Outstaffing vs Outsourcing: The Ultimate Comparison


The main dilemma

Have you ever been confused by the sheer specter of business that seems to arise as fast as the demand of our digital age grows? You’re certainly not alone.

Hiring locally has long stopped being the sole option. You can’t say remote work doesn’t come with plenty of benefits. For hiring companies and for hired contractors — it’s a win-win situation. Plenty of options for businesses to hire talent and manage their projects. Don’t want to work with the company down the road? Find your perfect fit in the international market!

With this norm, we face two common practices of employing experts: outstaffing and outsourcing. You’d be surprised how often those two get confused. Understandably so, as both models have certain similarities. However, there are significant differences also, and if you want to structure your business operations successfully, it’s vital to pinpoint exactly what fits your needs.

In this article, we'll review the differences between oustaffing and outsourcing and help you understand which could work better for your business. We'll dive into the advantages and disadvantages of each model, giving you a clearer picture of what to expect. So, sit back, relax, and let's get started!

About outstaffing

Let’s start by establishing outstaffing definition. When you hire remote employees as temporary members of your main in-house team, that is outstaffing. You get to add extra people to your team without worrying about all the administrative stuff that comes with hiring someone in-house.

With outstaffing, you work with a company that finds and manages remote employees. They take care of all the recruitment, payroll, and legal stuff, while you focus on managing your team's work and ensuring they meet their goals. This is a great option if you need to scale up your team for a specific project quickly or if you need temporary staff for a short period of time.

The best part? You get access to a global talent pool, which means you can find the best people for the job, no matter where they are in the world. And with remote work being more popular than ever, outstaffing quickly became the go-to solution for businesses of all sizes.IT outstaffing is an especially successful practice.

So, the main points are:

  • Outstaffing is a model that lets businesses hire remote employees to collaborate with the in-house team.
  • The outstaffing company handles tasks such as recruitment, payroll, and legal compliance.
  • Clients manage their team's work and ensure their goals are met.
  • Outstaffing is a cost-effective way for businesses to expand their teams without the administrative burden of traditional in-house hiring.
  • It's ideal for temporary or project-based staffing needs, providing quick scalability.
  • Outstaffing offers access to a global talent pool and provides flexibility in staffing.

The pros and cons of outstaffing

Let’s take a closer look at the benefits and drawbacks and what this practice can bring to your table.


  1. Save money. One of the biggest benefits of outstaffing is cost savings. By outsourcing your staffing needs, you can avoid expenses like office space, equipment, and training costs. That means cutting the budget you would spend on employment. And who doesn’t what to free up some money? There are plenty of other business needs you could be spending them on.
  2. Access global talent pool. With outstaffing, you are not confined by geographical location. Expand your horizons! Dive into the exciting world of the international job market. That means you can find the best people for the job, no matter where they are. This can be particularly useful if you need specialized skills or expertise that's hard to find locally. Did we mention you can also save money while doing so?
  3. Get flexible with staffing. Outstaffing provides a lot of flexibility when it comes to hiring new employees. If your employment needs fluctuate or you plan a short-term project without needing a regular team after it’s done, you can quickly scale up or down as needed. You don't have to commit to long-term hires you may not need later. Hire people for as long as you need — literally, everyone would benefit from it. Outstaffing companies are happy to negotiate the timeline, and you can avoid painful and unnecessary job cuts with your in-house team.
  4. Save time. When you outstaff, the company you work with takes care of all the administrative tasks associated with hiring and managing remote workers. This can be a huge time-saver. That includes things like the recruitment process, keeping people on the payroll, and overseeing legal compliance. You can focus on managing your team's work without getting bogged down in admin tasks. Neat, isn’t it?


