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Staffing: Outsource vs. FTE

Projects are the lifeblood of an IT organization. Prioritizing projects are sometimes based on business drivers, like mergers & acquisitions, application development, or in some cases, refreshing legacy IT assets, all of which can be a very costly endeavor. Once these projects have been identified, companies can determine their staffing models.

Outsourcing providers generally work on one project at a time, for firms that may need assistance around business development that heavily centers on tech initiatives. These providers are also responsible for the entire project, from management to payroll, to complete customer satisfaction. Outsourcing refers to the complexities and overall support of an entire project.

As projects run over, additional costs such as overtime, insurance, and benefits do not fall on the company. So, a pro to outsourcing is that companies can focus on core business activities while the outsourcer works on the delivery of the project. Some cons of outsourcing can be lack of integration within your own company, which can cause additional time spent on communicating project pressure points and expectations. Additionally, project control is given over to a third-party agency which limits the customer's ability to control the end product.

Full Time Equivalents (FTE), also known as outstaffing, are responsible for only the qualified personnel that they provide to the customer. Think of it as “renting” your IT professional. In some cases, the IT pro can be hired for as long as the business requires their services, may work onsite, and may eventually be hired by the company. Outstaffing is about hiring individuals.

With outstaffing, companies have the benefit of hiring a vetted IT pro without having to pay the overhead of benefits, taxes, insurance, etc. The also have the flexibility to increase and decrease the number of specialists they hire to work on projects. Some cons to outstaffing may include communication problems between project managers and employees who work remotely, many times offshore.

So which do you choose? Both options can provide quick and actionable results for companies that either don't have the technical knowledge to fulfill their own development initiatives, or for companies that don't have the in-house manpower to properly execute on initiatives.