Outstaffing as a Safe Path through the Turmoil

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By Alex Zakrivaševič, News analyst
Published on Jul 5, 2022

Best Practices
7 min read

Uber now treats hiring as a privilege because of the “seismic shifts” in the markets and intends to reduce the expenses. Meta slows down hirings for the nearest year in order to reduce costs. Microsoft halts recruitment because of the economic uncertainty. Netflix does not just push the stop button on the hiring process, but also starts to lay off the employees. The media report “big tech layoffs”, whereas the tech salaries remain strong. While swinging between these two extremes, neither of them facilitates meeting your goals and keeping up with the delivery schedule.

It’s just a small portion of distressing news related to recruitment in global companies. Even if you don’t intentionally look for news about massive waves of layoffs and hiring halts in the tech sector, in the digital space you will come across it anyways. With respect to the recent events, when confusion of the first few weeks has subsided a little, well-established world-known enterprises and seed-stage startups have equally faced uncertainty in the future and the necessity to leave the comfort zone and look far beyond habitual planning periods. 

Riding the tech staffing roller coaster

Compared to other spheres during the coronavirus era, the tech sector turned out to be quite resilient to the challenges the pandemic caused and showcased better growth. While restaurants, travel agencies, logistics companies etc. had to freeze their work (to say nothing of hiring new staff), stay in standby mode and tighten their belts waiting for the better times, tech companies strengthened their positions and even underwent a hiring boom

While companies from other spheres were reconsidering their approach to work and customer service through adopting digital solutions, tech companies offered services on their development and had to mobilize additional resources to handle the enormous scope of work that rained down on them. The tech labor market was extremely overheated, and recruiters battled for candidates that could fill in the gaps in the teams. But due to the fact the coronavirus has loosen its grip (although it hasn't completely surrendered its positions), people are taking their steps back to offline life, and the demand for some digital services has decreased. This fact is proved by the example of Netflix the company reported a loss of 200000 subscribers in the first quarter for the first time in more than ten years. 

The situation is deteriorated by the record-breaking inflation, rising costs and high degree of tension and uncertainty in the future. Companies are forced to take measures (sometimes unpopular) considering various scenarios, including worst-case. However, they have obligations to their clients and their actions must not affect the overall working process, timings and quality of deliverables. But is it possible to fulfill the obligations and not to go broke during the troubled times and constantly changing rules of the game?

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Source: CNBC

Is outstaffing a magic pill for tech talent supply pains?

Imagine that you own an average size manufacturing company. One day you receive a big and super-profitable order, which according to the most conservative estimates would take a year to complete. Without a doubt, you are determined to get down to the project as soon as possible if not one big “but”. To fulfill it you need a special piece of equipment, which is extremely expensive to buy, hard to find and problematic to maintain (in case of any failure parts for the machine are also rare and expensive). Moreover, you never know if you need this equipment for your future projects, and the prospect of wasting a big amount of money for the machine that would stand idle is not that optimistic. 

And here you face a dilemma: whether to spend an awful lot of time to find, order and get it delivered (the entire process may take months), or rent the needed machine, saving precious time and leaving the headache with its maintenance to the vendor. In the first case you have the equipment at your full disposal, expand the opportunities and become more competitive in the market, but meanwhile you can’t predict if the equipment will properly serve you in the future, and in case of any failures fixing, searching for appropriate parts is your responsibility. Going with the second option, you rent the machine for the agreed-upon period, pay less and do not have any snags with maintenance, granting this privilege to the vendor. 

Outstaffing is something similar to the described equipment rental. It implies renting team members from another company for a particular project. You do not need to care about the hiring process, payroll and other organizational aspects all these points will be the burden of your vendor, while these specialists become your in-house team extension and you have full control over their work. The approach is especially relevant during turbulent times, when there is a pressing need to cut the expenses down, without sacrificing productivity and timings, and keep balance between the quality of delivered services and costs. 

Outstaffing helps save resources

The hiring process sometimes resembles a hellscape. You need to find an appropriate candidate, possessing necessary hard and soft skills, set up an appointment, conduct several stages of the interview, and only then make a decision if he/she is a perfect match for your company. But even if you make a positive decision on your end, there is no guarantee that he/she will accept the offer. And here you have to start all over again, until your try is crowned with success. Most likely, you will find a well suited team member, but how much precious time and resources will be spent on searching! 

When we speak about software development, hiring often becomes mission-critical. Oftentimes there are tight deadlines to observe, and need a teammate for a project as soon as possible. Shift the worries related to the hiring process to your software development partner. As a rule, they have a set of streamlined processes and an extended pool of talents available for hire individually or as a well-knit dedicated development team, so you could gather your dream team from one vendor, save time on hiring and get down to the project asap.

More outstaffing benefits: faster time-to-market and full control

A recent study called “The 2022 State of Tech Staffing Report” by Commit, mentions the number of startups opting to outsource software development is expected to increase by 70% in the next year. The UI/UX designer tops the list of outsourced jobs (34%), followed by software developers (31%), while QA at 28% stands as the third most outsourced job. This trend is especially strong for startups after their successful Round A – urged to deliver and keep up the pace, they eagerly partner with vendors providing software services for startups and outstaff multiple tech jobs.

No big surprise here. By resorting to services of a contractor company, you gain access to a diverse pool of talents with different expertise and skills, which ensures experience-sharing with your full-time employees. You expand your in-house team, gaining an opportunity to track the quality of their work as in case of a direct hire, and reserve the right to keep the full control over the project and the entire development process. Also, worth mentioning that using outstaffing services you can easily scale up and down the team at your own discretion, which is almost impossible in case of direct cooperation with specialists.

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Benefits of Outsourcing Software Development According to C-Suite Executives | Source: Commit

IT outstaffing is still financially advantageous

What stands at the compensation of a high-qualified full-time employee? Beside the salary itself, thean employer is responsible for paying taxes and fees, vacation and sick leaves, maternity leaves, all sorts of social benefits, let alone office space rent, workplace equipment and other overhead costs etc. If we speak about software developers, whose salaries remain strong despite the turbulent period, all these expenses are quite significant. Besides the fact of coming expenditures, keep in mind the bureaucratic moments. All the documents mentioned above must be executed correctly in compliance with legislative peculiarities, and it’s totally your responsibility if onboard a team member. 

Opting for outstaffing, you pay an agreed-upon amount to your partner company, who deals with the paperwork, pays salaries, provides social benefits and resolves arising labor disputes. Making it the vendor's responsibility, you kill two birds with one stone: save money and alleviate human resources management.

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How to save through outstaffing

To wrap it up

There is no universal method to get through the storm without resulting in damage. 

Although the outstaffing model is not able to resolve all faced problems,  it simplifies the task of keeping the balance between costs and quality and obviates the need to sacrifice timings. 

A brief list of outstaffing benefits counts: 

  • Faster time to market 
  • Transparency and full control over project progress 
  • Easy team scaling up and down
  • Simplified HR management 
  • Reduction of bureaucratic procedures
  • Cost-efficiency

 

Resorting to the services of a reliable vendor, you fill in resource gaps in a short time, reduce paperwork, cut down the related expenses, and on top of that – acquire highly qualified team members, whose work you can control in full.

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