  1. Communication challenges. Working with remote team members can sometimes remind of the game of a broken phone. There may be language or time zone differences to contend with. Maybe there are some cultural differences to take into account. Working with team members from different parts of the world can sometimes require extra attention. However, most outstaffing companies have systems in place to manage these issues. Being open and timely is, of course, a huge help to get everyone on the same page.
  2. Limited control. When you outstaff, you have limited control over the day-to-day management of your team members. They are ultimately under the management and control of the outstaffing company. This can be both a pro and a con, as it highly depends on the amount of control over operations you seek for your project. On the one hand, there’s only so much you’ll be able to manage. On the other hand, though, you won’t have to bother with every little issue that organizing a team comes with. Which notion is more important to you?
  3. Security risks. When you outstaff, you're working with remote team members who may have access to sensitive data. That can create security risks. However, any credible outstaffing agency has strict security protocols in place to manage these risks. You are also more than welcome to negotiate additional terms, like signing an NDA contract, or inquire about the details of the work ethics and the contractor’s internal processes. Besides, checking the reputation of the company you are considering hiring is always a first step anyway.

About outsourcing

Outsourcing is as common business model these days as hiring an outstaffing company. Outsourcing, however, is the practice of hiring another company to handle certain tasks or projects that the in-house team is not up to. The reasons for that may vary. Often the in-house team is just plain busy working on the main product. Sometimes you do not have the right experts for the job. Maybe you are a startup that needs professionals for a jump start. Outsourcing solves a lot of problems for businesses of all sizes and niches.

There are two main types of outsourcing: offshore and onshore. Offshore outsourcing is when a company hires a service provider abroad, while onshore outsourcing means employing a service provider from the same country.

Outsourcing can be applied to various tasks, depending on the company's needs. For example, if a company needs a new software product developed, it might outsource that to a specialized software development company. Or, if they need to handle a high volume of customer inquiries, they might outsource their call center operations.  It can truly be anything — from IT support to manufacturing or customer service.

Let’s recap the main points:

  • Outsourcing is the practice of delegating projects to an external company.
  • Outsourcing solves various tasks, including IT services, manufacturing, customer support, and more.
  • The outsourcing process typically involves identifying the tasks to be outsourced, finding a suitable outsourcing partner, and establishing a contract or agreement.
  • Outsourcing can be done domestically or internationally, with international outsourcing often referred to as offshoring.

The pros and cons of outsourcing

Let’s define the advantages and disadvantages of this model as well, shall we?


  1. Save money. It’s no wonder hiring a remote workforce can cut your spending. Outsourcing can often be cost-effective, as you can access specialized services at a lower cost than hiring in-house staff. Besides, you are not tied to your location. Not happy with local options? Well, the world is your oyster. For example, Ukraine outstaffing and outsourcing services can both be much more optimal in the price-to-quality ratio than hiring in the US.
  2. Be more efficient. By delegating non-core functions to specialized service providers, you can free up your time and focus on what you do best. This is great news not only for you as a business owner but for your team as well. There is so much stress and worry that hiring extra help can take off your shoulders.
  3. Access specialized expertise. Outsourcing can help you reach experts in areas you might not have any specialty in. Both software outsourcing and outstaffing, for example, are in high demand globally exactly for this reason.
  4. Scale on a whim. Alright, not exactly on a whim, maybe. But scaling up and down with outsourcing can be done quickly and efficiently. Everything here depends on your needs only. You won’t have to invest in additional personnel, for example. Just discuss your challenges with a project manager —- your primary contact with the agency you employ. They are here to help you along the way and will find a perfect fit solution for your project specifically.


  1. Communication challenges. You know it. We’ve touched on this while talking about IT outstaffing services. Working with service providers in different countries can potentially lead to communication breakdowns at any stage of the process. Worst case scenario, it can lead to delays and misunderstandings. However, as we already mentioned, most companies with a decent amount of experience always establish ways to prevent such issues. 
  2. Quality assurance. What’s important to keep in mind is that by outsourcing, you give up a certain amount of control over the project. For some people, it's easy; for others, it’s not. It can be difficult to review work that's being done by someone else, especially if they're in a different location, with a different time on their clock. Ultimately, there are several steps you can take to make sure the final product will be up to your standards. And that’s the usual precautions: research the provider company, don’t make deals through shady websites, negotiate a contract. You know the drill.
  3. Can get pricy. Outsourcing can definitely get expensive if you're not careful. While it's true that such a practice can save you money in the long run, there are also some potential pitfalls that can end up costing you more than you expected. For example, if you don't carefully vet your partner, you might end up with poor-quality work that you must pay to fix. Or, if you don't have a solid contract in place, your outsourcing partner might nickel and dime you for every little change or add-on.

