setup and better aligned with your business’ mission and vision.

Ultimately, the scope of the project is managed by the CTO or the project manager of the client organisation and not the software agency.

With outstaffing, you need the technical knowledge to supervise and guide your new employee, whereas outsourcing is more of an ‘off the shelf’ solution, and often better suited to people with an idea but without the technical nous to deliver it.

Which Approach Should You Choose?

Like with anything, the approach you choose should be based entirely on your requirements and specific needs. If you’re building a one-time app without the need for continual improvement and delivery then outsourcing would be a good option to do it cheaply and flexibly.

If, on the other hand, you need two or three full-time engineers to help on a variety of projects within your tech business for an undefined period of time then outstaffing might be the better option.

Alternatively, you may prefer to choose the offshoring model, which supersedes both outsourcing and outstaffing as a way of augmenting your existing engineering setup with full-time, long-term developers who are genuine colleagues and have no external support.