The number of companies choosing outstaffing instead of the classic hiring model grows every day. What’s the reason behind it? Firstly the process of hiring & managing in-house staff is pricey.
Outstaffing provides employers with plenty of new talent tools. Without geographical limitations, you can hire the best-qualified specialists from all around the globe to do any specific task.
Moreover, the outstaffing model proves to be far more effective in terms of costs, because employers can determine wages in accordance with the basic local indicators.
What does outstaffing mean, exactly?
The definition helps a lot when it comes to the term.
To put it in simple words, outstaffing is one of the ways to employ remotely. Basically, very similar to outsourcing, although there are a few differences. Employee works in a client's company but is officially employed in another company. outstaffing companies are the ones, who are responsible for day-offs, seek-leafs, taxes & work equipment.
What are the responsibilities of the client company?
To assign tasks to their outstaffed employees!
- Enterprise decides to add fresh features to the mobile app, but team members are too busy doing other tasks. That’s why the company starts to search for additional developers.
- The company sends a questionnaire with all the requirements for new employees (a must and desirable skills, time zone, work experience, etc.) to an external company that specializes in outstaffing.
- When market research is completed, the most suitable developers become part of the client team, even though officially they still work for the outstaffing company.
- Developers are getting their salary from the outstaffing company from the client's budget.
Does outstaffing really worth it? And when does it make sense?
outstaffing is usually used in cases when you need additional developers for your project in a short period of time. Another instance for using such a model may be a need for highly specialized non-core technology specialists.
Many IT teams are using outstaffing when they need to execute a small project, but don’t want to take many if any additional obligations.
Outstaffing means that you employ a team of specialists with high qualifications to work remotely on the current project under your supervision. Usually, this new team will work together with your regular developers on improving your project. Your main role is to verify productivity and workflow of your remote developers and allocate them tasks according to your needs. The outstaffing company has full responsibility in the areas of finding, hiring, and managing the professionals you need.
So what do you get from an outstaffing company after sending an application to it? At the start, companies with the maximum resources will conduct market research and look for the most skilled candidates on the call. This step is one of the most difficult in the recruiting process as companies must use all available instruments to find the best candidates worldwide. Professional outstaffing companies usually own a database of highly skilled remote experts, so you don't have to waste time posting vacancies in chats and channels, forums and groups, sending emails, searching LinkedIn, etc.
After deciding on the best candidates, the company appoints a technical interview, during which candidates answer all the required questions that will help determine their level of knowledge and readiness to implement your project.
After selecting the candidate and signing the contract, you will have another highly qualified programmer or engineer on your team.
In relation to administration and wages, there are two models: the "cost model" and the "Cost-plus model".
1. "Cost model"
In this case, the client pays the outstaffing company a certain fee to recruit a new member to their team. With this compensation, the company pays the IT professional's salary, bonuses, vacation/sick leafs, etc. The hiring company independently and without the involvement of the client decides how to compensate and reward the employee. The advantage of this model is that you only have to pay a certain amount every month and you don't have to participate in managing the team.
2. “Cost-plus model”
When operating this model, you pay your team members salaries, project bonuses, and other expenses, but still through the outstaffing company. This way, you decide how your team members get paid, but as a result, you can experience ups and downs in your costs.
Why is outstaffing more beneficial?
In modern day and age, companies are frequently choosing outstaffing. Why is it so popular to look for IT talents outside of organizations?
The main advantage is that the company pays holidays/sick days, bonuses, health insurance, etc. Such cost-management allows clients to save a large amount of money. The external company is responsible for all these expenses. According to statistics: savings from the operating budget are about 20% to 30%.
Also, there are times when workers are unable to perform their work properly due to illness and other circumstances. In such a situation, the job of the outsourced company is to replace the employee with another highly qualified specialist. It is essential to ensure the continuity of business processes and to reduce costs such as sick days.
Another major benefit of outstaffing is that employees can be easily increased or decreased. This means that the company can quickly and freely replace or fire an employee if their work is no longer needed. In addition, the outstaffing company is responsible for paying all necessary taxes.
Main differences between outstaffing and outsourcing
The outsourcing firm usually signs a long-term contract that can be extended, while the outstaffing company signs a temporary contract, the terms of which depend on the duration of the project.
Outsourcing companies pay their employees based on the final results, while the outstaffing company pays a fixed wage.
In the outstaffing model there is no manager between you and the expert, all communication is direct. You control the work of hired outstaffed developers, programmers, engineers, etc. The result of the work depends on you.
