Outstaffing vs. Outsourcing: What’s the difference?​

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 workers. 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

3.3. Outstaffing
Feras Tanan, head of the Outstaffing team since 2018, has IT degrees from the universities of Damascus and Darmstadt. He has been living in Darmstadt since 2015 and from there is responsible for the L-One employees in Damascus.

Outsourcing

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.

»All management around recruitment, leadership and training is the responsibility of the service provider. For outsourcing as for outstaffing.«

Lionel Born, Gründer und CEO von L-One Systems

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.

Pro Outsourcing

    • 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

Contra Outsourcing

    • 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

Outstaffing

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.

Graphic showing the Outstsffing process @ L-One Systems
With outstaffing, the client's in-house developers are directly linked to the contractor's development team - a key factor for close and productive cooperation.

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).

Pro Outstaffing

    • 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

Contra Outstaffing

    • additional effort for setting up a development process that is followed by both the internal and external development team and that both productively interlink
Head of Outstaffing at L-One Systems Feras Tanan
The Outstaffing team in Darmstadt consists of experienced IT developers who provide L-One customers with qualified developers from the offshore team

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.

»Some of our customers refer to the L-One Outstaffing team as our employees. We are happy about that. That is our goal.«

Valerie Dietsche, Customer Relationship Manager bei L-One Systems, Darmstadt

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.

Sources & Links

Case Study: Communication and Risk Warning by SMS

Crop field in East Africa with little plants in rows

Harvest and trade better

The digital advice service by agriBORA sends weather forecasts and agricultural cultivation tips. As a communication platform between cultivation and trade, the agriBORA app supports the food supply in East Africa. This way, the app helps smallholders to adapt their field management to the weather forecast or to protect themselves from pest plagues increasing their yields. L-One’s offshore team is developing the front end of the app, for the display of information and its input. The app sends messages via SMS and is used along the entire value chain between cultivation and distribution to exchange messages, from warnings to sales support.

KO-01
The Kenyan Kizito Odhiambo has been living in Germany for 10 years, where he studied and founded the start-up agriBora. He is also a Global Learning Facilitator in the network Education Meets Development.

What is developed
With the agriBora app, the Kenyan Kizito Odhiambo has devised a digital tool for the small farmers and farmers in Kenya. The conditions there cannot be compared with those in Europe. The app enables an exchange between the farmers and distributes very helpful and sometimes necessary warnings, for example of approaching thunderstorms. Providing customers with agricultural data – forecasts, weather data, cultivation recommendations – is one component. The tool is also a sales platform. Farmers have a direct line to cooperatives, wholesalers, seed and fertiliser producers.

The app includes free and paid service offers. It also handles cashless transactions over the telephone. Communication takes place via integrated voice messages and SMS in English, Kiswahili and other regional languages such as Luo and Luyha.

From the very beginning there has been a clear division of labour. L-One took over the frontend development, agriBORA the backend.

»Our solution was not well visualised and not practical for our customers. We are not front end experts for this and do not have the manpower. We are glad that L-One implemented the front-end for us.«

Kizito Odhiambo, founder and CEO of agriBORA

Challenges
The agriBORA app informs farmers by text message in English or several national languages about approaching storms or pest infestations.

fields view from satellite
The agriBORA app informs farmers by text message in English or several local languages about approaching storms or pest infestations.

The cooperation with the L-One team in Damascus

As development time was tight, Kizito Odhiambo initially had one thing in mind: “Thanks to the same tools used for communication, onboarding worked well and teamwork was straightforward from the start. All in all, it worked better than expected”.

Market in East Africa
The aim of the agriBORA app is to optimise harvests and improve communication in agriculture and trade.

»L-Ones Offshore Team supports us in front-end development. Advantage: The time and cost savings. And even more important: We can concentrate on our core competence.«

Kizito Odhiambo, Founder and CEO of agriBORA

Results, plans for the future
agriBORA gain a time advantage. The employees can concentrate on what they understand: Time for the customer, the product idea and programming in the backend environment. The implementation of the area visible to the users of our web applications, the frontend, is what L-One does. “We simply lacked the manpower for the frontend. The front-end that we now have appeals and provides solutions that we could never have implemented in this way,” concludes Kitzito Odhiambo.

With agriBora’s growth, the cooperation with L-One will soon be expanded. This means that the number of working hours and the number of offshore team members will be increased.

Further case studies and more about L- One:

Case study: Kernel simulation for robots  
Contact us: You are planning an IT project? Talk to us.
Outsourcing vs. Outstaffing: What’s the difference?​