Most of the IT companies provide with both employee outsourcing and project-based work. But in the majority, many of the people are not aware of the difference between both, often leading to problems between the client and service provider company.
On project basis work, the service provider will collect all necessary requirements from the client and further calculate the estimate. Later based on the estimation, the service provider will provide a proposal to the client and all the requirements will be freeze at the initial stage itself. In case, if the client needs any further changes in previous requirements, the service provider will raise an extra quote correspondingly. Secondly, on Project basis, everything will be under the timeline. The service provider makes sure that all mentioned works are completed within the fixed time frame and fixed cost. In case if the project exceeds the time limit, the loss will be met by the service provider and on other hands, if it gets finished before estimated time, a service provider will get the same amount and their profit much higher.
Under employee outsourcing, the service provider will provide an employee to the client upon request for a period of time. The outsourced employee will work like company’s other inmate employees. In this case, if the project takes more time than estimated, the client needs to pay more amount to the service provider in accordance with the extra time taken. Moreover, if the project is completed before time, they can stop the payment right there saving money. They need not pay any extra amount keeping mind the total duration of the project. In employee outsourcing method, the service provider is billing against the time of developer deployment, therefore client can change their requirement on the flow.
The cost will be higher under Project basis comparing to employee outsourcing. This is because, in project basis, the service provider will take all risk including technical risk, time risk, financial risk etc. In employee outsourcing service provider only agrees to provide a resource for the offered period. In employee outsourcing, the project management will be done through the client and the client is the one who is assigning work to the employee.
Normally the employee outsourcing method is better and cheap to the client, but when the client doesn’t have the technical knowledge and capacity to analyze the work, project basis seems better. Otherwise, it will be difficult to work out. Some clients only look into the price quoted and decides to go ahead with employee outsourcing method. But in reality, they don’t know about the difference between these two methods. In this case, they will argue about the project status and will argue that the project completion is a risk to the service provider, which often lead to an issue between them. In contrast, if you have enough technical knowledge and ability in analyzing and managing the work, you will end up in choosing employee outsourcing in terms of the financial and technical basis. This makes further implementation requirements smooth.
The comparison between an Employee Outsourcing and Project Basis is more like a construction work, where you can manage your work either on your own by hiring employees or via contract. In both cases, the work may get prolonged or reduced. Under the contract, if the work gets prolonged more than the estimated period, you can challenge them by questioning the integrity. As the client, you have the absolute power to question them. On the other hand, if the construction work is handled on your own, both profit and loss should be met by yourself. Project basis work is like a contract where there is a fixed charge set for the theme and Employee Outsourcing more like a self-supervision where you need to bear the additional expenses when time period exceeds than planned.
Below I am providing the comparison table between Employee outsourcing and Project basis, it will help you to understand the major differences between them at a glance.
| Employee outsourcing | Project Basis |
| Cost is low | Cost is very high as compared to outsourcing |
| Project risk (Time, Finance, Technical etc.) is taken by client | Project risk (Time, Finance, Technical etc.) is taken by the service provider |
| Project management will do the client | Project management will do by the service provider |
| A requirement will not freeze before starting the project | Requirements will freeze before starting the project |
| Billing for a resource utilization to a period | Billing for a predefined work |
| Service provider only agrees to provide an employee with a period | Service provider agree to complete the predefined work within a stipulated time and fixed cost. |
| Cost depends upon the worked time of deployed employee | Cost is fixed |
In recent, many of the IT companies preferred employee outsourcing from remote companies like Cybrosys. The advance reason is that employee outsourcing fits well into pockets by saving pennies. It is highly profitable comparing to hire workers on the project basis. Secondly, outsourcing reduces the headaches related to its working. While recruiting their own employees, a company needs to undergo all required infrastructure and add an employee to their payroll, which is costlier compared to employee outsourcing. Also, it is very difficult, time-consuming and costly to find and recruit the right people for the post. Through employee outsourcing method, a company gets hold of right skilled people without much difficulty. The employee outsourcing method is a headache less process too, because when they are recruiting their own employee and are fully dependent on that employee. Many cases, soon after the recruitment process and completion of the training, employees resign or take long leave stating different reasons. This often puts employer into trouble, as they will be into many committed projects keeping the new recruits in mind. In employee outsourcing method the service provider will agree to provide a skilled resource for a period.
Moreover, Employee outsourcing method is more suitable for small IT companies. At times these companies will have small projects in a run with duration of 3 or 6 months where hiring a regular staff for the execution seems impractical. The disadvantage of regular employee staffing is that; it leaves the company with unwanted expenses. Once the project is completed, the staff remains unutilized. Unless there comes another project in hand, this employee remains a burden in terms of money and other resources. On the other hand, with employee outsourcing, you can hire the skilled people upon contact and can be dissolved soon after the project completion, leaving no additional burden/ expenses. In short, employee outsourcing helps in effective utilization of company funds and resources.
Hope you understand the differences between Employee outsourcing and Project basis clearly. So before you proceed with your work, check thoroughly which one works better for you and choose the right method.