Outsourcing Vs Outstaffing Vs Managed IT Services: What Is The Difference? Advantages. Disadvantages. 3 Aug 2021
Managed IT Services In the continuous race to grow, accelerate and progress business ideas via technology, organizations usually encounter a common barrier: Staffing.
Your ideas could be the best, unique, and pioneering. But, without the right team to work on your idea, it could sound uninteresting.
Here is where qualified professionals can be of help to give life to your amazing idea. But, landing the right experts is no easy feat to achieve. Identifying and pick qualified candidates in a common pool is challenging. You might end up at both corners – either choose the best candidate or select an average one.
Here is where outsourcing, outstaffing, and managed services team will prove efficient and rewarding. We don’t claim that these 3 options will always work 100%. However, what we are trying to tell you is it has worked most of the time. It is applicable only when you lack great resources in your in-house team or you are on a budget crunch to employ a full-time staff.
Sometimes, a few companies, instead of building an in-house team, prefer to outsource or “outstaff” their projects. The success ratio of this decision is really based on the project, client, and the outsourcing organization.
We have outlined every option and highlighted where and when each of the options makes sense.
Achieving Business Value
While encountering new challenges, the IT staffing business delves into discovering the industry needs and finding the right workforce to accelerate change and grow their business. In order to achieve great business value, the staffing providers should predict customer needs, taking into account the number of available professionals or developer teams, and progress gradually to manage the requirement with matching IT personnel.
The core objective is to improve and make sure of an efficient project running for CIOs or managers by providing skilled professionals, on time. Owing to the expanding competition, the IT staffing companies are endeavoring to be better and greater than their current standards and maintain the pulse of changes in technologies, and hence, forthcoming client demands.
Outsourcing Vs. Outstaffing Vs. Managed IT Services: Dodge The Doubt
Most commonly, outsourcing and outstaffing are used interchangeably. Especially, in the software development area, IT outsourcing and IT outstaffing are quite different. Both the terms include remote work on a project. But the catch here is how?
Outsourcing means passing your complete project work to a third-party vendor to complete it for your organization.
Outstaffing means hiring skilled professionals from third-party vendors to work for your project under your business control, like every other full-time employee working in your organization.
What Is Outsourcing?
Outsourcing is the practice of getting certain job functions completed by their-party experts. It is a strategic decision made by an organization to lessen their project costs while increasing the efficiency of the work. The company will assign the project to an individual or a company to complete their tasks, provide them better services, and manage their operations, which may or may not have been performed by the employees within the company. The process of outsourcing business functions is also called contracting out.
For example, Velan is an outsourcing partner for huge organizations. From offering IT outsourcing services to healthcare and accounting and bookkeeping and almost all the other business verticals, we have been one of the leaders in the outsourcing industry.
Common Types of Outsourced Work
The type of outsourcing work depends on the business’s needs and their industry. The most commonly outsourced activities are:
- Bookkeeping and Accounting
- Customer Support Service
- IT services and management
- Supply chain management
- Content writing
- Web Development
- Human resource management
- Data entry
- Computer programming services
- Tax compliance
- Finance and lots more.
Advantages Of Outsourcing
There are many reasons why a company may decide to outsource a particular task, job, or business process. However, the most reasons for outsourcing are:
- High productivity on core business activities – Outsourcing will liberate your staff and focus on their strengths to contribute to the important business processes. As a result, it will help you grow your business, make better decisions, and create strategies to increase your revenue.
- Improved efficiency – Choosing an outsourcing company that has the experts in the business process or service you want them to perform for will help you achieve a great quality job, more productivity, and efficient service.
- Reduced costs – Cost-savings form an integral part of outsourcing. You could use the remaining capital for business progression and investments in other areas of your business.
- Increased reach – Outsourcing will unlock new capabilities and opportunities that were not easy to reach earlier, in terms of affordability, capital, or accessibility.
- Greater competitive benefit – Outsourcing will help you make use of specialized knowledge and skills from your third-party vendors at a single along with your entire supply chain.
In addition to the above significant benefits, outsourcing will increase agility and flexibility, enabling you to adapt to the evolving market challenges and user conditions while offering huge cost benefits and business-level enhancements.
Disadvantages Of Outsourcing
It is true that everything has two faces to it. While you were just fascinated by the benefits of outsourcing for your business, here is another side to outsourcing.
- No control over your project – Since you are handing over the complete project to the third-party vendor, you will have very minimal control over those business functions and processes. The associated risks of having minimal control or no control are:
- Service delivery – It might not happen on the decided date and may literally fail your expectations
- Confidentiality and security – It certainly would be at risk
- Lack of flexibility – Contract may sound stern and almost impossible to accommodate change
- Management difficulties – Operational changes at the outsourcing company may cause friction
- Instability – Budding outsourcing company could run out of business
What Is Outstaffing?
In outstaffing, a business will extend its internal development team to include a developer, from an outstaffing provider, to complete the services. The client will sign a contract with an outstaffing service provider to hire a remote professional from their team and leverage their skills internally for the client’s project development. As with outsourcing, there is no need to hire your staff from a vendor because the outsourcing company will take care of it.
The outstaffing service provider gains control over the human resource management. The client finalizes the members of the remote team from a preselection test and heads the remote developers. The remote team augments its team for the agreed time. The outstaffing client will decide the daily tasks, team allocation, work allocation, and delivery of the project for the temporarily out-staffed remote team.