Aside from the scammy part, there is much to pay for. It can get expensive because companies often have to pay for the services they receive from other companies, including salaries, overhead costs, and profit margins. There are different rates for different agencies as well. Not to mention the bigger your project gets, the more to pay for. It’s certainly not an inconsolable issue for a business — just something to be aware of.

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Comparing the two

When it comes to choosing between outstaffing and outsourcing, there are some key differences to consider. Let's compare these two models side by side.


When comparing the costs of outstaffing and outsourcing, it's important to consider the different types of costs involved. Let's take a closer look at some of the key costs associated with each model.

1. Staff costs.

The total cost of staff members will depend on various factors, including the level of expertise required, the location of the staff members, and the demand for their skills.

With outsourcing, you'll generally pay a flat fee for the services provided. This fee will typically include the cost of the service provider's staff and any overhead expenses related to the services provided. The cost of outsourcing will depend on the type of services you need and the complexity of the work involved.

2. Infrastructure costs.

If you choose on-shore outstaffing, you'll be responsible for providing the infrastructure and tools needed for your staff members to work effectively. This can include things like:

  • Office space and equipment
  • Computers and software
  • Internet and phone service
  • Training and development resources
  • Supplies and materials

The total cost of infrastructure will depend on the size of your team and the resources needed to support their work. This can be cut by employing specialists remotely through a company that handles everything on their part.

With outsourcing, the service provider will generally provide the infrastructure and tools needed to complete the work. This can be a cost-effective option if you don't have the resources to provide these things in-house.

3. Administrative costs.

With outstaffing, you'll be responsible for the administrative tasks associated with managing your staff members. This can include things like:

  • Recruiting and hiring staff members
  • Onboarding and training new staff members
  • Performance management and reviews
  • Time off and leave management

The total cost of administrative tasks will vary. It all depends on the size of your team, the level of support needed, and the agency you chose to work with.

With outsourcing, the service provider will generally handle the administrative tasks associated with the services provided. This can be a cost-effective option if you don't have the resources to manage these tasks in-house.

In summary, when comparing the costs of outstaffing and outsourcing, it's important to consider the different types of costs involved. Outsourcing can be a cost-effective option, but the cost can vary widely depending on the type of services needed, the size of the project, and the provider chosen. IT outstaffing company might offer a cheaper option budget-wise. However, remember that it is also more time and effort-consuming on your part.

Control and management

Another key factor to consider when comparing outstaffing and outsourcing is control and management. Let's examine how these models differ regarding staff management, communication, and legal responsibilities.

1. Staff management.

With outstaffing, you have greater control over the day-to-day management of your staff members. You're responsible for hiring and firing, setting work schedules, and managing employee performance. This level of control can be beneficial if you have specific requirements for your staff members and want to ensure that they're meeting your expectations.

When you outsource, the service provider manages their staff members. This can be a more hands-off approach that frees up your time to focus on other aspects of your business. However, it can also be more difficult to ensure that the service provider's staff members meet your expectations and deliver the work you require.

2. Communication.

Effective communication is essential for success in both outstaffing and outsourcing models. With outstaffing, you'll have direct communication with your staff members, which can help to ensure that everyone is on the same page and working towards the same goals. However, managing communication with multiple staff members can also be more time-consuming.

When you outsource, the service provider typically acts as a single point of contact, which can make communication more streamlined. However, this can also make it more difficult to communicate specific requirements and preferences to the service provider's staff.

3. Legal responsibilities.

When you outstaff, you're responsible for complying with all relevant labor laws and regulations. This includes things like paying taxes, providing workers' compensation insurance, and complying with minimum wage requirements. You'll also ensure that your staff members are legally authorized to work in your country.

With outsourcing, the service provider is responsible for complying with all relevant laws and regulations related to their services. This can help minimize your legal responsibilities and ensure that you're not violating any labor laws or regulations.

