The Whys and Hows of IT Outstaffing Model

Running a successful business in severe competition requires constantly seeking new talent and opportunities. When you think about adding new team members, the first option that may come to your mind is hiring a full-time developer. However, this can be too expensive, especially for a startup. This is where outstaffing can be helpful.

Outstaffing allows businesses to tap into a large talent pool and fill skill gaps in their teams. Outside expertise is a quick way to boost the project's technical capacity and ensure its timely delivery.

Statista revealed that the IT outstaffing market revenue is expected to reach US$541.10bn in 2024. So, you can imagine how appealing the software outstaffing model is.

Yet, the decision to outsource product development requires careful thought. Let’s explore the essentials of the IT outstaffing model and its main benefits and drawbacks.

What is IT outstaffing, and how does it work?

The outstaffing definition refers to a business practice where companies hire external experts through a third-party provider to work on specific projects. Often, these specialists are located in different cities, countries, or even continents. The outstaffed employees work as part of the company's team but are officially employed by the outstaffing provider.

How IT outstaffing works – businesses can integrate remote specialists into their teams while maintaining full control over their tasks and day-to-day operations without the burden of direct employment. A remote worker focuses entirely on your project for the long term. The service provider handles all the employment responsibilities like paying salaries, benefits, bonuses, insurance, taxes, and software licenses. The outstaffing in the IT industry also provides the necessary equipment.

These outstaff specialists work for their own company but report directly to you. It’s like leasing a team to meet your development needs. Since you don't need to handle the legal aspects of employment, outstaffing is a cost-effective solution for businesses that either can't or prefer not to hire full-time staff.

Another way to enhance business operations is through outsourcing. Unlike outstaffing, which involves hiring individual specialists to work alongside your existing team, outsourcing entails contracting an external company to manage entire projects or specific functions. This means that with outsourcing, you hand over responsibility for both the work and its outcomes, allowing you to focus on your core business activities. In contrast, outstaffing provides greater control and integration, as you maintain oversight of the tasks performed by remote specialists who directly report to you.

Benefits of IT outstaffing

Many software companies prefer the outstaffing approach over outsourcing for several reasons. Here are the main advantages of IT outstaffing:

Great value for money

Outstaffing can save you money in two ways. Firstly, it reduces recruitment costs since the vendor takes care of finding and staffing your team. Secondly, you can save on overhead costs such as office space, equipment, and employee benefits that would be required for full-time staff.

Access to technical skills

An outstaffing company typically has a team of highly skilled specialists who are experts in a wide range of technologies. For clients, finding such talent on their own can take a lot of time, effort, and HR resources. However, IT outstaffing allows businesses to quickly bring in the right specialists within just a few days.

Quick market access

With outstaffing, you can quickly hire additional developers without a long hiring process or waiting for the CFO’s approval. This boosts productivity and shortens the time required to release new features or meet critical development goals.

Super adjustable

Outstaffing offers great flexibility, allowing you to easily scale your team up or down based on business needs. Unlike outsourcing or local hiring, you aren’t locked into a fixed arrangement. Additionally, you can minimize expenses related to idle staff during slower periods or the costs associated with permanent hires.

Full control

One of the main benefits of IT outstaffing is that it gives you full control over your team’s operations and productivity. You can manage how and when the team works, making it easy to change direction whenever necessary.

Individual budget line

If your organization has a budget that limits the number of local developers, outstaffing provides a solution. Since it's often cheaper, faster, and more efficient, companies turn to outstaffing to boost their development team without battling budget constraints.

Fix for extended time off

When local employees take long-term leave or sabbaticals, outstaffing services can fill the gap. This way, their absence won’t disrupt the productivity and efficiency of the development team.

Considerations of IT outstaffing

The outstaffing model comes with certain considerations that you should be aware of. Below are the main risks and tips on how to avoid them.

Communication challenges

The outstaffing model requires ongoing interaction with remote team members. Since remote specialists may be in different countries and time zones, it's crucial to have clear communication among all team members. Thus, setting up effective communication channels and methods is a key to monitoring development progress.

It would be best to set up some guidelines about the communication channels you want to use and how quickly team members should respond. This will ensure everyone is on the same page and everything runs smoothly.

Another risk of the outstaffing approach is ensuring that the developers from the vendor are a good cultural fit for your company. Even if a developer is highly skilled, it’s important that they integrate well with your onshore team so everyone remains aligned and works toward the same goals.

To address this, it's important to conduct final interviews with all candidates recommended by your outstaffing vendor and maintain the authority to make the final hiring decision. This extra step allows you to assess whether a developer will align well with your company's culture and team dynamics before officially bringing them on board.

The client takes the lead

With the outstaffing model, your company is responsible for management. You need to participate in every development step and have strong management and technical skills. Implementing continuous quality assessments is one of the best ways to guarantee that final results will meet your goals. Schedule regular quality evaluations to identify and address issues quickly. It's essential to provide constant code reviews, functionality testing, and performance assessments to maintain high quality throughout the project lifecycle.

Data loss

When working with an outstaff team, you'll need to give them access to sensitive company information, project documents, and software. Clear access permissions are crucial to ensure that only authorized personnel can view or modify critical data. Additionally, we recommend taking security precautions and creating a detailed non-disclosure agreement (NDA) to protect your information and maintain confidentiality.

When to outstaff

IT outstaffing is a great option if you want to grow your team with new members. Here are some common reasons why companies choose outstaffing:

• They can’t afford to hire more in-house developers.
• There aren’t enough skilled developers in their area.
• They want to avoid the hassle of HR and recruitment.
• They want to focus on results.
• They only want to pay for actual working hours.

We’ve helped our clients achieve great results with IT outstaffing services:

• ReturnGo: 40% of merchants reduced funds
• Laurus: 47% increase in efficiency
• AskPorter: $5 million investment secured
• Pattern Brands: 12% boost in average order value

These success stories show the real impact of our outstaffing solutions.

Conclusions

Despite some challenges of the outstaffing model, many IT companies, as well as major corporations, are increasingly turning to outstaffing services. Companies like DigitalSuits, featured in the Top Staff Augmentation Company list, help businesses connect with top-tier developers. By offering IT staff augmentation, we empower startups and large enterprises to focus on business and product development, while we take care of all HR management aspects, ensuring a seamless and efficient process.

If you want to ensure you've made the right choice, reach out to us for expert advice — we're happy to assist you!