Vasily Voropaev, a founder and CEO at, a serial entrepreneur, and a dedicated promoter of remote work and remote teams, shared his experience in a material for Forbes.

You can read the original article at the link.

Outsourcing and outstaffing are well-known terms among IT recruiters and professionals in the world of tech. During the pandemic, both of these industries are experiencing unprecedented growth.

In outsourcing, part of the company’s functions is transferred to a specialized third-party executive company. It doesn’t have to be solely programming — one can outsource accounting, HR, call centers and advertising/PR. It’s based on a long-term contract with a company for hiring contractors. This is more profitable than simply being located in a place with a lower average salary or taking advantage of professional specialization.

Outsourcing is highly sought-after in IT, and here’s why: The global market size of IT outsourcing is estimated to reach $92.5 billion this year.

But the public knows far less about the outstaffing. Outstaffing is another way to manage the workforce on your project. Your company leases professionals to work exclusively on your project. Workers receive payment through an outstaffing agency, who solves all workforce-related issues as well.

There are many differences between outsourcing and outstaffing, but only one common feature: both aim to minimize financial and personnel costs and risks for the client company. For example, outsourcing is ideal when you lack the resources to quickly solve a secondary task, but if an insured event occurs, or a key employee quits and you have to find an urgent replacement — an outstaffer company handles those problems.

In general, cost savings should not be the first (much less the only) reason for choosing outstaffing. We recommend outsourcing for secondary projects or functions and outstaffing for the primary ones, the quality of which determines the future of the entire company.

The main differences between outsourcing and outstaffing:

  • When outsourcing, the contractor or staff is usually subcontracted. In the case of outstaffing, the staff is registered with the contractor company, which searches for employees and ensures their sufficient skill level. At the same time, you can choose exactly those people that you need, instead of the “full package” that the contractor can provide.
  • Usually in IT outstaffing, the staff is more qualified, and therefore they’re paid every month (or every two weeks), not from the client company but their agency. With outsourcing, everything depends on the contract. Employees may receive hourly wages or pay by project based on its outcome.
  • With traditional IT outsourcing, communication is already established. The manager and employees know each other, and they have established a working relationship. During outstaffing, the customer has to build those relationships from scratch. Having a skilled manager (with knowledge of the required language) can be helpful.
  • Work process is different. You have no control over what outsourced employees do. They may have several projects from different customers. Therefore, quality can suffer. When outstaffing, you completely control their work; they do not receive assignments from the outstaffing company but from your company’s manager. Therefore, you know for sure that your project is given their full attention.

With outsourcing, you have greater clarity in a situation. You can opt for this method when your energy or time is not enough, or to save on wages. Outstaffing is more tricky. Not all situations are suitable for cooperating with a special contractor agency to hire labor resources. The relevance of the service increases in such cases:

  • The bulk of the company’s expenses are personnel costs.
  • Your HR department can’t keep up to cover the need in high-quality specialists.
  • The company staff grew so large you cannot enter the most favorable tax bracket.
  • In order to operate personnel, you maintain large HR and accounting departments.
  • You would like to reduce your risks with the insurer, GMS and others.

If you need to keep control over the workforce but eliminate their overhead and financial support, outstaffing is an attractive option. The responsibilities of the official employer are shifted to the contractor, and you manage the personnel, as usual, paying for the services of the outstaffer through their contract.