Quality and productivity

When it comes to comparing outstaffing and outsourcing, quality, and productivity are important factors to consider. Here are some key points to keep in mind:

  • With outstaffing, you have more control over your staff members' expertise and skill set. You can choose the individuals you want to work with who work exclusively for your company. This means they can become experts in your industry and your company's unique needs over time. On the other hand, with outsourcing, you're relying on the expertise of the service provider's staff, who may have a broader range of skills but less experience with your company's specific needs.
  • Both outstaffing and outsourcing require training and development to ensure your staff members have the necessary skills and knowledge to perform their tasks effectively. However, with outstaffing, you may have more control over the training process and can tailor it to meet your specific needs. With outsourcing, you rely on the service provider to handle the training, which may not be customized to your company's needs.
  • Cultural and language differences can also impact quality and productivity. With outstaffing, you can choose staff members familiar with your company's culture and language. This can lead to better communication and fit your values and goals better. With outsourcing, there may be more of a language barrier or cultural differences to navigate, which could impact productivity and quality. However, a lot of companies learned to accommodate that. For example, if you seek outsourcing or outstaffing in Ukraine, the person you will be in contact with will be able to discuss your project in English. 

Choosing the right one for you

When deciding between outstaffing and outsourcing, it's important to consider a few key factors to ensure you make the best decision for your business. Here are some factors to keep in mind:

  • Type of work. Consider the nature of the work you need to be done. Some tasks may be better suited for outstaffing, while others may be better suited for outsourcing.
  • Business goals. Think about your long-term business goals and how each model may align with those goals. Will outstaffing or outsourcing help you achieve your objectives more effectively? If you are unsure, starting with a project discovery might be a good idea.
  • Budget. Cost is a significant factor to consider. Outstaffing can be more expensive in the short term but may provide more cost savings in the long run. Outsourcing can be a more affordable option upfront but may become more expensive over time.
  • Geographic location. Consider the location of your business and how that may impact your ability to outstaff or outsource. You’ll need to account for the difference in time zones and the appropriate cost rates in the country you employ. You can turn it into a great opportunity to get cost-efficient. For example, IT outstaffing in Ukraine can provide you with a great quality-to-pay balance. The same goes for outsourcing.
  • Staff size and expertise. The size and expertise of your staff should also be taken into account. If you have a smaller staff or need more specialized skills, outstaffing may be the better option. Outsourcing may be more appropriate if you need a broader range of skills or have a larger staff.

Ultimately, the right choice for your business will depend on your specific needs and circumstances. By carefully considering these factors, you can make an informed decision that will help your business thrive.


So there you have it! Deciding between outstaffing and outsourcing can be tricky, but it's essential to consider the pros and cons of each before making a decision.

To sum up, here's what you should keep in mind:

  • Consider the costs. Staff, infrastructure, and administrative costs all add up.
  • Consider control and management. Do you want more control over your staff and their responsibilities? Or will delegating be a better option for you?
  • Don't forget about quality and productivity. Expertise, training, and communication will impact the quality of work.
  • Pick what fits your needs. Consider the type of work and expertise you need, your business goals, available budget, and location.

At the end of the day, it's all about finding the right fit for your business. Outsourcing, outstaffing — whichever you end up choosing, make a point of finding a reliable partner to entrust your project with.

If you're interested in getting some help, we'd love for you to check out our services. Our team is here to find the perfect solution for your business needs. So why wait? Reach out, and let's get started today!


What is the difference between outsourcing and outstaffing?

Outsourcing involves hiring an external company to handle specific tasks or projects, while outstaffing involves hiring external professionals who work exclusively for your company. The main difference is in who manages the professionals. In outsourcing, the external company manages its own employees, while in outstaffing, the professionals are managed by your company.

What's the difference between outsourcing and offshoring?

Outsourcing and offshoring are related business strategies, but they have different meanings. Outsourcing involves hiring an external company to perform tasks or services normally done in-house, while offshoring involves moving business operations to another country to take advantage of lower costs or access to specific resources. Essentially, outsourcing is about hiring external professionals, while offshoring is about relocating operations.

What is the difference between outsourcing and non-outsourcing?

Outsourcing involves hiring an external company to handle specific tasks or projects, while non-outsourcing means that company employees handle all tasks in-house. The key difference is whether external professionals are involved in completing the work.

What is the difference between outsourcing and non-outsourcing?
What is the difference between outsourcing and non-outsourcing?
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Outsourcing involves hiring an external company to handle specific tasks or projects, while non-outsourcing means that company employees handle all tasks in-house. The key difference is whether external professionals are involved in completing the work.

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