Nowadays outsourcing vs outstaffing is two terms have long and firmly entered our life. But still, sometimes questions arise – what exactly do these terms mean, which of these two formats to choose an organization?
Outsourcing is the use of an external source and/or resource, the term appeared in business circulation in the West in the early 90s. This is a situation in which an organization transfers part of its functionality to external performers. This delegation allows you to optimize your work, save resources, and focus on your core business.
Outsourcing, as a rule, transfers non-core functions related to supporting business processes.
In addition, there are situations where the law requires certain organizations to outsource some of their functions. For example, mutual funds are obliged to outsource the accounting, control, and management of their own assets.
Outsourcing is often used when an organization needs a data center. Your own data center is an expensive, resource-intensive project. It is much more profitable to conclude an agreement with a commercial data center and get all the necessary services. Nowadays outsource software development is rather popular.
When to switch to outstaffing
With outsourcing, everything is clear. You connect it when your energy/time is not enough now, or when you want to save well on labor costs. Outstaff is more difficult. Absolutely not all firms are suitable for the option of registering labor resources for a special contractor agency.
Outstaffing is the use of the personnel of another company to perform a number of functions. Outstaffing emerged as a phenomenon back in the 60s and 70s of the last century. In Japan, this is the main form of formalizing relations with employees – there, as a rule, no more than 1/3 of all employees are employed by companies. The rest are registered with recruiting agencies.
Thus, during outstaffing, the opposite picture is obtained. No functions are transferred to external performers. But employees of other firms are invited to the organization to perform some work. Obviously, this option is needed in cases where the functionality cannot be transferred, or these are specialized tasks.
If you need to maintain control over the workforce, but get rid of the need for their documentary and financial content, outstaffing is the best option. The responsibilities of the official employer are shifted to the contractor. And you manage the staff as usual, paying for the services of the outstaffer in accordance with the contract.
Sharing outstaffing and outsourcing
Yes, there is such a thing. The two systems do not have to be interchangeable. Despite some similarities of words, one of them is the form of personnel registration, and the second is a way of attracting resources from the outside, transferring to a third party some of the non-core functions of the company.
Sometimes for personnel optimization, the most effective and profitable solution is to combine outsourcing and outstaffing services. The former allows you to get rid of most of the regular employees, replacing them with external, less expensive ones. And the second is to retain de facto control over the key, most valuable employees, for whom it is usually very difficult to find replacements.
Moreover, outsourcing and outstaffing can be ordered simultaneously from one contractor. In order to keep both quality and speed not to sink.
To sum up
Both of these phenomena are now an integral part of the market economy. Business needs them in one form or another. It remains to be hoped that the situations with gaps in legislation will be resolved, and there will be an opportunity to make full use of convenient tools.