The difference between outsourcing and outstaffing is a never-ending debate among business professionals. As competition between companies gets fierce, you may be wondering which is the best model for your business. Maybe you have a project you want to offload to the providing partner, or you need to hire a team without focusing on the managerial tasks. Before you decide which model to use, you should understand the pros and cons. This article will explore the benefits of each to help you make a worthwhile investment.
Difference between outsourcing and outstaffing
Outsourcing is a project-based business model where a company hires an agency for the entire project. All tasks and functions remain with the external agency. Typically, the company can offer services like web design, customer service, programming, software engineering, digital marketing, etc. When it comes to deadlines, updates, and requests, the client company communicates with the outsourcing agency.
In contrast, out staffing refers to hiring skilled professionals (nearshore, offshore, or onshore) to work in a company. The contracting client handles payroll issues -bonuses, sick leaves, benefits, etc. Depending on the agreement of the providing company, the employer can give long-term contracts.
Pros and Cons of Outstaffing and Outsourcing
Advantages of outsourcing
Since most tasks remain with the external agency, your business focuses on core responsibilities. The best companies will emphasize dealing with cultural differences and language gaps.
Outsourcing is less costly compared to hiring full-time employees. If you have remote teams restricted by time zone, they can work during the hours that suit them best. Beyond that, you don’t need to hire additional equipment. If you need a team in the IT department, you don’t have to invest in cloud servers, laptops, and mobile devices. The outsourcing provider ensures the team has the equipment to do the job.
Quality of services is the responsibility of the outsourcing company
The outsourcing company must ensure the team meets and exceeds client expectations. For instance, the manager should identify the areas that need improvement and address any issues that arise. That said, the outsourcing company must have a strategy to manage risk.
A pool of tech talents
Whether you work with an agency or a freelancer, you can access a great set of skills. Plus, you can hire people from different geographical locations.
Disadvantages of outsourcing
If you outsource a team to handle data in an IT department, your confidential information may get into the wrong hands. Both parties must trust each other.
Since the team reports directly to the manager of the outsourcing company, there could be delivery delays.
Lack of innovation
Without proper collaboration between teams, your company may not embrace ideas on emerging technologies. To avoid this, you should ensure your in-house team works with the outsourced talents.
Advantages of outstaffing
One of the main pros of the outstaffing model – you can manage both your in-house and outsourced teams. This allows you to have full control of a project from initiation to completion. If your business has complex financial calculations on taxes, salaries, and bonuses, outstaffing will make the task simpler.
Good for emergencies
Outstaffing allows you to take care of emergencies. You can rest assured that your projects will run without affecting the deadline.
The company controls the whole team, so you can decide which phase of the project to increase the staff and the one to reduce.
Cons of outstaffing
When you outstaff offshore, you may experience some cultural differences. In addition, the team may find it difficult to embrace the company culture. Others may not comply with the ethical standards set in place.
The client is responsible for the project
Since the outsourcing partner is offloaded with communication tasks, the project’s success lies with the client. You can look at this point as an advantage too. It could be a strong indicator the company can accomplish its goals.
Whether you need to outstaff or outsource will depend on your business needs. If you don’t have in-house professionals to work on a specific project, then outsourcing can be a viable option. But if you have well-defined processes to handle a remote team, outstaffing can be a better idea for you. You may want to consult a professional to help you choose a model that suits your needs.