If you don’t have enough available resources to launch your project, what would you do? Except for quickly recruiting new employees to fill the project, you should consider two types of methods for outside skilled resources: full outsourcing and subcontracting. So what is the difference between these strategies and which is better for your business context? Hope you will clearly know after some points below.
Understanding terms
Full outsourcing, or end to end solutions, refers to the process that a system or service is carried out from beginning to end without assistance from a third party. A solutions provider strives to deliver a fully functional system, service, or project from start to finish. For example, there will only be one vendor supplying a system’s software and hardware components including installing, implementing, and maintaining a new technological system.
While subcontracting refers to the practice of bringing in an outside company or individual to perform specific parts of a contract or project. In most cases, a company subcontracts another business to perform a task that it’s too hard to be handled internally or takes a lot of effort to do. In the IT industry, it can be understood as a method of outsourcing a part of a project or hiring a dedicated team to do specific tasks or modules of a software.
Examples
For example, you would like to build a web application for your Ecommerce website and the process includes initialisation, design, app development, testing, deployment and maintenance. So you can find a trusted end to end solutions provider to take on all steps of this process. And all you have to do is help them be clear about your idea and requirements as well, building your other teams such as business development to promote and sell your products. By this way, it’s not essential to have your own tech team and too much programming knowledge.
In case you own a business of developing software and projects need to be launched in a short period of time. However you do not have available and suitable resources to do it on time. Solution for this case is that you could find an outside team of developers that meet your requirements and have a contract with them in a short time till the project is done (e.g design team). This helps you have enough skilled engineers to build your software within a predetermined time without hiring new one, which is a waste of time and effort.
In general, the full outsource method is used to designate in-house functions to a third- party provider while the other method is mainly used for highly specialized tasks that are hard to be done inhouse. Outsourcing is applied for cost-cutting purposes for a long-term or permanent engagement. Whereas, submodule outsourcing is usually considered for time-bound large-scale projects by a temporary engagement with clear-cut end dates. The terms of payment of the second type are often fixed instead of flexible as the first type. Check the table below for a brief understanding.
Benefits and drawbacks
Although there’s not too much of a clear difference between the two types, business owners should have a sound understanding of benefits and drawbacks for planning the right strategy for business.
About Outsourcing (full or one-stop service)
- It helps companies to cut down their overall costs by performing the same task for lesser money.
- It allows the firm to focus on their core functions.
- It can help provide a better quality of product or service.
But
- The company may end up in losing managerial control.
- There may be issues like improper communication and time zone difference between the two parties.
- Outsourcing may lead to hidden costs and quality control issues.
See more about Outsourcing and In housing, Which’s better?
About Subcontracting (outsourcing a part or some modules of projects)
- It helps companies to handle large projects with greater ease.
- It is comparatively less expensive than hiring employees on a full time basis.
- It helps to bring specialized expertise to the business that is not present among their employees.
But
- The team does not have the same training as your staff, so their style and methods may not blend with yours.
- It may take time and effort if you need many subcontractors in a long time that affect to quality of output.
Which type is suitable for your business?
Both outsourcing and subcontracting have their benefits for any company in the long run in terms of cost and time efficiencies so there is no fit-all answer when it comes to the right approach to opt for with your important project. It’s up to your business strategies and financial situation. But no matter which type you approach, the most important element that directly affects your business is finding a trustful, professional and dedicated provider to cooperate with.
SETA International is one of the leading software companies in Vietnam providing one stop software development services with high quality, efficiency and competitive cost and being trusted by international clients for the past 14 years like Amazon, Pfizer, American Airline. We provide IT consultation and IT outsourcing services for AI, VR/AR, IoT, mobile, web and cloud.
If you are looking for a trustworthy partner for dealing with your technical problem or in need of an IT consultant, let’s talk to SETA’s expert via contact@setacinq.vn
