Today, in practical activities, business encounters new concepts at every step. Increasingly, these terms are encountered when it comes to personnel recruitment, team formation, and regulation of labor relations, especially in the IT sector. What do specialists mean when they talk about outsourcing and outstaffing?
What is Outsourcing?
The concept of outsourcing involves the transfer of a certain part of duties and tasks to a third-party contractor. Thus, the customer company receives those services that it is unable to perform independently. In turn, the contractor company ensures the high-quality performance of the assigned tasks by a team of its specialists. Outsourcing in the field of IT has proven itself in particular, because recruiting a team of developers or IS specialists is quite difficult and costly. A dedicated development team always has a lot of responsibility at work.
When outsourcing, communication between the executor and the customer is similar to the client-project manager-team of specialists model. In such a model with the manager of the contracting company, the client company will discuss all the issues and problems, and the manager, in turn, distributes the task of his team of specialists, and the project manager distributes tasks to his team of specialists and monitors the performance of the work.
What is Outstaffing?
Outstaffing provides a slightly different model of remote employment. In this case, the customer company hires a team of specialists from a third-party organization to perform a project or specific services and tasks, but the distribution of tasks and control of work assumes. At the same time, the payment of wages, and providing the necessary equipment, and place of work remains in the hands of an outsourcing company. In some cases, the customer may accommodate the hired IT team for some time. This improves communication and increases efficiency.
In any case, communication in the out staff with a hired team takes place on an equal basis with regular business teams on the principle of the client-a-hired team. This option contributes to the uniform distribution of the volume of work and qualitative performance by control by the client himself. The advantages and disadvantages of using outstaffing are in many ways in resonance with outsourcing, but there are some differences.
Practical Tips for Outsourcing and Outstaffing – What to Choose?
In order to decide on the choice of an employee recruitment scheme, we suggest considering the main differences between the two schemes:
Formalization of Labor Relations
Outsourcing: an employment contract is concluded between the employee and the company that is the executor. The employer is a company providing outsourcing services.
Outstaffing: the employment contract is concluded between the employee and the company that is the executor. The employer is a company that provides outstaffing services.
Place of Work/Providing Services
Outsourcing: Labor is carried out on the territory of the executive company.
Outstaffing: Labor is carried out on the territory of the customer company according to the rules of its internal labor regulations, schedule, and other conditions.
That is, the first difference is that the outsourcing employee continues to go to work with his landlord, providing the company with only a specific result (such as a website or design project), but outstaffing involves immersion in the work process on the territory of the client-customer According to his rules of work, but without registration with him labor relations. According to statistical studies, in 2023, IT outsourcing revenue will reach 430.50 billion US dollars.
Outsourcing: the customer company makes payment under the outsourcing contract to the performing company for the actually achieved work result.
Outstaffing: the customer company pays for the work process of the employees provided to it by the outstaffing company.
The main and important difference between outsourcing and outstaffing is the form of management of a team of specialists hired to perform certain tasks. That is why it is worth choosing between these models of remote employment. For companies that are not focused on information technologies and do not have competent IT specialists on staff, it is better to choose to outsource IT services, entrusting all the work to a contractor. If the business has configured IT processes and a freelance team is needed for a short-term project or a narrowly focused service, then it is worth choosing outstaffing of IT specialists.