Outsourcing vs. Outstaffing: Which Is the Best Option for Small Business?

For the success of the whole enterprise, every process should be backed up by qualified personnel. Whether it is engineering, security, or other functions, your business will only have a chance if you fulfill your teams with the right people.

Unfortunately, not all companies always have the possibility to maintain large staff. Some, especially startups and small businesses, may find their natural resources scarce. That's when alternative management patterns like outsourcing and outstaffing come in handy.

What do these terms stand for? How are they different? And which one fits your business objectives best? In this article, we are going to answer all these questions.

What Is Outsourcing?

The name of this form of management is made up of outer, source and using. As you could already guess, the main concept behind this term is the use of an external resource to close the business's need for qualified personnel.

Choosing this form of management, an organization finds a reliable provider of personnel. Then, a business can pass over the responsibility for certain functions to another company. The other company has to operate in the desired field. The relationships between the two are based on an exclusive contract.

Currently, outsourcing has found a wide application in a variety of niches. These include IT, engineering, HR, law, and more. For example, a contractor can be anyone from an essay writer to a software engineer. This form of management is rather popular among businesses. It allows to secure smooth functioning of the core processes. Outsourcing can improve the efficiency of the enterprise as a whole.

Another big benefit of this approach is that it lets businesses to save a part of their own resources. This makes it possible to use the spare organizational, financial and human resources for the development of other tasks. Specifically, those that can't be outsourced.

What Is Outstaffing?

Unlike outsourcing that basically brings in personnel from the outer source to complement your business processes, outstaffing purposes to withdraw some specialists from the office personnel of the organization.

Using this management model, a business transfers a share of its human resources to an external agency. This implies that those specialists will have a different official employer. Meanwhile, nothing else changes for the workers. They continue performing the same roles for the same company but are registered in a different enterprise.

In most cases, the main goal of this action is to cut down the company's expenses.

Top 5 Distinctive Features

Both of these approaches are being adopted by enterprises, and each has its own purpose. However, before you can decide which one works best for you, it is vital to see the difference.

So, here are the main features that differ these concepts.

Outsourcing vs. Outstaffing: Which One Is Best for Small Businesses?

Now, as you know the difference between these two concepts, you are probably wondering which one is the right for your business. Since these two models generally have different purposes, the only way to make the right choice is by keeping your company's needs at the core.

Outstaffing will be a good choice for enterprises that strive to optimize their expenses. It enables you to reduce office expenses, optimize taxation, and reduce your overall spending by up to 30%. In the meantime, it can also help optimize internal processes and boost productivity.

Outsourcing is a good solution for companies that need to get certain tasks done. They may not have the relevant human resources or simply don't want to get distracted from more important tasks.

Which one is best? In conclusion, it is worth noting that, as a rule, those who resort to outstaffing are big companies employing at least 100 people. That's the case when it makes the most sense. Nevertheless, the final choice is yours.