Choosing the right model: Software development outsourcing vs outstaffing

For many companies, finding the right software developers feels like an uphill battle. Deadlines slip, teams get overwhelmed, and projects stall because the talent simply isn’t there when it’s needed. The result is frustration, missed opportunities, and slower growth than anyone wants.

That’s why so many businesses turn to outsourcing or outstaffing software development — ways to bring in the skills they need without the long process and high costs of hiring full-time employees. Whether you want to partner with a software development team abroad or add a few remote experts to your existing in-house team, outsourcing and outstaffing offer practical solutions to pressing problems.

But which one is right for you? In this article, we break down the pros, cons, and real-world applications of outsourcing and outstaffing to help you find the best fit for your team and projects.

IT outsourcing market: State and trends

The global IT outsourcing (outstaffing included) market, valued at $600.9 billion in 2024, is projected to grow to $835.5 billion by 2033, driven by cost-saving imperatives, regulatory complexities, and demand for specialized IT skills.

Key drivers

One of the biggest reasons companies choose IT outsourcing is cost savings. Running an in-house IT team can be expensive, with costs piling up for salaries, training, equipment, and office space. By working with outsourcing service providers, businesses can cut back on these expenses while still accessing top talent from around the world. For industries like healthcare and retail, where profit margins are tight, this can make a huge difference in terms of staying competitive.

Regulatory compliance is another big driver. In industries such as finance and healthcare, the rules are always changing, and keeping up can be overwhelming and costly if you’re trying to do it all in-house. Turning to software outsourcing providers helps companies navigate compliance challenges without stretching their internal resources. These service providers bring specialized expertise, making it easier for clients to stay compliant and focus on running their businesses.

Speed is also key. Today, being the first to launch a new product or service can mean everything. Outsourcing software development allows businesses to bring in experienced teams and advanced tools quickly, so projects move faster. Whether they’re developing a new app or upgrading internal systems, outsourcing helps companies stay ahead of the competition.

IT outsourcing trends

The growing need for specialized skills and advanced tools is changing how businesses approach custom software development outsourcing. Technologies like AI, cloud computing, and cybersecurity are becoming essential. But building in-house expertise takes time and money that a lot of businesses don’t have. That’s why so many companies are outsourcing software development to Eastern Europe or Asia. Service providers in these regions offer not only affordability but also deep expertise in the latest technologies, helping businesses stay ahead without exceeding their budgets.

Outsourcing also allows businesses to refocus on their strengths. For a company in manufacturing or retail, running a full-fledged IT department can be a distraction. Delegating tasks like software development or cybersecurity to software development outsourcing companies lets businesses zero in on what they do best — whether that’s building great products or serving customers effectively.

Finally, there’s the question of flexibility. Business needs change quickly, and scaling an in-house IT team up or down isn’t always practical — or affordable. With IT outsourcing services, businesses can adapt on the fly. Whether you’re gearing up for a big project or scaling back during a quiet period, outsourcing gives you the freedom to adjust without the headaches of hiring and layoffs.

Defining outsourcing and outstaffing

Outsourcing and outstaffing are two distinct approaches companies use to address their software development needs. While both involve leveraging external resources, they differ in terms of control, responsibility, and use cases. Which model is right for you will depend on your project requirements, internal resources, and long-term goals.

What is outsourcing?

Outsourcing in software development involves hiring a third-party company to handle an entire project or specific tasks. The outsourcing partner takes full responsibility for the project or tasks, from planning and development through ongoing maintenance and support. This model is ideal for companies looking for a hands-off solution that lets them focus on their core operations.

For instance, let’s say that a startup launching a mobile app outsources the entire project to an external provider. The outsourcing company handles everything — design, coding, testing, and deployment — while the client monitors the progress without managing daily tasks. This arrangement could allow the startup to tap into a global talent pool while keeping costs predictable.

Outsourcing is particularly beneficial when developing large projects with tight deadlines, launching new products, or entering unfamiliar markets. It offers flexibility and scalability, allowing businesses to ramp up or scale down as needed without the long-term commitment of hiring full-time employees.

What is outstaffing?

Outstaffing (also called staff augmentation or team extension), on the other hand, is a model where companies hire external developers or teams through a third-party provider while retaining control over project management. Unlike outsourcing, where the vendor oversees everything, outstaffing integrates external talent directly into the company’s existing workflows.

Consider a mid-sized tech company developing a complex software platform that needs additional developers with expertise in a specific programming language. Instead of outsourcing the project, they use outstaffing to bring on skilled professionals who work as part of their in-house team. The company manages these external developers, ensuring they align with internal goals and processes.

Outstaffing is ideal for businesses that want to enhance their internal team’s capabilities without relinquishing control over their projects. It’s particularly useful for ongoing development efforts or situations where close collaboration between internal and external teams is essential.

Differences between outstaffing vs outsourcing

We’ve covered the basics of both models, but for you to make the best choice for your software development needs, let’s compare outstaffing vs outsourcing in more detail.

Purpose: Filling gaps vs delegating projects

If you’re looking to fill a talent gap quickly, outstaffing might be your best bet. Outstaffing allows you to bring in niche experts who integrate directly with your existing team, working under your management to help you hit project milestones. For example, if your in-house team lacks a machine learning specialist for a specific feature, outstaffing can solve that problem without requiring a full-scale hiring process.

On the other hand, outsourcing is about handing off an entire project to an external team. Whether you need to build a mobile app from scratch or modernize an outdated platform, outsourcing software development allows you to delegate the full scope of work. The outsourcing partner will handle everything from planning and design to development and deployment, giving you a complete solution without the need for day-to-day involvement.

