IT outstaffing services: Benefits for the business of any size
Table of contents
- How does outstaffing work?
- Main advantages of outstaffing
- How does the IT outstaffing company help to optimize development costs?
- Which companies are suitable for outstaffing?
- Outstaffing in the world
- Still have questions?
More and more companies are moving away from traditional ways of managing people in favor of more innovative methods. So what is the essence of such a new but already a quite common concept as outstaffing company? How can it help save money and accelerate business growth? Let’s figure it out.
How does outstaffing work?
This concept can be described as the withdrawal of staff. This process involves three parties: the host company, the recruitment agency, and the hired employees. The actual employer of specialists is precisely the intermediary company, and labor relations arise with it. When signing an outstaffing contract, specialists will perform specific work for the host enterprise while the staff continues to be registered with a private employment agency.
Thus, the intermediary company transfers part of its personnel to another enterprise for temporary use. In the IT direction, technical specialists, designers, developers, and other experts are outstaffed to solve digital problems.
Outstaffing is often confused with outsourcing and freelancing. In all three cases, the specialist who is hired will not be on the staff of the customer company. But if the customer has almost no control over the contractor in outsourcing and freelancing, then in outstaffing, he will do it.
Main advantages of outstaffing
This service has several other benefits, including:
- The number of officially employed workers at the enterprise is decreasing.
- The company’s business processes involve familiar (experienced, trained) personnel.
- Staff costs are being optimized — most of them are distributed from constant to variable items.
- Office work is simplified, and reserves are identified for reducing administrative departments (HR, accounting).
- The organization’s resources are released from conducting a non-core business process and can be involved in solving priority tasks.
- The risks of inspections and fines by federal services for illegal maintenance of employees are reduced.
- The company’s investment attractiveness is increasing, and its business model is being improved.
The main risk for the employer is to run into an illegal outstaffing agency. In this case, all sanctions for illicit workers, non-payment of taxes, and violation of migration laws will fall on him.
How does the IT outstaffing company help to optimize development costs?
Most are interested in the question: “Outstaffing: what is it?” and why such a procedure is needed. Traditionally, companies have hired employees to perform the tasks they need, so why change anything? Moreover, you will have to pay for the services of an intermediary company.
On the one hand, everything is true because such services cannot be accessible. But if we consider everything in more detail and then make the necessary calculations, we can understand that outstaffing is very profitable financially. Large enterprises that use outstaffing can reduce their costs for these items by up to 5 times.
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Which companies are suitable for outstaffing?
Large IT companies to strengthen the in-house team and test hypotheses.
These are companies where the in-house team makes 85% of the products. They bring in people from outside to quickly develop a new feature or product and see how users react. If successful, the internal team will continue to develop the product, and outstaff specialists will be transferred to other tasks. Such companies value their own expertise, prioritizing long-term cooperation (from six months).
Companies that need help developing digital products (app, website, internal administration system)
Such companies have a small IT department — a few employees are on fire during releases and deadlines. They do not have enough individual specialists or expertise to solve some problems right now, but it is not profitable for them to hire a new person on the staff: in the future, there will be no tasks for him. These companies need outstaff specialists to solve current problems, so they are hired for a short time (several months).
Outstaffing in the world
Because outstaffing results in cost savings and increased productivity, we are confident it is the future. For example, Citigroup took 11,000 specialists out of the staff and now works with them only through a provider. Qualcomm employs departments in four countries through outstaffing. Startup Worldwide gave the whole complex of work on the product to outstaff team: programming, design, marketing (SEO/SMM). For them, it was a way to quickly get a well-coordinated and powerful team instead of collecting it bit by bit, risking losing the market. And the successful outstaffing from Estonia at one time allowed Skype to move from developing an idea to selling the company for $2.5 billion in 2 years.
If a company does not want to bother about where to find good specialists, how to raise them, and what taxes to pay for them, outstaffing will help. Outstaffers take on all the costs of arranging specialists, and in the meantime, the customer develops his business and begins to earn more.
Still have questions?
Outstaffing is a service that involves hiring an employee who will work for a customer company but will not be officially on its staff. In simple words, outstaffing is the withdrawal of people from the staff. At the same time, outstaff employees will have an official employer, an outstaffing agency.
Outstaffing workers is a personnel management tool that helps regulate the number of employees in the company while not expanding the official staff. This is incredibly convenient for large companies that face restrictions on the number of full-time employees.
The essence of outstaffing is to provide employees to the company, and outsourcing is a service for transferring a function to a contracting company. For example, an outsourced service could be cleaning, facility security, logistics, or even production.