Outstaffing is a popular remote hiring model employed in the IT sector – especially in software development and offers many benefits to companies located across the globe. This remote hiring model involves a dedicated team of information technology professionals such as software developers, web developers, and software quality testers. All human resources are provided by a third-party contractor to the main client of the project.
Outsourcing and Outstaffing
In outsourcing, you usually select a third-party provider for software development or business process support services. An outsourcing provider works on project-based business models, which means that the client trusts it for the entire activity.
Outstaffing, on the other hand, brings you the chance of hiring highly trained professionals but without having to pay higher prices and taxes. It also provides flexibility as it allows you to decrease or increase the number of people you hire as per your project needs. In addition, you get to keep full control over the entire software development process.
Tackling some of the Outstaffing challenges
For sure, outstaffing can salvage many projects in a cost-effective manner. That is because it focuses on selecting the right professionals, who are capable of managing efficiently the flow of the project. They will provide for open communication, task assignment, and productivity.
Nevertheless, there are some challenges that come with opting for outstaffing. The good news is that there are various ways to handle them.
Resource management – who takes responsibility?
An outstaffing supplier usually selects the skilled employees who are qualified for carrying out a particular project set by the client. The staff it offers is not solely responsible for the ultimate outcome. In addition, such they are “rented” and must be seen as remote employees.
Official employment, taxation, and insurance to personnel – all is taken care of by the outstaffing supplier. There can also be cases when the clients can eventually hire the staff and even agree on relocation.
The supplier, however, is not accountable for the quality of service rendered, nor for the actual team management. These depend mainly on the client’s experience and its project management expertise.
What about costs?
Outstaffing focuses on two models. The first one is known as Cost Model, when the client pays a fixed tariff per person. The hiring supplier manages this money – and pays the professional at its own discretion.
The second model is the Cost Plus one. It focuses on the customer who covers all extra expenses including taxes, holidays, bonuses, equipment, etc. The Cost Plus is a more open model because the customer participates in the entire process. Following this, there will be fewer risks for the client.
Furthermore, human resource managers know about the use of cost-saving and outstaffing. Sometimes, a manager transfers a few employees to outstaffing – the purpose is to keep a simplified taxation system. This allows optimization of human resource management and lower expenses for the client company.
The outstaffed workers that work remotely for an organization may have different cultural backgrounds. This can lead to a misunderstanding between the company’s administration and overseas professionals.
To overcome this problem, it is important to hire employees that are familiar with the culture and business operations of the host country.
Advantages of Outstaffing
The global market size of outstaffed services in 2019-2018 is at $80.6 billion. Over 60% of the companies that opted for this solution in 2018 are likely to continue this year and in the coming years.
According to Micro Sourcing, 42% of companies – in 2018 – planned to increase the amount of work to outstaff for software and application development.
When it comes to value, about 80% of the outstaffing deals originated from the U.S, followed by the U.K at 8%, Australia and Spain were two other important outstaffing markets.
Outstaffing gives you flexibility in hiring. You can employ any number of employees depending on your business requirements. Likewise, it is possible to guide their activities related to existing projects.
Explore PaleBlue Outstaffing Services
PaleBlue has the right solution for your business and can help you build the team you need. All options are covered: outsourcing, offshoring, nearshoring, outstaffing.Learn More