Home Outsourcing or Outstaffing: Do it Right With 10 Effective Tips

Outsourcing or Outstaffing: Do it Right With 10 Effective Tips

Outsourcing and Outstaffing are the two most popular practices that are widely approved and preferred by businesses. Such models help to fast-track the development process and also save a lot of time & money. Both the models allow businesses to utilize the valuable resources and experience of the employees working from any part of the world.

The approaches are gaining traction with many companies across industries, and such models are the best for specific domains, and the IT industry is one of them. So keep reading to know more about Outsourcing and Outstaffing practices and effective tips to find the best fit.

The Difference between Outsourcing and Outstaffing

People often assume Outsourcing and Outstaffing are the same things, but they are not.

Software Development Outsourcing refers to a model where a company hires workers from another company to get specific tasks done. The IT industry can be developing an app, a website, software product, etc. Often, Outsourcing means that the contractor will carry out the entire scope of work and not just one or two tasks. For instance, if you want to develop a mobile app, they will deal with everything, from technical requirements to maintenance and final checks.

If you choose to outsource, you will get a project manager assigned to your project. They will interact with you and also handle the entire team.

On the contrary, Outstaffing is a type of model in which a third-party worker or a team performs your work. The third party is officially employed by another company but performs the work for you. In Outstaffing, the customers control the entire scope of work, and they have direct access to the outsourced team. When you outsource, you have to manage the hired team and your own; however, the Outstaffing team will handle the payroll.

This approach works best when you already have a development team but lack some expertise required for a particular project.

Outsourcing vs. Outstaffing: Looking for the Best Fit

There is no one-size-fits-all, and no one can tell you what to opt for. Every situation is unique and requires consideration. To develop the best fit, you need first to evaluate the available resources at your disposal.

If you don’t have a software department in your company and have enough funds to accomplish your project, Outsourcing is the option for you. On the contrary, your team doesn’t have enough strength, and you can seamlessly manage a third-party team and yours to complete a project, outstaffing is the best choice for you.

When deciding between Outsourcing and outstaffing, you need to be aware of the general principles on which the models work.

How does Outsourcing work?

When you are required to build cooperation with your outsourcer, a universal algorithm is followed.

  • Draft and allocate the required budget.
  • Look for an experienced and competent outsourcer.
  • They will need a product requirements document that encompasses all priorities concerning your needs.
  • You will have to brief the outsourcer about your requirements and the details of the project.
  • You should schedule regular meetings with the team working on your project to know the progress made and discuss the modifications that may arise.
  • In the end, you will have to evaluate the results and give feedback on the services availed.

How does Outstaffing Work?

When you choose outstaffing, a different set of activities are performed to obtain the desired results.

  • Just as you hire candidates, you need to hold a selection campaign to look for IT experts who would be a great fit.
  • The final project requirements are to be articulated to make sure that all the employees proceed together.
  • Furnishing the required software to ensure smooth workflow.
  • If needed, the onboarded team is to be trained and then provided with a workload.
  • Monitor the performance of the outstaffed team.
  • Provide regular feedback on how they are performing and the areas that need improvement.
  • Evaluate the quality of the deliverables and suggest necessary alterations.

Make Outsourcing and Outstaffing Great (Always): Useful Cues

  • Start with Goal Setting and Scheduling:

Whether it is Outsourcing or outstaffing, you need to determine the goal of your project. You need first to know which model you will choose. After hiring a team, you can then communicate your objectives to the vendor to get started. It would help if you then supplied them with a complete list of the details of your project. With more accurate information, they will let you know the cost and duration of the project.

  • Prioritize Finding the Right Vendor:

When picking vendors for your project, you need to consider a few essential points, the competence domain of your vendor, their portfolio, past client’s reviews, etc. Other crucial considerations include language barriers, timezone, work ethics, cultural background, etc. This will narrow down the options for you to decide on the best company.

  • The lowest bid is the dirty word:

It may sound tempting, but you should disregard the vendor who charges the lowest rates. You cannot expect to get quality at thrift prices; hence, such a decision may make you compromise on the key performance indicators of your software product.

  • Rule out a fixed-price offer:

In the beginning, if you know how much you will have to pay, you will have a sense of control and safety since all upcharges and financial risks will be handled by your outsourcer only. However, if you relieve yourself from all the worries, you may face other concerns. For instance, in the fixed cost, the vendor may keep a risk margin along, and hence you end up paying more. Also, if the sum is stipulated initially, the developers will limit their creativity and try to fit in the budget with no improvements.

  • A contract is a must-have:

The best recipe to get financial, technical, communication, management, and all possible moments regulated, signing a contract is a must. This document will cover all necessary details of the project and will be signed by both parties.

  • Easy does it:

If you cooperate with a vendor for the first time, we recommend starting with an assignment of smaller scope. If you are satisfied with the results, you can continue obtaining the benefits of software development outsourcing.

  • Correlate payment to milestones:

Don’t make the entire payment upfront. A sensible move is to make an advance payment of one-third of the final amount and then divide the remaining amount to complete milestones. In this way, they will also work towards meeting deadlines.

  • Coach the in-house staff:

When you choose outstaffing, this tip is essential. When you explain the potential benefits to your regular employees, they will accept, and the resistance of introducing new temporary employees will be reduced. It further helps to enhance the efficacy of the workflow.

  • Emphasize Communication:

Communication is essential when cooperating with remote teams. If it fails, the project may be defeated. To prevent such mishaps, you should establish effective communication channels with which both sides are comfortable.

  • Provision for a follow-up:

It is critical to integrate a support clause specifying the possible cooperation of the parties after the completion of a project. By doing so, you will not have to look for another vendor to get the required fixes done or get something corrected after the product launch.


Whether you choose Outsourcing or Outstaffing, you will use the workforce outside of your company to make the job—the main difference with who manages the team. You are required to make a thoughtful decision and weigh all the pros and cons before choosing a business model for your project. Gauge your requirements thoroughly and look for high-quality, reasonable services.

Image Credit: provided by the author; thank you!

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Vikrant Bhalodia
People Ops & Marketing Strategist: Leader with 15+ years of experience

An Avid Writer by nature. Having passion towards technology and with multi-functional experience at WeblineIndia, a leading Software Development Company in USA & India, Vikrant loves sharing insights on optimizing the success and internet visibility of the customers’ businesses.

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