Outstaffing is a personnel management method that allows you to “rent” employees from a specialized agency.
How Outstaffing Helps to Solve the Problem of Shortage of IT Personnel
Outstaffing is a method of organizing work with different employees. The outstaffing agency employs specialists who work for another customer – the employer. The abilities of such a specialist have already been verified, and there is no need to search for and verify him. At the same time, he is 10-20% more expensive than an employee from the street – which is what makes up the agency’s commission from each specialist’s salary.
The outstaffing agency provides employees and bears full legal responsibility for them. It pays them salaries, calculates taxes, keeps personnel records, transfers contributions to social funds, and resolves non-standard situations. And the staff works for the company that pays for these services. SECL Group knows everything about outstaffing and Body Leasing and is ready to share the experience.
How Does Outstaffing Work?
- The client sends information about vacancies to the outstaffing company.
- The client signs the contract, and the personal manager initiates the selection of employees.
- The outstaffing company selects suitable candidates and provides customers with information about them, including the rate.
- The client-company interviews candidates and selects the most suitable for the project.
- The outstaffing agency sends an invoice for payment.
- The parties determine a convenient format for reporting, setting tasks, checking work results, and formalizing the possible reasons for paying fines.
- If necessary, some IT-outstaffing agencies replace employees free of charge.
Specialists start working with customers remotely or in the office. And the out staffer deals with accounting and personnel accounting, pays salaries, and resolves labor disputes. When the project ends, the customer notifies the agency and stops paying for the work of its specialists.
Next, the agency selects a new project for its employees. Since there is a lack of specialists on the market, as a rule, there are no problems with this.
Outstaffing Is Used by Companies of Different Levels
In the 1990s and early 2000s, outstaffing was used only by large organizations, but now it is used by both medium and small companies. Outstaffing is a popular alternative to outsourcing, where a third-party company does everything itself, and the customer cannot control the work of specialists.
In the USA, the largest outstaffing market, the service is used by 1.7 million companies – from small shops that need cleaning staff to startups from Silicon Valley that want to get IT quickly, specialists.
Japan has gone even further in outstaffing, where only a third of the company’s employees are top management and a few critical specialists. A recruitment agency hires the rest.
When Is Outstaffing Especially Beneficial?
You don’t need to look for employees for a long time – you can hire them from agencies for several months or years. There is no need to worry about wasting time and money if the employee is unsuitable – the agency will replace him for free. Outstaffing is most beneficial in the following situations:
For Temporary Projects
If the staff is needed for a few months to implement a specific task, there is no point in looking for it for a long time and arranging it. That is why IT outsourcing has become so popular in recent years: companies use it to develop a website or application, after which they say goodbye to part of their employees, leaving only a small team to support the project.
Also, with outstaffing, hiring specialists for a specific project is convenient. Large banks quickly hire personnel for the accelerated development of intra-corporate startups. It is usually more profitable than outsourcing. It is difficult to accurately calculate the cost of a complex project from the beginning – outstaffing guarantees the absence of overpayments since the customer pays only the hourly rate of employees.
In addition, there is no need to consider the nuances when drafting the task. Standard practice – when the customer has questions or wishes during the project, the outsourcing company demands an additional fee or refuses to complete the project, referring to the task. With outstaffing, the situation is different, and the customer can dispose of the personnel as freely as with their employees: they will be redistributed to another project and given other tasks.
According to the outstaff contract, it is most profitable to hire highly paid and rare specialists, including:
- Backend and frontend developers;
- Programmers for iOS and Android;
- UI/UX designers;
- SMM and SEO specialists;
- Marketing analysts.
Agencies providing IT outstaffing are well aware of the skills and specialization of their specialists, so the customer can save time and money searching for suitable candidates. Specialists work only on the customer’s project, so they can pay more attention to it and delve into the details.
Focus on the Development of Core Business
This is the most crucial reason for outstaffing abroad – it is more important than reducing costs. Companies for which IT, cleaning, or technical service are not their area of expertise find it easier to hire relevant ready-made specialists.
Sometimes – most often in foreign startups – outstaffing solves the problem of overall hiring in the company. This allows employers to significantly reduce the accounting burden and completely abandon the HR department. At the same time, managers and executives will pay more attention to critical functions: procurement, logistics, renting premises, attracting investors, etc.
Reduce Personnel Costs
The savings go to the selection of specialists, the salaries of the accounting department, and the personnel department. Outstaff employees do not need to pay insurance and severance pay. They can be fired at any time without risking sudden costs.
Hire Employees Who Are Not Easy to Attract
Outstaffing is convenient for hiring foreign specialists: there is no need to solve issues with documents and registration.
Therefore, European IT outsourcing companies are very popular with foreign customers. Startups from the USA and Great Britain can get relatively inexpensive labor without burdening themselves with bureaucracy. Yes, the average rate of an experienced programmer is $35 per hour, while in the USA, it can be $55.
Outstaffing is mainly used in cases when the company:
- Reduces personnel costs;
- Plans to focus on core business;
- Wants to find a rare specialist.
Outstaffing has become one of the full-fledged alternatives to outsourcing and staff hiring. At the same time, it should be remembered that only certified agencies with sufficient capital can sell temporary labor, which limits the number of prominent market players.