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Outstaffing vs. Outsourcing vs. Managed Services: Hire the Right Team for Your Software Development Needs

Krunal Shah

Aug 13, 2021

9 min readLast Updated Jan 23, 2023

outstaffing vs outsourcing vs managed services

Technology has made it possible for software development organizations to grow more quickly than ever before. However, staffing remains a common barrier that many people still face. Your company's ideas may be best in the business world. But without the right team, even great ideas wouldn’t work. Along with the ideas, companies also need the right people to execute them in a way that is cost-efficient, time-saving, and competitive. This is where qualified professionals can help. They can breathe life into your idea and make it come alive.

The goal should be to find qualified experts for your company. But finding these people is difficult and can take a lot of time and effort. Outsourcing, outstaffing, and managed services come to your rescue at this point. This blog will discuss everything related to outstaffing, outsourcing, and managed services in detail. You would have enough idea which service would be a good fit for your organization until the end.

What Is Outstaffing?

Outstaffing Model

The easiest model to understand is outstaffing. It's exactly what it sounds like: a company's business model is hiring out the skills of others. Outstaffing comes in handy when a company is shorthanded and needs more developers. It is best suited for projects that require a quick start.

The Approach

The outstaffing approach allows you to take on the day-to-day tasks of a software development team without needing to hire new employees. Whether you're on your first project or it's the thousandth, defining the project's scope is still the most common pitfall that companies need to focus on beforehand.

If you're considering an outstaffing approach, you have complete control over the management of your team. The team inherits existing management structures. It includes everything from the same tracking tools, methodologies and communicates similarly. The code repository, environments to deploy your applications, and automation tools are all under your purview. With outstaffing as your approach, you control and prioritize what happens.

The Value

Also known as staff augmentation, in our staffing, the manager is employed by the client. They have the ownership of overseeing products, budgets, and terms. For the businesses looking to adopt this approach, outstaffing requires little organizational complexity. There are many competitors, and it's often price-based. Vendors compete with each other for small clients. This approach works on the concept of hourly costs in addition to the model. The clients purchase the work hours, and the providing companies gain profit according to the number of hours they sell.

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Why Should You Consider Outstaffing for Your Software Development Needs?

Highly productive

Outsourcing is a strategic business decision that many companies make. Releasing your employees from working on tasks outside their strengths can help you grow your business and make better decisions. You will be able to generate strategies to increase revenue because you focus on your core business activities.

Enhances efficiency

Finding the right outsourcing company is vital for your business. The experts in the business process or service you want them to do will help you attain a great quality job, be more productive and efficient. In addition, outsourcing can lead to cost-savings in your business. You may use that leftover money for business progression and investments in other areas of your company.

Competitive Edge

Outsourcing enables you to reach new opportunities that were hard to access before, including affordability, capital, and accessibility. Furthermore, you'll get a competitive edge by utilizing third-party vendors as well as your whole supply chain.

What is Outsourcing?

Outsourcing Model

Software outsourcing is when a company delegates one of its business needs to a third-party provider. These needs could be categorized according to the three models of outsourcing - staff augmentation, dedicated team model, and project-based model. And that’s why it's essential to identify the gaps, capacity and address them before finding the right development partner.

New technologies, methodologies, languages, and practices need an innovative global strategy like outsourcing to set the course for digital acceleration. For example, when a company doesn't have the coding skills themselves, they can hire a development team to perform these tasks. Outsourcing is not only for development teams but also for different technologies and platforms that a company may not have the expertise in.

The Approach

There are two main management structures in this approach: the client-side and the vendor side. Client-side product management, program management, and team leaders are in charge of organizing and managing everything from the original project idea to its end result. The vendor's responsibility is to provide proxy managers who ensure the quality of the outsourcing process.

The idea of management in a contractor company can be both a blessing and a curse. It allows people in managerial positions to set standards and measurements for their employees to follow. Moreover, they are responsible for complying with these standards and making sure they hit the company's KPIs.

The Value

When you outsource work, you're saving the time and energy of your team. You're also getting access to experts and processes that exist within other companies. You can do this by hiring a company with prebuilt solutions, technical guidelines, and more. The end result is increased efficiency and cost savings. Plus, there's a major revenue pro to outsource work: it's easier to scale your business when you have more margin from lower costs.

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Why is outsourcing a beneficial route for companies?

Expanded Capabilities

Outsourcing allows you to hire more help without having to hire more people full-time. It enables you to expand your capabilities with your existing IT team. And yet, it retains all of the control that comes with hiring an in-house team.

Full Control

When companies outsource software development, they can solve their staffing challenges in a cheaper way than hiring staff. Further, it also translates into a lower market price and enhanced competition.


