Outsourcing and Outstaffing: Key Differences in the Approaches to Hiring Employees

Outsourcing and outstaffing are two common strategies for hiring external staff to perform tasks for the client company. Although both concepts involve the provision of staffing services, there are significant differences between them. In both cases, employees are placed on the payroll of the outsourcing or outstaffing organization, which is responsible for paying salaries and managing all personnel matters.

Outsourcing and Outstaffing: Differences in Approaches

The primary distinction between outsourcing and outstaffing lies in the contract. In the case of outsourcing, the employer enters into an agreement for a specific service, such as accounting or legal support. He doesn’t care who exactly performs the function because he is interested in the outcome, not in hiring a particular employee. The outsourcing company’s responsibility is to provide the necessary personnel for the task, ensure smooth workflow, and achieve the objectives outlined in the contract.

The situation differs in the case of outstaffing: the employer enters into an agreement to provide certain categories of personnel with specific qualifications, seniority, and other characteristics.

Hence, the difference between outsourcing and outstaffing pertains to the objectives. The first approach involves delegating a specific function to an external organization, while the second entails providing personnel for the execution of specific tasks.

Functional Features of Outsourcing and Outstaffing

Traditionally, it is commonly believed that outsourcing exclusively encompasses intellectual tasks such as accounting, design, IT, and personnel management. However, in practice, this definition is overly narrow and does not encompass the full spectrum of services that can be offered. The fields of work subject to personnel outsourcing are much more diverse and may include the following:

1. Warehouse maintenance.
2. Execution of minor construction tasks.
3. Performance of manufacturing operations.
4. Cleaning and janitorial services.
5. Transportation services and logistics, and so on.

Usually, various tasks are outsourced, apart from the company’s core business processes.

The differences between outsourcing and outstaffing lie in the fact that the latter approach allows for the delegation of virtually any type of work, including even an organization’s key business processes.

Distinguishing Between Outsourcing and Outstaffing in Employee Hiring

Understanding the difference between outsourcing and outstaffing is crucial for determining which method aligns with a company’s needs.

In the case of outsourcing, an organization delegated specific functions or tasks to a contractor who committed to delivering a positive outcome. This can entail a complete relief from responsibility for the performance of certain support functions.

Outstaffing, on the other hand, involves transferring a portion of the company’s workforce to a specialized agency. Employees carry out their duties at the same workstations but are managed by a staffing agency. This approach helps alleviate the burden on internal HR and accounting departments and deals with matters concerning salary payments, tax transfers, and other mandatory payments.

Why It’s Beneficial to Seek Outsourcing and Outstaffing Services from a Company

These approaches enable a company to:

1. Reduce financial obligations associated with taxes and social contributions.
2. Save resources that are typically spent on maintaining internal, non-specialized departments
3. Delegate all tasks related to hiring, training, and personnel termination to a service provider.

As a result, a company can significantly cut expenses by outsourcing functions or entrusting personnel recruitment to a staffing agency.