Outsourcing vs Outstaffing in Software Development

Both staff augmentation and IT project outsourcing are different from alternative models such as managed services and freelancing. With freelancing, the hired talent works more like an independent contractor. That is, they are neither employed by your company nor are they part of any outsourced team. Outsourcing is about getting tasks done, whereas outstaffing is about extending the team and working together for the long run. 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. To sum up this part, both software outsourcing and outstaffing offer the benefit of increasing the development capacity of an organization by providing a tech team.

  • You just need to define the roles and a vendor will backfill the vacancies and help you integrate remote team members efficiently.
  • Nevertheless, both outsourcing and outstaffing are in high demand as companies and startups seek to scale their operations and pursue rapid growth.
  • Here’s a breakdown of the average price of software developers’ services in popular outstaffing destinations.
  • You can check a detailed description of the benefits and drawbacks of using the outsourcing model further in the article.
  • Both outsourcing and outstaffing are less costly alternatives to in-house teams.
  • Countries such as Ukraine, Poland, China, etc. have emerged as outsourcing giants because numerous skilled talents can be hired for cheaper prices than western rates.
  • Now that you know the particularities of outstaffing in software development, the next logical question is about the risks you may face while outstaffing developers.

The outstaffed team and in-house team work together on various business processes. It is one of the software development outsourcing cooperation models in which
the cost of services depends on the time and materials spent by the team on
the development of your project. Outstaffing is a model of cooperation that involves
supplementing the existing in-house development team with individual remote

Difference between Outsourcing and Outstaffing

All of those drawbacks can be eliminated by hiring a company that has proven its reliability and quality by numerous projects and many years of experience. Although an outstaffing IT model is comparable to outsourcing, engaging talent through outstaffing has different characteristics. Here is a quick guide to help you estimate conditions and make the choice towards outsource or outstaff development.

If you decide to manage a remote outstaffed worker, this comes with both advantages and disadvantages. Additionally, outstaffing saves money spent on candidate search, as the outstaffing company provides the employees. For example, when I ask a candidate, “Why do you want to work for us?

When To Opt for Software Development Outsourcing (Cases, Types of Projects)

The outstaffing arrangement can be short-term or long-term, depending on the project’s needs. Remote IT professionals work from their own location but become an integral part of the client’s team, collaborating closely with the in-house staff. It’s important to understand that outstaffing is different from IT outsourcing. In the outstaffing software outsourcing and outstaffing vs. outsourcing dilemma, outsourcing assumes a “turn-key” approach to delegating software development activities to an external vendor. The client hires a vendor aiming to obtain a completed product or get a service (for example, Quality Assurance or cloud migration) without involving managerial resources on their side.

According to the 2020 Deloitte Global Outsourcing Survey, businesses choose to outsource to reduce costs. Clutch’s report shows that businesses also outsource to increase efficiency (24%) or acquire expert assistance (18%). PWC claims that, on average, outsource payroll saves 18% more than in-house staffing. If you realize your human resources aren’t enough for a timely and quality project delivery, staff augmentation may overcome these short-term workforce challenges.

Outstaffing in Software Development

Outsourcers and outstaffers need to charge more than what they pay the developers to make reasonable net margins. Also, ask the references how the outsourcer accommodated change requests. Your app’s scope or project is likely to change multiple times.

software outsourcing and outstaffing

If they don’t have an IT department to create this product, they can outsource its development to the tech agency that will deal with it end to end. The duration of the project directly affects the type of cooperation. Working
with a dedicated team, for example, is ideal for long-term initiatives,
whereas a fixed-price approach is perfect for short-term ones. This model means that the company is looking for a contractor to undertake
specific tasks for a fixed price.

Qubit Labs is Hosting a Webinar About the Best IT Outsourcing Destinations in Ukraine

Do you want to build a custom workout tracking software solution for your needs and the needs of your clients? At the same time, you, as a client, will have the possibility to fully focus on your core business activities and the needs of your project. The same level of control can also extend to the code base of your project. In order to safeguard your code against potential security attacks or data theft, certain companies may limit your access to the code during the building phase. This reduces the burden of controlling all the operational aspects of the project and allows your in-house team members to focus on other projects. I recommend avoiding shops that claim to be experts in “Java, Python, C++, and AI/ML” and that spam you with faces of attractive females representing their agency’s expertise.

When a tech leader is tasked with delegating a set of software development activities, outsourcing is probably the first thing that comes to mind. However, in recent years, the market of IT services has grown to include several offshoots of the outsourcing concept. Outstaffing shifts the onus of responsibility for the team quality from the vendor to the client. If you choose outstaffing vs. outsourcing, you will get to build your team in a joint effort with the vendor and handpick the best talent personally. That way, the client is able to pick the best-in-class talent pre-approved by the provider. You can decide based on the needs of your business and the required technical component, and it doesn’t matter whether you have a mature business or a startup.

Your Involvement in the Development Process

Customers may prefer this approach when they already have a technical team, but lack experts, so the problem cannot be completely solved in-house. Outstaffing is a model in which a team or a single specialist essentially performs a job for a client but works for an outstaff agency. In such conditions, the client controls the entire scope of work and also leads the team himself. The outstaff company as an employer undertakes to provide equipment and salary. Moreover, unlike hiring a new in-house developer, where you have to integrate them into the project, onboarding an outstaffed specialist is typically faster as it is handled by the outstaffing company.

software outsourcing and outstaffing

The code generated by a chatbot will be from a database of codes that programmers have written. That is, using chatbots and code means using humanity’s previous experience. Of course, you can look at a human cell from scratch, create and improve a microscope, or use the acquired knowledge of a particular field and build on it. Speaking of generative AI, humans are expected not only to perform work but also to be able to set tasks. In other words, when interacting with AI, each of us becomes a customer expecting work to be performed. But simultaneously, we must understand what we want as clearly as possible.

Outsourcing: Advantages and Disadvantages

Also, in both cases, those developers are working on the project remotely. Still, the main difference between those two concerns the project’s management. Cooperation with external providers of IT services is a common way to handle growing projects.

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