Recruiting Agency VS Outsource VS Outstaff — What to Choose?

Stas Shihov 20.04.2022

When it comes to implementing ideas, business owners should choose whether to hire in-house personnel or use outsourcing or outstaffing services. ITExpert team will connect the dots between all these terms so that you can conclude which option is suitable for your case.

Outsourcing companies

This option is suitable for businesses that need to implement a project or its part and don’t need to hire an onsite team. It is convenient when you need a team that can quickly handle urgent tasks. Outsourcing works like this:

You address an outsourcing agency
They dedicate a team to your project.
You communicate only with a project manager (PM).
That project manager works directly with the team.

This model works like you were purchasing services from a marketing agency to organize an event for you. The same thing works with development as well.

Pros:

Time efficiency. You don’t need to spend time hiring a team. Everything is already at hand, and you don’t even need to manage them except for conveying your requirements to the PM.
Result-oriented approach. You don’t have to worry about all the work conditions, as outsourcing firms do everything for you. You only get results, for which an outsourcing vendor is accountable.
Great choice of specialists. Outsourcing vendors offer a variety of possibilities for development. Even if you want your product to be written in a rare and complicated programming language, be sure they may have such experts.
Creative and innovative solutions. Every business has an already set development vector, however, external teams may see everything from a different angle, thus, offering innovative and unusual solutions.
Various pricing packages. Vendors offer different pricing models tailored to the needs of specific businesses. We are sure you can find the best fit for your budget.

Cons:

Distributed focus. An outsourced team often works on several projects simultaneously. It means that they won’t be as focused on your project or product as your in-house team would be.
Communication difficulties. You can’t communicate to each team member but only with their PM. This may cause lags or miscommunication while passing all these stages.
Lack of control. Since the team is organized outside of your focus, you can’t track anything except for the final results.
Depending on the others’ expertise. If the PM is not quite professional, you can encounter the issue of poor administration. So, you need to constantly update that person on planning, resources distribution, and so on.

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Outstaffing companies

This type of cooperation implies remote employment of a specialist. However, this person is not hired by your company, they are officially employed by an outstaffing agency. So, the latter is responsible for their salaries, bonuses, equipment, and workplace. Outstaffing works like this:

You ask an outstaffing company for one or several employees.
They dedicate these professionals exclusively to your projects (part-time or full-time).
You communicate with these specialists and set tasks for them. You can even treat them as your remote in-house workers.
You save up to 30% on employment costs, as these people are officially employed not by you but by an outstaffing company.

So, it works like your remote team that is focused on only your projects.

Pros:

Tight communication. If you want to contact and set tasks for developers directly, outstaffing is a great option. You are always in touch with them during business hours.
Productive collaboration. They can work together with your in-house development team and drive better results together.
Cost-effectiveness. This method implies less organizational activity, HR, worries about finances, and so on. Also, you don’t officially employ people. All this saves budgets for business development.
Full control over management. You are managing an outstaffed team, so you can change and improve development processes, track intermediate results, and exchange feedback.

Cons:

More responsibility on your side. As long as these people actually work for you and communicate with you, you won’t have anyone who’s in charge of low-quality results (except for your onsite PMs and team leaders).
Communication and collaboration issues. Since outstaffed people are still not in-house, there might be problems with their onboarding to the project. Many outstaffed people have absolutely different cultural backgrounds, which can lead to misunderstanding.
Possible lack of motivation. Salaries and bonuses are left to an outstaffing agency, so you will need to solve a puzzle about how to keep such personnel engaged and motivated.
Lack of corporate culture. Specialists don’t feel like part of the team, which may affect the overall productivity of personnel.

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Hiring with Recruitment Agencies

A recruiting agency is often the best solution for those who want to hire a team yet lack recruiting resources. Companies that are rapidly growing or scaling may address agencies to close several difficult technical positions at once. It’s obvious that hiring 10+ people per month by only one recruiter is hardly possible.

Pros:

Fast hiring of even rarest specialists. Thanks to the high expertise and deep knowledge of the market, recruiting agencies close vacancies fast. You get workers on board in a week or two (depending on the speed of processing them).
Full freedom of management. Once you hire people to your own team, you always know what is going on — from planning sprints to receiving active products.
The deep focus of staff on your projects. Since you decide how to motivate employees, their level of engagement is higher compared to outsourced and outstaffed teams.
Cost-efficiency. You decide how much to pay to each employee, and you pay only once to an agency that has found them.

Cons:

Onboarding and HR welcome activities take time. This is not a disadvantage but a fact you should be ready to take into account. When a new person comes to the office or starts remote working, it commonly takes one or two weeks for them to become a full member of the team.
Not every recruiting agency provides guarantees, so always ask for a plan B, if something goes wrong and the candidate found doesn’t cope with tasks during their probation period. Nevertheless, if you ask for help from ITExpert, you won’t face this issue — we guarantee the replacement of the candidate if they don’t fit.

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Conclusions

To sum it up and make your choice smoother, here is a brief manual on what is better for you:

If you need to finish a few projects and don’t want to be in charge of management, choose to outsource.
If you want to strengthen your in-house team with the expertise of remote employees and save costs on official employment, choose outstaffing.
If your business is rapidly growing and you need highly engaged onsite employees who will be hired within tight deadlines, choose recruiting agencies.

Are you wondering why we haven’t mentioned hiring people with the help of in-house recruiters? If so, take a look at this article on the pros and cons of both methods!

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