Did you know Nintendo didn’t code the original Donkey Kong arcade game? While legendary Shigeru Miyamoto designed it, the code was delegated to the small firm Ikegami Tsushinki. These delegation practices, according to a study from NC State University, go as far back as the 1950s.
This concept isn’t limited to the IT industry. Delegating work or sharing your work to make it easier for yourself is the basis of outsourcing and outstaffing. These solutions are only rising in popularity. Two factors for their growth are the pandemic and the growth of cloud technologies. After the pandemic hit, many companies decided to delegate the work they couldn’t do in the new conditions. Companies today still want to optimize resources, but the key to that is understanding the concepts and distinctions between outsourcing and outstaffing your project.
Outsourcing vs. outstaffing
Outsourcing is an agreement between two companies where the first one hires the second one to be responsible for a planned or existing activity. This activity is often part of a bigger project. By outsourcing, the first company is now able to focus on the remaining parts. Whether it’s for focusing on critical activities, lack of personnel, or workload reduction, this agreement can drastically help companies.
While outstaffing is a similar agreement between two companies, it entails that one company hires external personnel via the second one. The second company acts as the employer of the outstaffed personnel, paying their wages, bonuses, and even equipment. Meanwhile, the first company can involve this personnel in any task or assignment, not limited to one part of the project. As a result, the first company increases its workforce, often with experts, without the complexities of expanding.
Back in 2013, Trustwave reported that 63% of all data breaches were due to bad outsourcing. Its CEO, John Yeo, explained that while outsourcing is not a bad practice, “organizations that do get breached have probably made some bad outsourcing decisions.” If specific parts of the project can or need to be delegated, you could go for outsourcing. Otherwise, if you want to have control over all parts but are lacking the workforce needed, outstaffing may be better. To make that informed decision, it’s good to have a careful analysis of the pros and cons in light of your specific situation.
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