Outsourcing vs. outstaffing: which is right for your business?
In today's dynamic business environment, there is a growing need for optimisation and efficiency in the performance of various tasks. That's why outstaffing and outsourcing have become popular tools for delegating aspects of work. However, despite some similarities, especially in language, these processes have significant differences. Let's talk about them and their advantages and disadvantages for businesses.?
Outsourcing
Outsourcing is the process of transferring certain business functions or project delivery to an external contractor. The type of task is irrelevant - it could be web development or financial accounting. In this case, the client has minimal contact with the project team or individual business functions and therefore delegates all processes.?
How do you benefit from working like this?
More time to work on the core business. By offloading some or all of the work to another team, the client's internal team can focus on higher priority tasks for the business, thereby increasing profits.?
Cost reduction. Hiring an external team can save the company money on fees, rent and equipment.
Work by specialists with high levels of expertise. The external team working on your project may have better and deeper knowledge of the niche than your own specialists. In this case, outsourcing is a suitable format if you want to speed up the execution of tasks or expand the range of talent.?
What are the drawbacks of outsourcing?
Lack of control. As your contractor takes on the project from scratch, you as the business owner may have minimal control and influence over the team.
The risk of hiring a weak performer. If you make a mistake in hiring a contractor team and deal with an unscrupulous contractor, it can be costly for your business. It's not just a financial loss, it's a reputational one too.
Unclear KPIs. During the collaboration, misunderstandings may arise between you and the contractor team due to unspecified or unclear KPIs or terms of collaboration and different expected outcomes for each party.
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Outstaffing
An important factor is that all aspects of the working arrangement are regulated between the team and the outstaffing company.?
Advantages of outstaffing
Rapid team recruitment. A contractor company, if it has the appropriate expertise, can find specialists with the right experience and skills to actively engage in work in the shortest possible time. For example, according to the DOU platform, by 2023 there will be about 250,000 IT professionals in Ukraine, including specialists with experience of working with foreign projects and companies. Research by McKinsey & Company also shows that companies with cultural and ethnic diversity are 35% more likely to be profitable than their competitors.
Reduce talent retention costs. As the working relationship between the specialist and the outstaffing company is managed, the client saves money. There is no investment in salaries, taxes, benefits and insurance, office space and equipment. The company also doesn’t have to worry about documentation related to the team, freeing up time to focus on key business objectives.?
Control. Unlike outsourcing, the entire team management process is concentrated in the hands of the client. They can control the project resources (financial and staff), optimize the process and generally make changes to the work as they see fit.
Disadvantages of the format
Limited influence on team structure. The outstaffing agency reserves the right to change the members of the team working for the client.
Responsibility for the specialists' actions. Despite the fact that the hired team is formally employed by the outstaffing company, your company remains responsible for the performance and actions of the talent. This is particularly true for reputational and material issues (e.g. damage to equipment or property).
Choosing an outsourcing partner is difficult. There is always the risk of encountering unscrupulous contractors in the marketplace. Companies must therefore consider the professionalism and reliability of the company providing the services.?
Important criteria for choosing an outstaffing company
If your business has a request for outstaffing and is looking for a partner that meets the above criteria, UnameIT is ready to help. We can be your outsourced HR business partner, helping you to hire the best tech talent that you manage directly. While we manage all the legal, administrative, HR, accounting aspects for you within our company. Knowing the main trends of the hiring market and having formed a specialization in finding and managing technical teams, we are ready to offer you comprehensive services in finding skillful technical teams.
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7 个月Hi there! We are looking for out staff service providers. If you are the appropriate contact to discuss this further, please reply to this?comment. If not, kindly forward my profile to the responsible person.