Companies are now using outsourcing for more than just saving money. An array of objectives, such as improving quality and lowering costs, are among the goals of outsourcing software.

What are Managed Services?

Managed Services

Many businesses follow this approach to take some burdens off their shoulders and want a 24-7, hands-on approach. Managed IT service providers take over IT operations and design a solution tailored to the business' needs. This includes 24-hour monitoring, managing, and problem resolution for all IT systems. Before you choose a partner, it's important to ask them the right questions about their qualifications and ability to scale.

Managed Service Providers (MSPs) can use software to work towards two major goals. First, they'll be alerted to anything that may cause a customer symptom or risk, both before and after it happens, and will know about it. Second, every notification they receive is important and needs instant attention.

The Approach

Managed services can help your business stay afloat and free of costly downtime. The most important is that you'll take care of potential problems before they can affect your business and ruin your computer network. With proactive maintenance, monitoring, and optimization, your network will run smoother and better than before.

When you hire a managed service, your business lets go of the old-school tradition of breaking things and then fixing them. It enables you to be proactive and make sure the issues never happen in the first place. Instead of waiting for a looming disaster, a business with managed services ensures that employees are never interrupted. These days, businesses should have a plan for every eventuality - and this includes technology. Managed services have a focus on prevention to avoid interrupting its employees in the event of an issue.

The Value

Managed IT services offer a diverse range of remote IT help, including 24/7 support and on-demand assistance. Organizations can take advantage of these managed services to reduce their in-house IT workload or fill gaps in staffing, such as with IT skills. These services are for on-premises computers as well as private cloud storage.

As a company, your IT is an integral part of your operations. Managed IT service providers can reduce in-house overhead and boost IT efficiency. Plus, by offloading IT services to a third party, your company can improve its uptime management. Reviewing data protection policies and procedures also ensures that your managed IT provider complies with international standards.

Read More: How To Outsource Software Development Projects The Right Way

Why is Managed Services a Future-defining Business Model?

Lesser technical errors

Your technology should be running like a well-oiled machine, without any technical issues. That's why your managed service providers will be there to take care of everything. They'll constantly monitor your IT and detect any abnormalities early on before they become a bigger problem for the company.

Support from Experts

A managed service provider company will offer all the technology you need for your business, from servers to workstations to software. You will use these services for an agreed price and stop spending on expensive technology. You will get the latest services and solutions while you let experts take care of all IT functions.


Companies can use them to free up personnel or relieve stress on their IT infrastructure. When a company provides a contract, it should be able to highlight the specific technological services they need. Managed services are more holistic and can serve as a low-cost alternative to hiring an in-house IT team.

Read More: What is better: in-house mobile app development or outsourcing app development?

Two Different Models followed by Software Outsourcing Companies

Onshore vs offshore software outsourcing companies

Outsourcing is a popular way to bring in new ideas and innovation. In addition to web and mobile app development, typical outsourced services include cloud computing, robotic process automation, and artificial intelligence. These technologies are becoming mainstream in the industry and will have an impact on the future of business. Outsourcing software projects can be done by working with vendors across the globe.

Onshore Outsourcing

Onshore outsourcing, or when a company outsources to a company in the same country, has its advantages. Communication is much easier, and outsourcing becomes more effective because there are virtually no language barriers. The con of onshore outsourcing is that customers usually have to pay more.

Offshore Outsourcing

When you need to grow a team quickly, it's worth considering offshore outsourcing. As your team expands, there's a lot to manage: visas, payroll, health insurance, office space. It can be especially challenging to coordinate time zones. In offshore outsourcing, online communications channels like Zoom video conferences (or even just good old email) make it possible for you to stay connected with members of your team without worrying about the time difference.


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Why Choose Third Rock Techkno as your Trusted Onshore Outsourcing Partner?

It's important to align your business goals with your needs when choosing an IT services provider. That's why asking the right questions is critical. Trustworthy service providers will give you straight answers. If the terms are vague or confusing, you may have a costly misunderstanding on your hands with an unscrupulous company.

Remote work led to a surge in successful outsourcing cases. The current circumstance has brought this to the forefront, as companies have to run remotely due to the disaster. Business owners realize that remote work and outsourcing make a difference when they're in crisis mode. Third Rock Techkno is a top-ranked IT company. Our goal is to bring client success and keep up with the latest in technology. We have over ten years of experience in voice, web, and mobile app development, and we are constantly learning about the latest trends.

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Krunal Shah

Krunal Shah is the CTO and Co-founder at Third Rock Techkno. With extensive experience gained over a decade, Krunal helps his clients build software solutions that stand out in the industry and are lighter on the pocket.

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