To outstaff or not to outstaff: all you need to know before selecting an outstaffing supplier

Screenshot with a team of developers


In a medium or large enterprise, it is essential to increase the workers because of the company’s growth. The personnel plan for the year is surpassed by such a need for new workers and only using an outstaffing service will help. Consider hiring professionals who work with other employees and who will perform their duties in the company but will belong to the outstaffing agency’s crew.

What Is Outstaffing

In some countries, the phenomenon of outstaffing has already been widely popular for a while. Many companies in the Western-European countries prefer this particular model with personnel. However, in a lot of countries outstaffing is only gaining momentum, as the attitude towards this method of personnel management is still very ambiguous, because it is mistakenly associated with the illegal tax withdrawal.

However, in truth, the essence of the outstaffing service is simple: a company (usually a large one), wishing to focus as much as possible on solving key business issues, without being distracted by various HR problems, concludes an agreement with a provider, according to which the official employer of the employee changes, an outstaffing agency becomes it. Apart from that, nothing changes for the workers: they continue to work in the previous company, they are performing the same tasks. While for the employer, this service allows to reduce costs by up to 30%. As a rule, outstaffing is used by companies with at least 100 employees

Outstaffing is often confused with outsourcing, or mistakenly considered a “kind” of outsourcing. However, these are completely different services. The concept of “outstaffing” comes from the English words “out” and “staff”, which means “state”. The peculiarity of this type of employment is that part of the company’s personnel is removed from the staff and legally registered in the outstaffer company, but fulfills its duties within the framework of the tasks of the customer company.

In this case, the outstaffer provides services to the customer under a contract for the provision of services for a fee, and the latter pays for them. Thus, we can say that the main difference between the two types of services is that outsourcing is the transfer of certain functions of the company to the contractor, and outstaffing is the contractor’s employees.

The main common feature of outsourcing and outstaffing is that the task of both types of services is to focus on minimizing risks and financial costs for non-core activities of companies, optimizing taxes and reducing personnel costs.

In-house vs outstaffing development: what’s the difference?

In-house teams

Employing in-house developers means that companies are now more likely to discover their own marketing departments than hire some marketing agencies, because by doing this their specialists will be more involved and the communication issues will be prevented as well.

Nowadays, companies are almost fighting for professionals, so you need to make sure your team is fully satisfied in order to keep it.

Then, since the in-house development team will be working on your product all the time, you may share your specific needs as well as your company and product values.

What is more, the communication will be a lot more convenient and accessible (if their department will be placed in one office). Just keep in mind: when everyone is at the same place, communication takes less time and needs less coordination.

However, hiring is always a challenge and you are the one who is responsible now for wages and perks and, you need to figure out how to balance development with the constant advancement of the new developers and keep them satisfied simultaneously.

All in all, it is reasonably hard to find out whether it is worth hiring an in house team because the pros are equal to the cons, so you should opt based on your company’s needs and preferences.

Take a look at the comparison chart for in-house and outstaffing to figure out what is the right decision for your company:

A black and orange table showing the different types of software development.

Advantages of outstaffing

Advantages of outstaffing

Selecting an Outstaffing Supplier

Selecting an outstaffing supplier is not the easiest task, but it is an extremely important step, so don’t underestimate this part. The supplier is the one to source the talent you’ll be working with.

Many companies are making the decision to hire an outstaf team to reduce costs and increase income. If you are forcing the same aims it is worth considering carefully when choosing a service provider. Ideally, this partner should be reliable to manage labor relations with employees. As the goal of working with an outstaffing company is to increase the efficiency of the entire business!

If you have already decided on the company you will collaborate with or chose several companies and need to choose one, check out the list of the most important criterias for selecting an outstaffing supplier:

–   Experience in this area: check on the partners the company had been working with before you or is still in collaboration with;

–   Studying the contract; 

–   Reputation and reviews: try to find reviews on the Internet, professional communities, among business friends; this is definitely one of the most reliable methods to understand whether the company is worthy;

–   Result orientation: if they are truly interested in cooperation with your company, it will be clear already in the negotiation process;

–   Reasonable prices: if prices are suspiciously low, this should cause some concerns as well as if they are unreasonably high.


Usually outstaffing becomes useful for companies interested in operating in another region, but not willing to open their offices or branches there. Thus, by having an employee there, the organization gets its own representative in that region, while the management of personnel and accounting falls on the intermediary firm.

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