What does outstaffing have in common with the Old West? To answer that question we need to look at the meaning of the word ‘headhunting’, which used to be quite literal back in the days. Nowadays, outstaffing is closer to this original meaning in a sense that it often takes the form of a chaotic hunt for candidates rather than intelligent recruitment.
The reason behind this is the rise of agency companies that receive outstaffing orders, check the availability of relevant specialists with their partners and then redirect them to the client for a fee.
This model may initially seem to be well designed, but in reality it has some major pitfalls. Firstly, these companies usually lack sufficient IT expertise to reliably find the most fitting specialists. Just like recruitment agencies, they can only focus on how the candidate’s CV matches the client’s requirements, but they can’t conduct technical interviews or accurately assess skills. This increases the risk of the candidate being rejected by the client.
Secondly, these headhunting agencies scout for specialists by word of mouth, meaning they exchange developer contacts with each other. As a result, the client may receive a CV of the candidate who had already been scouted by another agency company and went through the interview.
This business model is unlikely to have a promising future: after one unsuccessful partnership, the client will look for other options.
Outstaff and retainer
For outstaffing to be effective, it must be carried out by IT companies with a pool of in-house specialists or which have exclusive agreements with partners. Thanks to their broad expertise in development, IT companies are able to select candidates who will fully deliver against project goals. For example, we sometimes advise clients to use a different, more appropriate technology, which means getting a different specialist than the one they originally required.
There’s one particular type of outstaffing that has been getting quite a lot of attention lately, and it's called retainer. Under this model, the project team is managed both by the client and the contractor, whereas in traditional outstaffing this task becomes solely the client’s responsibility. Specialists engaged on retainer work full-time, or at least half-time. All of this allows for a closer and more effective communication between the parties.
Another thing here is that the company does not just hand over its staff to the client, but makes sure that they're in good hands. For example, before we actually start, we first enquire about the working conditions to learn more about the management process, find out who our employees will be interacting with, and understand the psychological atmosphere in the team.
Retainer and outsource
At this point you may wonder, “How does retainer differ from outsourcing, where the staff are also managed by the contractor?”
The difference is in flexibility. Outsourcing involves fixed rates, fixed deadlines, and a fixed number of tasks. The contractor undertakes to meet the deadline and the budget, and the client cannot impose additional requirements. With retainer, on the other hand, you have floating rates, flexible number of hours, and non-strictly defined number of tasks. Here the arrangements can be adjusted along the way.
A large project is difficult to outsource because it is hard to predict and estimate in advance. As a result, at some point you may realise that you need more time, more money, and more tasks to accomplish. In such cases, it would be more reasonable to work on a retainer model.
Overall, the retainer can be described as a hybrid of outsourcing and outstaffing – sort of a smart outstaffing, if you will. And it’s highly likely that this model will only gain more traction going forward.