Outstaffing has gained a lot of traction in recent years due to the ease of hiring the best professionals.
On one hand, outsourcing the most laborious organizational management for the additional developers frees up the burden of the HR team. It rules out handling recruitment tasks, induction, payroll accounting, training, accounting, and also addressing employee’s satisfaction, and most importantly the fixed costs.
On the other hand, the outstaffing process gives rapid access to highly skilled developers at affordable costs.
Advantages Of Outstaffing
- Flexible hiring model – Outstaffing eliminates the need for upgrading your development team. The resources will be working dedicatedly for your project while the vendor will manage their payroll.
- Control over the project – It is one of the main reasons why companies prefer outstaffing over outsourcing – you get complete control over your project. If you need more resources, but do not have the bandwidth to hire them, opt for outstaffing services. Your external resources will work exclusively for your team giving you daily updates about the project development. They will be similar to any other employee of your organization.
- Complete Access – With outstaffing, your company will have complete hands-on management control. Other than having an additional resource, all the other project lifecycle will remain the same. Not to forget that the supporting resources will also be a temporary part of your organization until the project is completed. You get to handle everything from strategizing to project completion and quality assurance.
- Affordable costs – Since your organization handles the project management from start till the finish, your vendor will have zero work here other than sourcing the right talent according to your job needs. So, as an organization, you can get access to skilled talents at a very low rate.
Disadvantages Of Outstaffing
With any outstaffing model, there are notable difficulties. The most common are:
- Broken communication – Daily communication could become challenging as your auxiliary staff from vendors would be working remotely. Getting them into the groove of your project life cycle could be challenging because of the practices they were used to in their outstaffing company.
- Project responsibility lies with the client – This option could either be an advantage or a disadvantage based on how much time you have to handle the IT outstaffing services. You must decide if you want to expend your time or your budget.
What Are Managed IT Services?
Managed services, unlike outsourcing or outstaffing, follow a much more holistic approach to offering excellence and efficiency in technology services. A managed service provider provides an extensive range of technology services pertaining to one or many technology domains. It is most suitable for small businesses that are looking to outsource their specific IT needs. The managed service provider offers technological support for your business’s tech at a monthly flat rate. They proactively monitor and track a company’s network, troubleshoot any IT issues, and mitigate all sorts of problems related to IT and technology. The managed service provider will remotely access your company’s network and deploy suitable solutions for all sorts of computing issues.
Is managed service an alternate name for outsourcing? The answer is a clear NO.
Outsourcing offers discrete services and narrowly defines the business processes. You would either outsource an entire business function, for example, accounting or you may want an expert to handle your non-IT tasks like data entry, customer service, etc. With outsourcing, you choose specific services and get your vendor to complete those business tasks for a cost.
Managed services, like mentioned above, take a more holistic approach. They provide contracts highlighting technological services to their last details. Companies that do not have IT staff or are looking to free up personnel for other important duties can rely on managed services to handle and monitor their IT infrastructure at a low cost.
Why Do Businesses Need to be Managed IT Services?
Businesses need managed service providers because they handle and nullify risks. Managed service providers will consistently monitor your business’s network and ensure it is problem-free from the beginning. Besides, they will also ensure the tasks and daily processes are updated and well maintained. As a business, you can be worry-free about your IT department and focus on your core business. Your potential managed service providers should also assess your present and future IT needs. The company should counsel on the type of products and services your business should implement for the upcoming year.
- Minimal or no technical issues – Your managed service providers will run efficiently to prevent any technical issues from occurring. They will be constantly monitoring your IT, such as software applications, hardware, security, and internet. They will detect any abnormalities prior and inform you so, you could take necessary actions before it hits you worse. Ultimately, what you are paying for is someone to keep your business from having issues rather than to fix them.
- Tech support – The managed service provider company will offer all the technology for your business, like servers, workstations, and software. You will use those services for an agreed price. You will not spend on the tech capital but receive the latest services and solutions.
- Expertise – Managed service provider company will have experts for every IT functions as opposed to having a single IT in-house staff to manage the company’s entire IT needs.
- Business continuity – A skilled managed service provider will prepare your business to face any IT hurdles – from creating an efficient disaster recovery plan to help your business endure it, they will have ensured your business’s safety in and out.
- Lack of physical presence – One of the major downsides to signing up with a managed service provider is they may not be available to solve your issues physically. They will only offer remote support, and it may take time. Or, if you choose to select a managed service provider on-site, you will have to bear the on-site support service charges in addition to the monthly fee you pay them for getting remote services.
- Cost – Signing with an experienced managed service provider will also mean you must bear more cost. The cost will differ based on the size of your organization, the services you sign up for, and your supplementary technical needs. But, do remember that with a managed service provider, you will never have to purchase the latest technology.
- Scope – Only the services that are listed in your contract with your managed service providers will be attended to. In case, you depend on them to get the services for something that is not listed in the contract, the scope will widen, leaving you to pay extra costs.
Outsourcing, Outstaffing, And Managed IT Services At Velan
Each business owner must weigh all the factors before deciding on a outsource provider, or outstaffing service provider, or a managed IT service provider. It depends on what problems you are trying to address in your overall business needs and when do you want the support – continually, temporarily, or on a project basis.
For our customers at Velan, we individually organize their business needs. We have specialized and multiple in-house IT specialists that you can choose to either outsource, outstaff, or get managed services. We have the flexibility and scalability to upgrade and downgrade as per your business requirements. For more information, contact Velan today.