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What is IT Outstaffing?
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27 May   John Doe  
offshore development center in Minsk

What is IT Outstaffing?

A successful business presupposes the presence of qualified employees who can fulfill their tasks and improve their skills. However, companies…

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A successful business presupposes the presence of qualified employees who can fulfill their tasks and improve their skills.

However, companies are not immune to the fact that an employee may leave for several reasons, or it is not possible to find a specialized specialist in their region. What do they do in such a case? Searching for a new one is not always effective, and not all organizations have the financial capacity to expand their staff.

Such situations can help such a model of HR management as outstaffing, which allows many firms to get access to a huge pool of talented professionals who can promptly solve the task at hand.

What is an Outstaffing Model? And How does it work?

There are different definitions of outstaffing. Most often, outstaffing is the transfer of personnel out of the state. Or else: outstaffing is a model of increasing the size of a department by hiring external specialists to perform specific development tasks.

According to the outstaffing model, the remote personnel will focus their efforts on executing a project from the customer for a certain period. In turn, the vendor company will act as an official employer and fulfill its social obligations in the form of wages, benefits, bonuses, insurance, taxes, software licenses, and so on.

The company hires a specialist or a team around the world to fulfill the task of developing this or that product (project) within a set time. 

It is worth noting that outstaffing is becoming more and more common, especially after the quarantine restrictions caused by the coronavirus epidemic, when very many companies lost the ability to use staff in office premises.

In addition, the trend of remote working is gaining momentum, which is also something that businesses looking to reduce their costs and optimize staff resources have to consider. 

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Pros & Cons of Outstaffing

Outstaffing, like any other model, has certain advantages and disadvantages, which should be known before using it in practice. Let us first note the advantages of outstaffing.

The advantages of outstaffing

  • Popularity and accessibility. Outstaffing is available to the vast majority of companies. It is a model of personnel management that is used all over the world.
  • Cost Efficiency: Reduced Operational Costs. Outstaffing can lower costs related to recruitment, onboarding, and training. Companies avoid expenses associated with full-time employees, such as benefits, office space, and equipment.
  • Open management. Remote employees will be under the control of the project management. Of course, the control is not total, but still, the company has the opportunity to promptly assess the efforts aimed at the realization of the tasks and, if necessary, to make adjustments in the project development.
  • Outstaffing is scalable and quickly deployable. It means that you can hire a whole team or just a few developers to fulfill a specific task in a short period. Plus, there’s the ability to bring in the right talent quickly, helping companies meet project deadlines and innovate faster.
  • Expertise and Talent: Outstaffing gives companies access to a global pool of qualified professionals, including specialists who may not be available locally.
  • Delegation of non-core activities: By delegating specific tasks to freelancers, companies can focus more on their core functions and strategic goals, which often leads to increased efficiency and productivity in the company.

At the same time, outstaffing has some disadvantages and you should also be aware of them.

Management Challenges:

  • Coordination Issues: Managing outstaffed teams, especially when they are remote, can be difficult. Ensuring that all team members are on the same page requires robust communication tools and project management strategies. Miscommunication can lead to errors, delays, and decreased productivity.
  • Cultural and Time Zone Differences: Working across different cultures and time zones can create misunderstandings and complicate scheduling. This can slow down project timelines and affect the quality of work.

Quality Control:

  • Inconsistent Quality: The quality of work produced by outstaffed employees can vary significantly. If the external team does not meet the company’s quality standards, it can lead to subpar deliverables and potentially harm the company’s reputation.
  • Dependency on Provider: Companies rely heavily on the outstaffing provider to ensure the skill and reliability of the workforce. If the provider does not maintain high standards, the company may face issues with the performance and dependability of the outstaffed employees.

Security and Confidentiality Risks:

  • Data Security: Sharing sensitive information with outstaffed employees poses a significant security risk. Ensuring that proper data protection measures are in place is crucial to prevent data breaches and unauthorized access to confidential information.
  • Intellectual Property: Protecting intellectual property can be more complex when dealing with outstaffed employees, especially if they are located in different legal jurisdictions. The risk of intellectual property theft or misuse is higher, necessitating stringent contractual agreements and oversight.

Employee Integration and Loyalty:

  • Lack of Integration: Outstaffed employees might not integrate well with the company’s culture and existing teams. This lack of cohesion can lead to communication breakdowns and decreased morale among in-house employees.
  • Loyalty Issues: Outstaffed employees may not feel as committed or loyal to the company as full-time, in-house staff. This can affect their motivation and performance, leading to higher turnover rates and less continuity in projects.

Hidden Costs:

  • Unexpected Expenses: While outstaffing can be cost-effective, hidden costs such as training, management, and integration expenses can add up. These costs can reduce the overall savings and impact the budget more than initially anticipated.
  • Long-Term Investment: For companies that heavily rely on outstaffed employees, there may be a lack of investment in developing internal talent and capabilities. This can affect the company’s long-term growth and innovation potential.

Legal and Compliance Issues:

  • Regulatory Compliance: Navigating different legal and regulatory environments can be challenging. Ensuring compliance with local labor laws, tax regulations, and industry standards requires diligent oversight and can increase administrative burdens.
  • Contractual Complexities: Drafting and managing contracts with outstaffing providers can be complex and time-consuming. Companies must ensure that contracts clearly define terms, responsibilities, and expectations to avoid disputes and legal issues.

When to Outstaff?

