Outstaffing in 2021: what do you need to know about the future of IT hiring

Pandemic boosts remote hiring and now companies are able to hire talents from over the world. It became reasonable to move towards project-based or freelance hiring. 

Project-based hiring is becoming more popular among Fortune 500 companies. For example, P&G used platforms such as UpWork for new product development of R&D needs. 

The other reason why outstaffing is on the rise is that some regions are experiencing a tech talent gap. With outstaffing, one good specialist might be hired by several companies. 

Economists and analysts predict a sharp drop in numbers as baby boomers leave the workforce. There are already concerns that there may not be sufficient numbers of young people to plug the gap.

Outstaffing: how it works

Digis outstaffing how it works scheme

Outstaffing implies onboarding talent, whom you do not hire — technically they work for an outstaff agency. In this model, the client controls the entire scope of work and also leads his own team. The agency is responsible for working conditions, salary, legal aspects related to employment, training activities, motivation etc. It’s like renting – you team up with a developer from an outsourcing company without employing him directly.

The word «outstaffing» is a mix of two words: «outsourcing» and «staff». However, it is not a unified term for the phenomenon. It is called «contracting» in America, «subcontracting» or «offshoring» in Europe, and «talent outsourcing» or «hiring a contract worker» — in Australia.

Distinguish from form alternatives

OutstaffingIn-House Outsourcing Freelancers

Cost
You pay a developer’s hourly work + fee from the agency.You pay a developer’s salary, recruiting and employment expenses, an employee’s education, and equipment.You pay for the service, the work of the outsourcing agency as a whole, not separate employees since they are responsible for the final project result.You pay hourly just for the work of a certain person.

Control
Your company can communicate with a specialist directly, give tasks and control them.Your company fully manages the employee’s work process.You cannot personally lead professionals working on the software development project.Your company communicates with a specialist directly and gives tasks. But usually, it is difficult to control them. 

Risks
The qualification of the specialists might be lower than described by an agency. And some outstaffing companies do not return the money (but Digis does or replaces the candidate).
If a project fails, the company will no longer need an in-house department.
Since you do not control the process, the result might not be satisfying and you can lose your money.
Freelancers are less responsible. They can sometimes just disappear without any notification.

Also, they are better sellers, they might not have the skills they mentioned and you understand it only after the work has been done. 

Time to hire
Usually, from several days to 2 weeks.Up to several months. Several weeks.From several days to several weeks. 

Safety
You will have NDA, as well as guarantees for an employee’s timely and quality work.With more control, you gain more safety: NDA, deadlines, contract guarantees. You have a contract and NDA and you are able to demand what you agreed to with an outsourcing company.Usually, there is also no contract that can save you if a freelancer doesn’t comply with the requirements.

Motivation
Employees are motivated by an outstaffing agency.
The burden of motivation is on your company.
Employees are motivated by an outsourcing agency.The burden of motivation is on your company. It is a cool idea to offer the same working conditions as for employees.

Why do teams choose outstaffing for software development

  1. Lowering operating costs. Within the outstaffing model, you can have a remote team without opening a new company branch or a remote development office.  By using outstaffing vendors, your company doesn’t need to hire lawyers, accountants, and facility managers. These individuals are also already a part of an outstaffing vendor so they will take care of operational work for you. 
  2. Onboarding process. The client doesn’t need to seek out, hire, and onboard remote tech specialists on their own, as the vendor staffs all projects with its own tech talent. While your company can concentrate on the product delivery team.
  3. No need to spend time on educating employees. You get access to skilled talent, and never have to train junior employees. A manager from your company can contribute to employee training — yet, it does not have to be your chief responsibility. 
  4. Staffing flexibility. Scaling or reducing the number of employees can be done with minimal downtime since all communication is handled by the vendor.
  5. No location constraints. As you search for in-house employees, there are a few places to search often only within your country. With outstaffing you can hire from all over the world, prioritizing expertise over the location. 

2021 outstaffing trends

73% of surveyed employers said they plan to increase the number of interim, project-based, or contract IT employees on their staff.

96% of business leaders from the tech industry say it’s very or somewhat challenging for their company to find skilled professionals. 

One of the top 3 hiring priorities now is to speed up the hiring process.

Employer branding rethought. Previously mentioned tendencies lead to the fact that companies compete with offering better working conditions. Now, when introducing the company to candidates, recruiting leaders stress how they treat and support employees, customers, and communities; whereas once it was all about the product success and workplace perks. 

Because of the pandemic, employees value being flexible at work due to safety reasons.

Employees are demanding more from their employers. Partly because of the Covid-19 too. It makes hiring in-house teams an even more intricate process. Employees are increasingly demanding flexible working hours, safety at the office, paid leave, childcare, education, and mental health support, as well as wanting to know where companies stand on political and social issues.

Gartner reports that only 16 percent of new hires possess the skills needed for their current jobs and the jobs of the future. Outstaffing allows you to get access to the best software development experts. 

Cases for hiring an outstaffing agency

(most important cases are in bold)

1. To assign some regular work, but not the whole project.

2. Your managers are well versed in IT to manage a team.

3. The projects have clear goals and project management. 

4. Project requirements change frequently and need to stay flexible. 

5. You plan to rapidly scale your team fast in the near future.

6. You have a considerable technology workflow to achieve full-time or at least part-time.

7. You are looking for long-term cooperation with a service provider.

8. You do not have the time/desire/resources to train/hire your own team

What to pay attention to when choosing an outstaffing agency

First, check the material on how to choose a software development company — it is the basis:

  • remember to research your potential partner in social media, google, government sites
  • discover their portfolio
  • try to learn as much as possible about their internal culture
  • make sure the low or very expensive price is reasonable
  • legal backing of the process: NDA, IP rights
  • including guarantees. For example, Digis offers a two-week free trial and replace our employees if they do not suit your software development project
  • asks whether you will be able to work with employees directly
  • how they set communication: their communication tools and how fast they respond to your messages
  • staff retention strategies they employ
  • will a specialist work exclusively for you
  • employees working conditions
  • choose software development agencies that offer complementary services.

Smart hiring with Digis: best tech talents in 2 weeks

  • The top 3% of Ukrainian developers are working in Digis, due to our detailed selection of five stages. Our HR department covers almost all Ukrainian candidates
  • a dedicated project manager, who will in a transparent manner organize the work of experts you will hire from us
  • 150+ reliable tech specialists to choose from
  • 2-week trial to decide whether the developer is right for you
  • 2 weeks to expand and scale down your team 
  • 95% of our employees have experience with multicultural teams
  • 24 hours to see your first candidate’s CV from us
If you are still here you are obliged to read our BlaBlaCar case 😅 Two dedicated development teams helped BlaBlaCar augment their staff, cut their operational costs, and accelerate their business growth, ensuring 100% client satisfaction.


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