Difference Between Outsourcing and Subcontracting- Take Your Pick

Though Outsourcing and subcontracting are both widely utilized in entirely different industries, the models have enough similarities to work out in the software industry effectively.

So today, why not find out the differences between outsourcing and subcontracting so we can find out which model can help you manage projects better?

Advantages of Outsourcing

• Helps lower the cost of labor when sourcing team members from countries with lower costs of living
• Allows better product delivery by allowing the recruitment of top-of-the-line developers
• Reduces repetitive tasks to automation, optimizing workflow
• Frees up the internal team to focus on core business procedures
• Creates higher team morale with proper task distribution and reduced workload
• Allows better scalability and flexibility in the case of team infrastructure
• Helps to match seasonal demands by upscaling the team whenever needed

Disadvantages of Outsourcing

• Design quality might suffer in the long run
• Delayed feedback exchange and implementations can prolong development time and delay final delivery
• A company’s image or brand reputation can receive negativity if partnered with an unreliable outsourcing vendor
• Data security might become a huge concern

Advantages of Subcontracting

• It’s a cost-effective option
• Subcontractors only get paid for the amount of work completed, increasing total saving
• The client doesn’t have to offer additional benefits to subcontracted employees
• A subcontractor always put all their skills to work to ensure better product quality
• A good subcontractor issues an entire strategy after hearing all the concerns and before signing the final contract
• Subcontracting increases productivity, helping to reach deadlines more efficiently

Disadvantages of Subcontracting

• High dependency on the contractor can take away governance of the project
• There might be a lack of coordination between the contractor and the client
• Lack of quality from the subcontractor causes the client to suffer

Outsourcing vs. Subcontracting: Final Comparison

Parameters	Outsourcing	Subcontracting
Type of Strategy	A cost-cutting strategy where a business wants to receive the same output for a lesser cost	Is a strategy where a business hires a third-party individual or team to perform special business operations that isn’t internally possible
Duration	Generally done on a long-term basis	Done temporarily
Control	The service provider creates the contract but has less control overall	Service providers can negotiate all details and distribute control between the subcontractor and the client
Sectors	More prevalent in the IT industry	Works better with construction and large-scale industries
Chain of Command	A direct chain of command between the client and the vendor	Company contacts with the contractor, who conveys the information to the team
Project Scale	Can be used for both smaller and larger projects	Is mostly applicable to large-scale projects

Which Method Should You Choose?

Though the choice is always situational, we suggest going with outsourcing whenever possible since it’s a more flexible process that can save costs while delivering the same scale of work.

But if you’re a larger company and going for a long-term project that requires constant operation, subcontracting is the perfect fit for you.

If you’re planning to outsource your project to a trusty vendor for all the right services for the right cost, Impala Intech can help you with 

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