Outsourcing and outstaffing are two popular business practices that organizations use to extend their capabilities. While they may sound similar, there are important differences between the two.
Outsourcing: When to outsource a function
Outsourcing is the process of hiring an external provider to perform a specific task or function for a business. This can be done on a project basis or as part of an ongoing relationship. Outsourcing can be a cost-effective way for businesses to access specialized expertise and resources that they may not have in-house.
Some common reasons why businesses outsource include:
- Cost savings: By outsourcing a function, businesses can save money on labor costs, overhead expenses, and other associated costs. Outsourcing can also help businesses reduce the need for expensive equipment or technology that they may only use occasionally.
- Specialized expertise: Outsourcing allows businesses to access specialized expertise that they may not have in-house. This can be particularly useful for niche industries or for tasks that require specific skills or knowledge.
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Focus on core business activities
: By outsourcing non-core functions, businesses can free up time and resources to focus on their core activities. This can help them be more efficient and productive.
Outstaffing: When to outstaff a function
Outstaffing is the process of hiring employees to work for a business but who are not part of the company’s regular staff. Outstaffing can be done on a project basis or as part of an ongoing relationship. Unlike outsourcing, outstaffing typically involves a more long-term relationship with the provider.
Some common reasons why businesses outstaff include:
- Flexibility: Outstaffing allows businesses to quickly scale up or down their workforce depending on their needs. This can be particularly useful for seasonal businesses or for times when there is an unexpected surge in demand.
- Access to talent: Outstaffing allows businesses to access a wider pool of talent than they may have in-house. This can be particularly useful for industries where there is a shortage of skilled workers.
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Control over resources
: With outstaffing, businesses have more control over their resources than with outsourcing. They can choose the specific skills and qualifications of their outstaffers, and they can also decide how long to keep them on board.
Comparing outsourcing and outstaffing
While both outsourcing and outstaffing involve hiring external providers to perform a function for a business, there are important differences between the two approaches. Here are some key factors to consider when deciding whether to outsource or outstaff:
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Cost savings
: Both outsourcing and outstaffing can be cost-effective ways for businesses to access specialized expertise and resources. However, the specific cost savings will depend on the nature of the function being outsourced or outstaffed.
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Control over resources
: Outstaffing gives businesses more control over their resources than outsourcing. With outstaffing, businesses can choose the specific skills and qualifications of their outstaffers, and they can also decide how long to keep them on board. This can be particularly useful for businesses that need a high level of control over their resources.
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Focus on core business activities
: Both outsourcing and outstaffing can help businesses free up time and resources to focus on their core activities. However, the specific benefits will depend on the nature of the function being outsourced or outstaffed.