Outsourcing vs. Outstaffing [by Jobresponse]

If you’re planning a software product development, you may have heard of some terms in which most software professionals operate. But what exactly are outsourcing and outstaffing, and what else do you need to know to successfully develop your product?

Let’s get into it.

Other than Fixed budget or T&M? [by Jobresponse], outsourcing, and outstaffing imply another type of engagement that defines who is responsible for the project outcomes. But there are no strict definitions for naming your operations, similar to startup fundraising stages — it does not matter; however, it can help navigate the waters.

Responsible for the project outcome may sound scary, but no one can be responsible for your project other than you and your team. Outsourced development teams are the ones who help you build your product but are not responsible for the project outcomes. So why do we discuss the responsibility here?

It is always vital to set the project expectation right at the beginning, and the type of team you’re looking for will define those expectations and help form trusted relations with the software vendor.

Software development outsourcing is one of the popular methods of building a software product. If your startup is at the beginning of the journey and needs an MVP product, most of the time, company founders are looking for a team to complete the project. That’s right. You need a team that will come and take the product ownership to deliver the ready-to-go software. In this case, most of the time, it is a team that consults you on what to do with the product from the development perspective. The in-house startup’s team might be idea holders, product owners, and fund the project, but most of the implementation scenario is guided by an outsourced dev team. A so-called tech team for startups can help take the project off the ground and develop and maintain the project.

There are surely all sorts of project complexities that outsourced dev teams work on. It looks fairly straightforward with the MVP development, but some projects require far more work, and the enterprises may lack particular expertise or the agility to develop the product at the speed of a startup. That’s where the outsourced teams are needed. A professional product, design, and engineering team knows more about a particular industry, space, or technology.

In case of outstaffing, the responsibility tends to shift to the in-house team. As it implies, in outstaff, you are “renting staff” to work on your projects. In this case, the outstaffed team works completely under the management of an in-house team solely responsible for the project outcomes. So, for example, if your outstaffed team is not making it to the deadline or didn’t close the external keys (possible hack opportunity) — it is your responsibility to keep these things from happening. Obviously, poorly performed engineers are the vendor’s responsibility. But if the engineers are reasonably professional, it is your team that you should ensure will hit its goals.

The outstaffed team could also come with a process. For example, if you want the dev team not only to develop the code but also to manage the project, the vendor may equip the team with a full-time project manager that will manage the outstaffed as well as internal teams. This is a great option when you want to customize your project and responsibilities.

Not only the outstaffed team could manage the project. Some great examples include training activities, knowledge transfer, and hiring assistance. If you need this in your project, ensuring your vendor can provide these services is important during the assessment stage. Again, the same things are possible for outsourcing projects. It’s just a matter of customization and some arrangement with the vendor that makes the project fall into the outsourcing or outstaffing category.

Unlike outsourcing, outstaffing does not match with fix bid projects. The outstaffing is only used on Time & Materials basis, and the services are provided at the team’s flat monthly rate. Outsourcing can also run at the team’s monthly flat rate, but matches with the fix bid projects where the cost is limited and the team is responsible for delivering the product in a given timeline.

There is also an arrangement that’s called a dedicated team. In this scenario, the external team would work on the piece of software. For example, if you need some help unloading the in-house operations and have a team dedicated to some part of your product development. Here is where the dedicated term is used. A dedicated team can work only on the software assigned and be responsible for the only outcome of that part. It can be project maintenance or some routine tasks like upgrading the software version or DevOps.

When assessing a vendor, ensure you address the type of engagement you’re looking for, team configuration, and services you’re looking to add.