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Body leasing or programming outsourcing in IT

Grzegorz Papaj, 3 December 2018

Body leasing or outsourced programming

Body leasing (employee leasing) is a form of collaboration with an IT company and outsourced programming or competence outsourcing are ways to extend the company’s IT department. IT duties can be also delegated to HR agencies, but then companies aren’t contracted with any particular software development company. There is also a solution called team leasing, which is a more advanced form of body leasing.

The labor market still suffers from a deficit of developers and IT workers. Is the internal recruitment process the only way to meet the increasing demand for IT specialists? What are the other options?

Problems with recruiting developers in IT

The developer’s recruitment process is a traditional way to fill the vacant posts and in some situations, it is the best way, especially when the company decides to create an IT department. Unfortunately, this classic model causes many problems. Nowadays, there is a fair shortage of developers and candidates are quite picky when it comes to job offers. Furthermore, it takes more time for them to decide on cooperation. At the same time, because of the employee market, already hired developers are more likely to walk away from their current workplace and move to other employers. Having an own IT department involves a constant risk of losing certain employees, which increases the costs of recruitment.

HR agencies

HR companies are a solution for those who have constant recruitment needs. There is an increasing number of HR companies, which often specialize in the recruitment of IT department employees. They are a good alternative to running your recruitment process. The costs can be lower and companies specialized in recruiting developers have the tools to verify their competencies. Unfortunately, the reality is often different. Usually, HR companies provide sets of seemingly good CVs with various sets of skills. Potential candidates rarely pass the competency tests of technical skills. That is why after receiving a list of CVs, the internal verification of “paper specialists” is necessary anyway. In practice, HR companies take over from companies only some of the problems related to job offers and initial verification. The rest remains the same. Recruitment companies are mainly in charge of placing job offers, as they know better where to do it. They do not solve problems with keeping developers and have little responsibility for the effectiveness of recruited coders. Their profit doesn’t depend on the projects’ success. HR companies very often offer a model similar to body leasing, in which they formally hire a person for the client. In practice, however, it has the same problems as classic HR services.

Body leasing

Recruitment in the company or using the help of a third party always involves some problems. Firstly, the recruitment process always takes time. What is more, employing for the long term isn’t always efficient. Sometimes it is better to find an expert who will work in the company for a short period of time, contribute knowledge and experience, and share them with the whole team. In such a situation, body leasing (employee leasing, team leasing) is a better solution. Formally, it is an external employee or team, so the company doesn’t bear the administration and staff costs. The solution seems to be perfect, but it is not always like that. Firstly, body leasing often does not differ much from HR companies. The body leasing provider sends the company a set of CVs. Companies that decide on body leasing have access to many experts at hand. Also, an agreement with a body leasing company is usually not a long-term commitment and gives the option to change the hired person.

Outsourced programming

Outsourced programming, as an alternative for body leasing, is the practice of hiring an external software development company to perform and manage certain tasks. It differs from body leasing, as all work is outsourced outside the company. In the case of body leasing, the project is managed mainly internally but implemented by external developers. Outsourced programming means lower control over the team and the project, as well as lower administration costs. The project is managed and controlled by an IT provider, so there is little information about it until the provider presents it for final acceptance. The main risk of outsourcing is choosing the right provider. Also, the necessity to prepare a detailed specification of the project to start talking with IT experts and then choose one of them always takes time. And of course, not every software development company will be able to develop a given project, especially when it comes to taking charge of maintaining another provider’s project.

Competence outsourcing

Competence outsourcing is quite a new thing on the market. This service is somewhere between body leasing and outsourced programming. In outsourcing, the parties settle accounts based on the fixed-price model, but competence outsourcing involves settling accounts based on the working time of specialists, just like body leasing. When it comes to body leasing, it is necessary to specify the parameters of the required specialist or specialists, and on this basis, the supplier presents a list of CVs. When competence outsourcing is on the table, the provider selects people for the project by itself, often changing them during the project if the need arises.

Competence outsourcing combines the best elements of body leasing and outsourced programming. It is also a service defined at a higher level. This means that the provider has a bigger impact on the implementation of works and the selection of solutions. In the case of body leasing, the company defines the need in this way – "I need an Android programmer with 4 years of experience". In the case of competence outsourcing, the company says – "I want to create a mobile application that will be used by ten thousand people every day and that will run smoothly." This completely changes the point of view and enables a provider to show its skills not only in the strictly technical area (code development). This company can also help in business-technical matters. A software development company may suggest a dev team to perform the required work or perform it in another technology (e.g., React Native).

So where is the catch? Of course, there is always a risk that the provider will not work as quickly and efficiently as it could. After all, it is in its interest that the project will last longer and bring more money. And probably some of the providers understand it in this way. However, it is in the interest of a good provider to fulfill their obligations reliably and to build long-term reliable cooperation. Any attempts to trick a client, in the long run, are easy to spot and usually lead to the termination of the contract. A reliable contractor will build trust with his client, knowing that transparency is the basis of this service. And it can be accomplished in many ways, for example by providing detailed hourly reports on completed work.

Summary

Which model of cooperation with IT specialists is the best? Companies have to answer this question by themselves. If a company wants to form (or expand) a permanent team, it is probably worth getting interested in direct or indirect employment. If the project is brief or the company is looking for temporary support, an analysis of the pros and cons of body leasing and outsourcing models will be a good thing.  The below table may be helpful.

ParemeterOwn IT departmentHR agencyBody leasingOutsourced programmingCompetence outsourcing
Settlement formwork timework time and brokeringwork timeeffectwork time
Administration costsstandarddecreaseddecreased   zero zero
Time of access to developersstandardshortenedshortvery shortvery short
Easiness of staff changessmallsmallbignot applicablebig
Managementinternalinternalinternalexternalinternal

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