What will be more suitable for you: outsourcing or outstaffing?
With understanding of differences between outstaffing and outsourcing, you can decide which one to choose based on your needs. Both outsourcing and outstaffing companies will give you quick and effective results, but which one is best for your situation?
If your company is not focused on IT and does not have a development department, so you do not have proper management to control the work of IT professionals – outsourcing will be a better choice for you. Conversely, if you have in-house specialists who can manage the team remotely, you should choose outstaffing. However, you might want to consult with a professional before choosing one or the other option.
Benefits of using outstaffing
- Easier to manage: you can effortlessly and quickly change the engineer or end the cooperation when the work is finished;
- It is more convenient than outsourcing because you can communicate directly with developers without a PMs, which ensures better communication;
- Your company will become more competitive, because you are not limited to the local labor market. You can hire the best talent from every sector for a reasonable price.
- With the outstaffing model, you work exclusively with proven professionals who already have positive feedback, so you don't have to risk hiring a new specialist whose quality of work is unknown to you.
- Recruiting process with an outstaffing company takes much less time, due to a large base of experts with the help of which a team of professional recruiters can quickly select suitable candidates.
So, without any delays, contact global outstaffing companies. Communicating with them can provide a valuable experience and useful information and insights.
Myths about outstaffing
Myth 1: Remote workers are harder to supervise
When working remotely, employers often worry about losing control: the whole team seems to be idle, and developers give up on their projects altogether. In this case, excessive control appears: webcams, screenshots, etc. Of course, reports should be kept to calculate project costs and understand if the team gets stuck for some reason, but not for complete control. If someone in the company isn't really working, you'll notice anyway, so don't be afraid to give people some leeway. According to statistics, remote employees become much more necessary each day, because they are not limited by the schedule like those who work in the office.
Myth 2: Remote workers are fickle and unavailable when needed
You just need to implement a simple rule: for example, contact the company chat between 10:00 and 17:00. In this case, it is not necessary to work with tasks, the main thing is to answer the messages within 10-15 minutes. This way you can make communication predictable - most meetings happen within these seven hours. If someone needs to go offline, staff will notify others in the public chat channel.
Of course, there's always the risk of someone not contacting you, but there's nothing stopping office workers from not showing up one day. To be able to trust your team, all contracts must be formalized and communication between employees must be well organized. You can learn more about this in the analysis of the next myth below.
Myth 3: Remote work complicates communication
Communication becomes a little more difficult, but not complicated. For remote work, you must use only special tools. In the world of modern technology, this is not a problem at all. You just need to establish proper communication through platforms like chat.
Myth 4: Creating a corporate culture with remote workers is impossible
It is possible to create a strong corporate culture where remote professionals work without shared lunches, motivational posters around the office, or even a dress code. Moreover, it is even necessary. By defining what should be the focus of the culture, you create a common basis for employee decision-making. There are different ways to create a company culture and communicate with remote employees, the most important of which is the clear formation of core values within the company.
Advices for managing outstaffing team
1. Set clear goals and deadlines
Everyone has a different idea of what it means to do things quickly and well. That's why it's good to be clear and simple about what work outcomes you expect, and to make sure remote employees have the same expectations. One of the most important factors here is the ability to plan your work. It is necessary to set goals and work plans for the month, week and day without straining the team. Using distributed task scheduling systems would be a great idea. This will help you better prepare remote employees for work and avoid misunderstandings between you and them. The better employees understand the company's needs, the more effective their work will be.
2. Performance tracking
Many companies are a little hesitant to work with remote employees, fearing that they will not be able to work from home as efficiently as in the office, and deadlines will definitely be missed. However, it is worth trying to evaluate the effectiveness of the work in the office. Remote workers often get better results than office workers. To monitor performance, organize online meetings where all employees can report on their achievements since the last meeting. In addition, introducing a daily report on the results of work will be a great solution, because if you are not satisfied - you need to understand what is wrong with the tasks and make changes.
3. Create a communication strategy
To work effectively, team members need to communicate with each other regularly to share ideas and find common solutions to problems while working. We recommend using the following tools:
For video conferencing: GoogleMeets, Skype, Zoom, Slack, Hangouts
For project management: JIRA, Redmine, Trello, Youtrack
For screen sharing: the old TeamViewer
In conclusion, if you are interested in the outstaffing model but still have questions or doubts, it is good to consult with experts. Contact us and our managers will tell you all the important details about the employees. During the consultation, you will receive a lot of useful information and insights that will help you make your final decision.