How best to Outsource the Programming of Software
The software industry is growing. While the industry’s turnover in Germany in 2010 was 15.6 billion euros, it is expected to almost double to 27.6 billion euros in 20201. The IT market is looking for trained professionals. The search for employees for the IT department who are well-trained and at the same time affordable and fit the company is increasingly causing personnel headaches. Increasingly, companies of all sizes are outsourcing the development of the solutions they need. Different models deal with the delegation of the development of software solutions from one company to another. Outsourcing and outstaffing are two different concepts to consider when deciding whether to outsource IT development.
by Feras Tanan
When outsourcing software development, a company contracts another company to carry out a project from A to Z. The client is not involved in the development process. He neither leads the development team nor supervises the development process or solves technical difficulties if they occur.
This approach is best suited for non-technical companies without in-house know-how. The finished solution is purchased.
The company can set up an operational interface to the outsourcing provider with an IT project manager and receive regular updates.
Lionel Born, Founder and CEO of L-One Systems
»All management around recruitment, leadership and training is the responsibility of the service provider. For outsourcing as for outstaffing.«
Before starting an IT project, the arguments for or against outsourcing and outstaffing should be considered. This consideration can make a decisive contribution to the success of the project.
- no management efforts for recruitment, administration, training or other HR activities required by the client
- no technical supervision by the contractor required, purchase of the finished product
- The use of the latest technology during development is guaranteed, as the outsourcing provider is a specialized IT company
- The client incurs higher costs for outsourcing compared to ouststaffing
- no direct control over development team and development process
- no development of in-house know-how for software solutions
With outstaffing, a company expands its internal development team to include the development services of an outstaffing provider. The client concludes a contract with the outstaffing service provider for the provision of remote developers. As with outsourcing, there is no need to employ your own staff with outstaffing.
The outstaffing service provider takes over the human resource management. The client puts together the remote team from a preselection and leads the remote developers. The remote team reinforces its own team for the agreed time frame. The structuring of the development process and the distribution of the tasks to the remote developers is done by the outstaffing client.
Companies are increasingly working with outstaffing teams instead of hiring their own developers. On the one hand, outsourcing the time-consuming organizational management for the additional developers relieves the burden on their own HR management. This eliminates recruitment procedures, induction, training, payroll accounting, accounting and ensuring employee satisfaction – and last but not least, fixed costs.
On the other hand, the outstaffing process means that highly qualified but affordable developers are available very quickly.
Advantages and Disadvantages of Outstaffing
Serious outstaffing service providers offer access to a large pool of certified developers with a wide range of specialty areas (IT stacks).
- no recruiting, training, administration and other HR-related activities required by the client
- lower costs for the client are incurred for outstaffing compared to outsourcing
- direct access and control over the development team and the development process
- Increase in in-house know-how
- additional effort for setting up a development process that is followed by both the internal and external development team and that both productively interlink
Outsourcing and Outstaffing at L-One
For our customers, we individually coordinate the outstaffing experience with the processes at their internal developers. We use the same set of communication tools, for example Slack, Microsoft Teams (including the various Microsoft 365 applications), Trello, JIRA, Bitbucket and additional collaboration software that simplifies collaboration between different locations.
In addition, our customers can define training priorities for their external developers.
Valerie Dietsche, Customer Relationship Manager bei L-One Systems, Darmstadt
»What our clients appreciate about the collaboration is that the internal and external teams learn from each other. The time difference is only one hour and allows for a fluid exchange.«
Outsourcing and outstaffing projects usually involve the employment of teams that work remotely. The provider must ensure that the quality of the service offered is not compromised and that he does not lose control of the offshore team. We at L-One are aware of this and therefore refer to our outsourcing / outstaffing services as »made in Germany«.
Data protection, security, availability and communication skills are anchored key concepts that our dedicated offshore team implements. We have policies and protocols in place to ensure that these concepts are implemented.
In order to find out which of the options, outsourcing, outstaffing – or a hybrid form – is suitable for you, we recommend talking to our experts.