Outsourcing vs Outstaffing: What is the Difference 2023

The difference between offshoring, outsourcing and outstaffing is that the offshored team is officially employed by you. While outsourcing and outstaffing have a lot in common, these models are very different. The confusion arises from the fact that both models offer a workforce for your business. The major difference is that the outsourcing team is more independent while the outstaffing team depends on your management skills.

You can augment your tech team by hiring a developer from an outstaffing agency and have a full team assembled to start your project. But what if you have a tech team that misses a specialist with certain skills? Let’s see its pros and cons and what difference it may bring to your business. The outsourcing agency assigns a dedicated project manager that acts as an intermediary between the client and the developer. The client pays a fixed price per project as initially agreed and doesn’t have to worry about any hardware, environment setup, team composition, etc.

What does it mean when a country is outsourcing?

You do not need to train them beforehand; they will be incorporated into your project immediately. Are you struggling to find and hire developers for your startup? In this article, you will learn expert tips and advice on where to search for top talent, how to assess their fit for the company, and how to build a team. Outstaffing is the best option when you need to quickly ramp up your staff in an area where you don’t have many qualified candidates already on the team. Thus, outstaffing enables businesses to meet the occasional challenges of market demand fluctuations more effectively than would be possible if they had less flexible staffing arrangements.

And outstaffing is the best choice for those who want to have full control over the management of an upcoming IT task and temporarily extend their development team. Outstaffing is an offshore development model where the client hires a contractor from a software outsourcing firm to carry out development tasks. The employee works full-time on their project but is paid by the third-party company. With outsourcing service, the project development falls on the shoulders of the outsourcing agency. The development team still requires guidance in terms of the client’s business model, their long- and short-term goals, and features prioritization.

Flexibility in The Hiring Process

Outstaffing comes in handy when the client’s needs mean increasing the software development team’s capacity and jumpstarting the development process. In the case of outstaffing, offshore employees for remote software development are officially employed by another client to speed up the development process. In an outstaffing model, the hired developers join the client’s team and work under the client’s supervision with the resources provided by clients. It means that the outstaffing vendor is responsible for providing a qualified specialist to the client, paying their salary, and doing all HR management. The client is responsible for the tasks, supervision, and control over the development process in which the outstaffed developer is involved. Outsourcing the development of a project means providing a brief and guidelines for the desired outcome, while the outsourcing team takes care of code quality and product development.

Clients may not have much control over resources and their quality, and may be charged extra for deviation from agreed upon processes. Reliability concerns include not knowing the developer’s level of expertise until work is completed, and higher costs due to management fees. To ensure professionals are hired, additional testing or interviews may be necessary, but at an added cost. Although they involve hiring a foreign employee, these two concepts have significant differences. So outsourcing requires cooperation with a company or a private person providing services.

Software Development Outsourcing: Pros and Cons

Businesses might get sidetracked when they dabble in areas beyond their expertise. With outstaffing and outsourcing, companies can focus on their core capabilities instead of micromanaging developers. Meanwhile, outsourcing allows startup founders to devote their attention to marketing, sales, and pitching to investors instead of writing codes.

outsourcing and outstaffing

They select from already vetted professional developers available in outstaffing company’s talent pool. By partnering with such a company, your business gets a team or worker to perform a specific task/project. The outsourcing model also applies to different technologies, and an integrated software development function. Let’s continue with the outsourcing vs outstaffing comparison related to three core points.

Pros of Outstaffing

So, if the lists of tasks go, it becomes clear it’s not a one-person job. As it turns out, about 300,000 jobs get outsourced out of the US each year. Companies mostly outsourcing and outstaffing outsource web development services, accounting, and marketing. It is believed that software outsourcing boosts small businesses’ efficiency and expertise.

  • Take note that, much as with the outsource team, the workers you outstaff are officially employed by a third-party.
  • Quality standards and formal development methodologies are applied to measure quality and results.
  • In these cases, an offshore software development center (ODC) model might work better.
  • You have to take proactive measures to ensure successful project collaboration and the outsourced team’s effective integration.

The critical difference is that while Outsourcing is about hiring a provider to perform entire projects, processes, and team building, Outstaffing focuses on hiring individual team members. The providing end is responsible for maintaining the team of professionals a company hires. One interesting point is that in-house managers can manage outstaffed members, but managers can also be outstaffed themselves. Outstaffing can be seen as yet another option for hiring work remotely. Once an outstaffed team member arrives at the team, the client decides the scope of work to be done, assigning and following up on tasks. The providing company handles payroll, benefits, equipment, bonuses, sick leaves, holidays, and employment taxes in this model.


The Azoft team has 19 years of outsourcing experience and 800+ completed projects. We provide consulting and full-cycle development services in web, mobile and MVP. If you’re considering outsourcing, contact us at and we will gladly help you.

outsourcing and outstaffing

To conclude, it is important to say that each business case is unique, so when choosing between the outsourcing and outstaffing models, expert consultation would be your best choice. Businesses turn to outstaffing when they lack specific expertise within their in-house team but don’t intend to hire full-time employees. For example, you develop your own product and have a large team in place but due to market changes need to incorporate IoT or AI, ML features however, you do not have such experts in-house. The fastest solution will be to outstaff your team with such experts from an outside company like SCAND.

Outsourcing vs Outstaffing: How to Choose It Right?

Below we look at how outsourcing and outstaffing may differ in quality despite the availability of skilled personnel. Considering that the client has unlimited influence over the development team, they also determine the pace at which the programmers build the software. Outsourcing and outstaffing are two different models, and it is only by gaining an in-depth understanding of both a client can make an informed choice. At SCAND you can hire mobile app developers with exceptional experience in native, hybrid, and cross-platform app development. By the way, we have been recognized as the Top B2B company in Ukraine by Clutch.

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