Time: Quick starts vs comprehensive cycles

Outstaffing is designed for speed. If you already have a project underway and need extra hands, you can onboard outstaffed developers in weeks. This makes outstaffing an excellent choice for projects with tight deadlines or immediate needs.

Outsourcing, by contrast, typically involves a longer startup process. It requires discovery, planning, and detailed design before development begins. However, once the project is in motion, the outsourced team works independently to meet your goals within an agreed timeline, often delivering faster than an in-house team could due to their expertise and resources.

Cost: Hourly rate vs full-service pricing

Budget considerations are another major factor in the outstaffing vs outsourcing debate. Outstaffing is generally more cost-effective if you need specific expertise for a limited period. You pay for the hours worked, much like you do when employing freelancers, but without the hassle of managing payroll, taxes, or benefits — that’s all handled by the outstaffing provider.

Outsourcing can be pricier, since you’re paying for an end-to-end service, but it’s still far more affordable than building an in-house team from scratch. By choosing an outsourcing software development company, you get an entire project team — complete with a project manager, developers, and QA specialists — without the overhead of permanent staff.

Still, it’s important to note that today many software development companies charge clients according to the time and materials model rather than agreeing on a fixed price beforehand. This allows clients to pay for the actual work done, minimizing misunderstandings and allowing for better flexibility.

Control: Hands-on vs hands-off

Outstaffing gives you complete control over the team. You manage their tasks, set goals, and oversee their work as if they were part of your in-house staff. This approach works well for companies that already have strong project management systems in place but need additional resources to hit their targets.

With outsourcing, control shifts to the software development outsourcing services provider. They take ownership of the project and ensure it meets your requirements. For businesses that prefer a hands-off approach or lack the capacity to manage additional developers, this can be a more efficient way to achieve results.

What you get in the end

Outstaffing enhances your internal team’s capacity, giving you flexibility to scale up or down as needed.

It’s ideal for companies that want to maintain ownership of their projects while tapping into external expertise.

Outsourcing, meanwhile, delivers a comprehensive solution. Your outsourced team will manage everything from ideation to launch, ensuring you get a finished product that meets your needs.

This approach is perfect for businesses that want a full-service option without the complexity of managing the details.

Both models have their strengths. Understanding your project’s specific requirements and goals will help you decide whether outstaffing software developers or outsourcing software development is the right choice for your business.

Software development outsourcing and outstaffing prices

Now that you’ve (hopefully) determined what model is the best fit for your project, where should you outsource to? Should you look onshore or offshore? Many companies prefer outsourcing offshore as they can find affordable rates for the same quality as onshore development. On top of that, remote work is nothing new; nowadays you will likely work remotely even with onshore specialists.

But if you’ve chosen to outsource development offshore, that still leaves you with many options. You could outsource to numerous countries in Eastern Europe, Asia, Latin America, and other regions. How can you even know where to search first?

As a global software development company with offices and hubs in many countries, we would vouch for Eastern Europe for a few reasons.

According to Statista, revenue from the software development industry in Eastern Europe reached more than $14 billion in 2024, showing steady growth compared to $4.32 billion in 2022. This is due to the region’s highly qualified talent pool with strong technical education and supportive government initiatives. Plenty of well-known tech startups have originated in Eastern Europe, including Grammarly, GitLab, DocPlanner, and Zalando, to name a few.

What makes Eastern Europe especially appealing to enterprises from North America and Western Europe is not just its strong tech environment but also the diverse industry expertise. Software development providers in the region have extensive experience delivering projects across a variety of sectors, including finance and banking, IT, energy and utilities, healthcare, eCommerce, and business services. This combination of technical proficiency and sector-specific knowledge makes Eastern Europe a top choice for companies seeking specialized software development services and seamless compliance with industry requirements.

Software development outstaffing and outsourcing with Globaldev

At Globaldev, we believe that great partnerships are built on trust, shared goals, and tangible results. Whether you’re scaling your team with skilled professionals or outsourcing an entire project, we focus on making your vision a reality.

We understand that every business is unique, and that’s why we tailor our solutions to your needs. Need to fill a talent gap fast? Our outstaffing services will connect you with experienced developers who can seamlessly integrate into your team. Looking for a complete, end-to-end software solution? We will take your ideas and turn them into a high-performing product that is ready for market.

We don’t just fill roles; we provide the right talent to strengthen your team. With 85% of our specialists at the middle or senior level, you’ll be adding seasoned professionals who can make an immediate impact. And we know that time matters, so our in-house recruitment team works fast, typically filling vacancies within four weeks. Plus, with a robust 11,000+ candidate database and a 95% trial success rate, you can trust us to find the right fit for your crew.

Our work has earned us recognition, including the Clutch Staff Augmentation Award in 2024 and a spot on Clutch’s list of the fastest-growing companies, with an impressive 104% growth rate.

And when you need more than just extra hands, our outsourcing services are designed to handle the heavy lifting. With over 13 years of experience, a team of nearly 400 experts, and 150+ successful products under our belt, we’ve built complex software solutions that help businesses grow.

Whether it’s designing software from scratch, modernizing outdated systems, or integrating cutting-edge technologies like AI and cloud solutions, we bring the expertise and tools needed to deliver top-quality results.

Our work speaks for itself. Globaldev has helped companies across healthcare, finance, energy and utilities, eCommerce, and other industries achieve their goals.

When you work with Globaldev, you gain a partner who thinks about your success as much as you do. Together, we’ll build the solutions you need to move your business forward — faster.