In what situations should IT outstaffing be used? Let us remind you that IT outstaffing is considered an effective solution that allows you to increase your team with new and experienced specialists for some time. There are several reasons forcing companies to consider the possibility of using outstaffing to realize their tasks:

  • There are no financial possibilities to hire more employees to take care of product development.
  • There are no qualified developers in the city who have the relevant competencies.
  • The intention of the company’s management is not to waste time searching for new employees and overload the HR department.  
  • Focus on a specific result, project work, or temporary functionality.
  • The need for a team that better customizes the product to their region.
  • The desire to be paid exclusively for working hours, minimizing personnel costs.

Once again, it is worth emphasizing that it does not matter that the new employees may be in another state, they will perform the work assigned to them on the specified project and under appropriate supervision by the company.

IT outstaffing in Belarus

Outsourcing vs. Outstaffing: Key Differences Between the Models 

There are two methods to quickly add outside talent to your development department – outsourcing and outstaffing. There are a few key differences between the two that you should be aware of before choosing one model or the other.

The first difference between outsourcing and outstaffing is that outsourcing involves contracting with an external organization to perform certain business functions or processes. Outstaffing involves hiring external employees through an agency who work exclusively for the client company. These employees are managed directly by the client but are officially employed by the outstaffing agency.

The second difference between the above models is their cost. The price of outsourcing is generally higher than that of outstaffing.

The third difference is the form of payment. Outsourcing is paid on the fact of work performed (project payment), which is specified in the contract. Payment for the services of our staff specialists is determined by the number of hours they spend on the work and can be changed at any time and at any stage of the project.

The fourth difference is that in outsourcing there is almost no control over how the development process is conducted, while in outstaffing there is always an opportunity to determine how things are going and at what stage of realization the project is. In outsourcing, the vendor manages the project or function and the employees work for the vendor. And when implementing the outstaffing model, the client manages the outstaffing employees. 

The fifth difference is that an outsourcing company performs its work, as a rule, in its office, while outstaffers work on the territory of the company that ordered the service.

The sixth difference lies in the time of work. As a rule, outsourcing involves a contract for a long period and its renewal, while outstaffing is an interaction with a specialist(s) for a short period (most often up to nine months), and no further contract renewal is envisaged.

Thus, these models have key differences that allow you to determine in advance which of them to prefer for the development of the project so that you do not regret the time and finances spent.

Benefits of Choosing IT Outstaffing

The number of companies choosing IT outstaffing is growing every year due to the complex advantages of this model. Let’s consider them:

Costs are reduced.

Statistics show that no less than 66% of companies in the US use outstaffing services because experienced developers require high salaries, which is a burden on the business. Therefore, they hire experts from other countries whose services are cheaper.

It is possible to find the right expert quickly.

As new technologies are introduced very quickly, companies are forced to find an experienced sub-specialist in a short period to keep up with the competition. And outstaffing is one of the fastest ways to find an expert without spending a lot of time on the search process.

The business structure of the company is improved.

With outstaffing, a company can focus its resources on achieving its main objectives, while internal processes and customizations are handled by the hired experts.

Resources are freed up.

To develop software (software), you need resources. With outstaffing, there is no need to spend money and time on red tape and administrative procedures. The hired workers will take care of them. This is especially important for those organizations that have just started working in the market and need to use their resources economically for work.

Increased scalability.

Companies that are in the start-up phase often find that they are unable to scale their infrastructure. To achieve this goal and should augment the team with experts from an outstaffing company.

Due to the above-mentioned advantages, outstaffing is becoming more and more common in global labor markets, and more and more companies are turning to it to perform highly specialized project development tasks.

And to find the most professional team in this market, you need to take certain actions that allow you to do so. 

Seven actions to find the best outstaffing organization

To hire a professional IT outstaffing company, it is recommended that you take a few sequential steps.

  • Determining the scope of the project
    It is necessary to determine in advance what the specifics of the project will be, how many specialists the company currently lacks, and how many experts will be hired to get the project up and running. Only after this can you start discussing with a possible development partner how to proceed.
  • Search for staffing companies on the market
    Service providers place advertisements about themselves on business forums, and specialized sites, for example, such as Clutch, in search engines. In them, you can see what kind of companies they are, what their rates are, and what exactly they are willing to help with.  
  • Check the portfolio, customer reviews
    You should carefully check the company’s portfolio and the data that it offers about itself. You can also look at the reviews of clients who have previously cooperated with her, but it is necessary to remember that now reviews can be customized in content.
  • Interview
    The next action is an interview with the representatives of the company, during it, you can find out whether they have experienced developers, what projects have been realized, and so on. If the interview was successful, then the terms of the contract should be discussed.
  • Discussing the terms of the contract
    When discussing the terms of the work contract, various legal nuances are taken into account, from the evaluation of services to the timing of the project tasks, with the definition of responsible persons, etc.
  • Contact coordination
    It is necessary to create a convenient channel of communication and monitoring with the developers to be aware of the ongoing processes, and to know at what stage of the project realization.
  • Hiring of specialists
    Once the contract has been drawn up, working conditions have been defined, responsibilities have been distributed, and rates have been set, the last step is to hire new members of the project development department. They should be briefed on the details of the next steps to ensure that the project is completed on time and without unnecessary rework or disruption.

Why us 

Agreed, Outstaffing is a very convenient model for solving your business’ operational requests. If yes, contact our manager. The team is open and available always to make your business processes even faster and more efficient. And most importantly – to get exactly the result you expected at the end. Our team will help you find the best people and experts for your business.

Conclusion

Outstaffing is a wise decision for a lean, competent manager, an opportunity to get the best specialist or team to implement tasks that are not yet within the reach of your team. Use mobility in personnel management, which Outstaffing also provides.

About the author

John Doe

CEO and Cofounder of ND Labs

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