At first glance, IT outstaffing seems like the least labour-intensive way to complete a project when you don’t have the necessary in-house staff: all you have to do is find a reliable contractor, explain the tasks, and negotiate the rates and number of specialists.
If this approach seems perfectly fail-safe to you, try to imagine yourself a few centuries ago as the captain of a deep-sea vessel in search of a crew. Let’s assume that in those days there were also contractors that offered a kind of maritime outstaffing: you pay the doubloons, they provide you with all the sailors you need, from the boatswain to the cook. And now consider the following: It’s the 18th century and you’re steering a wooden sailing ship. There’s no automatic navigation, no rescue operations, and no way of communicating with land. Your journey will take several months. Essentially, the success of the voyage depends on your crew. How thoroughly will you vet your potential crewmates and negotiate terms to ensure that everything goes smoothly and you’re not told to walk the plank by a bunch o’ mutineers?
The same principle applies to the outstaffing of IT specialists: while you don’t risk meeting an untimely demise on the high seas, you could still very well sink a project if you fail to discuss all the details while still on shore. In short, there’s a lot of groundwork to be done before signing a contractor agreement.
Is outstaffing right for you?
Let’s start with the big-ticket question: are you sure that you need outstaffing as opposed to in-house or outsourcing? We’ve already covered the advantages of these models and the differences between them in one of our articles, but to cut a long story short: in-house is when the project is done by your internal team; outsourcing is when you hire an external team on fixed terms; and outstaffing is when you hire an external team on flexible terms.
Once you’ve chosen the model and found a contractor, you’ll need to discuss the tasks, the tech stack, the pool of specialists required, and the deadlines and KPIs – all of which will be set out in the contract. However, there are some less obvious but essential points that are often overlooked.
#1. Who manages the process?
Outstaffed specialists are usually managed by two people, one from each party. The first step is to establish whether you have such an in-house expert – not just a manager, but someone with the necessary skills to steer an external team. If you don’t, there is a potential conflict of interest because the management will be entirely in the hands of the contractor, who may start generating more tasks to inflate the budget.
This conflict can be avoided by using a retainer model, where you specify all evaluation criteria, KPIs, approximate budget, and deadlines up front.
#2. Will there be an in-house team?
If you’re looking at outstaffing as a temporary measure until you’ve recruited your own specialists, it’s important to discuss this with the contractor. This will help define deadlines and metrics for both you and the external team. In other words, you specify who will be engaged and at what stage of the project, enabling both parties to improve task planning and workload management, as well as limit uncertainty and chaos.
#3. Preliminary assessment
When it comes to large projects, it’s obviously difficult to evaluate all the work and resources required in advance. But if you have some rough estimates, do ask your contractor to preliminary assess the required amount of hours, at least approximately. This will give you an overall idea of the budget and protect you from unpleasant surprises, such as finding out that one of one the tasks will take a thousand hours to complete. If your budget is not big enough, you can adjust the scope of work beforehand, rather than changing everything in the rush of actual development.
#4. Additional bonuses
Clients sometimes offer additional financial incentives to external teams – bonuses or cash payments for meeting certain targets. The terms of their payment need to be set out in the contract: if they’re only discussed verbally, you and the contractor might get different expectations. And when it turns out in the end that you’ve misunderstood each other or have different recollections of what was said, this could lead to conflict.
Competency check
It’s good if you remember all these details: who’s going to manage the team on your side, will you be hiring in-house staff, can you give a rough estimate of the workload, etc. But it’s even better if these questions come directly from the contractor during preliminary negotiations. If this doesn’t happen, it’s a cause for concern: chances are, a company you’re dealing with probably doesn’t have much outstaffing experience. And even if they have excellent developers, you may still run into organisational or financial problems during this partnership – the quality of services depends not only on the team members, but also on process optimisation.
Still, staff competence is one of the most important criteria when choosing an outstaffing contractor. Before you proceed with development, you need to interview each specialist and get a detailed understanding of their hard and soft skills.
If you don’t have someone on your team with sufficient technical expertise to assess the skills of particular developers, your head of the project and the manager of the outstaffed team will need to discuss each person’s competencies, area of responsibility, and their interaction with each other. Sure, this may take many hours and even require several meetings, but such discussions are an integral part of the prep stage. Going back to our ship, a captain can’t neglect to get to know his crew – otherwise, somewhere on the high seas, he risks discovering that he’s been sailing in the wrong direction.