Outsourcing Companies vs Service Agencies – Be Aware of These Differences!

Anna Khrupa by Anna Khrupa on September 19, 2016

Outsourcing Companies vs Service Agencies – Be Aware of These Differences!

Want to make more profits with fewer investments? Try outsourcing some of your business processes and make them less time- and money-consuming.

Yeah, it’s really as simple as that!

Some even say that you should outsource any process as long as you do not feel emotionally attached to doing it on your own.

There are multiple core business processes in any company that could and should be outsourced. However, when it comes to moving your processes outside, you may have several choices.

Software outsourcing services differ. There are various types of contractors that you may meet in the market and some of them are structured better than others.

At some point, you have to ask yourself whether you need to hire an independent freelancing contractor or a service agency. The question is frequently trickier than it sounds. What are the differences between outsourcing companies and small service agencies?

First, let’s draw the line between these terms. We will refer to outsourcing companies as to developed organized commercial structures that can perform multiple functions at once and cooperate with several enterprises simultaneously.

Service agencies are smaller companies usually consisting of several team members; such companies usually work with a couple of clients simultaneously and mostly focus of specific business processes.

Difference #1. Specialization.

Service agencies: oftentimes, these companies are deeply specialized in specific processes and can deliver high quality results. Such companies are founded by high profile specialists who try to nurture their teams and tailor their skillsets for specific operations.

There are agencies that focus solely on marketing, content creating, content management, web development, etc. Such narrow specialization allows you to expect good results.

Concentrating on one specific service, however, has its own flaws. Usually, such teams cannot run multiple different processes at once or have little to no experience in the domains outside of their comfort zones.

This drastically reduces their potential scope of outsourcing. Their clients have to split their IT-related processes between multiple agencies. Managing so many contractors is tricky and forces enterprises to organize their own vendor management offices that can drain the budget quickly.

The more agencies and contractors you cooperate with the bigger staff you will need to oversee them.

Outsourcing companies: Big teams can cover more processes and can be highly efficient in multiple domains at once.

Small startups that need outsourcing may be pleased by flexible pricing and automated solutions frequently offered by huge outsourcers.

However, the quality of certain services may be lackluster. You cannot expect outsourcing companies that serve multiple clients to focus heavily on separate small clients. Despite their marketing slogans, big companies usually have lesser talent.

This disables potential collaboration options. You may be interested in creating a software solution that has specific functionality and a strong backend.

Development outsourcing is a perfect solution

Our project managers, developers, business analysts, and QA experts, always achieve uncompromising software quality.

A big outsourcing company can definitely provide both development and backend, however, the overall quality of the product may be not that impressive unless you know how to work with them.

If you ask a specialized team to develop software and rely on another contractor to create a stable backend – the result may be much more efficient.


Difference #2. Selection methods.

Service agencies: Usually, it is hard to find a good freelancer for the job. You need to analyze multiple offerings from sole specialists and browse through their portfolios before making the decision. Imaging is the same.

However, this time you will have to analyze relatively big teams of professionals. This is also time-consuming. The process of selecting the best contractor can be exhausting and inefficient in the end. While there is a lot of talent out there, finding the real diamonds in a pile of glass pebbles is very hard.

On top of that, service agencies often consist of several specialists and their skillsets differ drastically. This means that you do not have the full picture. As mentioned above, service agencies prefer to specialize in specific processes and services. This means that selecting the right agency is even more important!

You cannot rely on a contractor who may fail to deliver a satisfying level of quality.

Outsourcing companies: Searching for a good outsourcing company is much easier. There are various companies available and most of them have expansive portfolios, corporate websites, interesting ongoing projects, etc.

At the same time, you can find a good outsourcing partner in Ukraine or Eastern Europe in general. These guys cost less, communicate well in English, and can certainly cover a wide spectrum of services.

If you want to find a contractor who manages themselves and performs multiple business processes at once, you should definitely choose working with an outsourcing company that specializes on providing complex services.

It is also much easier to select a reliable contractor.

Difference #3. Independence and dependability.

Service agencies: These companies are usually very independent and in some cases this can be beneficial for the client. If you provide an agency or a sole freelancer with a lot of work, chances are that you can simply hire them at some point and keep your processes in-house, while ensuring that you have the right employee for the job.

On the other hand, being independent means avoiding close oversight. This makes the whole process of outsourcing less transparent and harder to manage.

Having no control over some of YOUR business processes is something that can be unimaginably frustrating for a business owner. You definitely want to keep an eye on your contractors, which means you want to control how you outsource.

These two issues have the same roots.

Outsourcing companies: Big companies are more reliable in many ways. You can definitely control your processes more easily, you will have constant reports, and their dependability and team cohesion will serve you well in terms of overall control.

It is much harder to avoid accountability for a big team of specialists who have an answerable manager. Big outsourcing companies are reliable, cohesive, and depend on each other, thus you can rely on them as well.

At the same time, having such interconnected teams at your disposal is not necessarily a good thing for a small startup.

The relationships are much more formal compared to working with an independent service agency. Simultaneously, you can never expect a solid outsourcer to simply give up their perspectives and work solely for you.


Difference #4. Expertise.

Service agencies: Again, service agencies are often great specialists that concentrate on specific services and skills. This means that you can hope for good expertise when it comes to it consulting and estimating your outsourcing projects.

However, many service agencies will not provide you with overall expertise of the market or consult you about business opportunities. Usually, service agencies have outside business analysts and cannot truly offer you a great deal of help when it comes to issues beyond their specialization.

Outsourcing companies. Big companies usually hire full-time business analysts, marketers, advertisers, designers, developers, etc.

This means that you can definitely receive answers on any questions related to the domain of your contractor and possibly will also receive comprehensive analysis of how they can help you with marketing your business or augmenting it in various ways.

For example, a good software development team that has a business analyst can come up with a good marketing plan for the release and make your application that is much more impactful and useful right from the get-go!


There are various differences between service agencies and outsourcing companies. You should make your choice based on your own preferences and estimated scope of outsourcing.

If you plan to search for a good contractor for a specific job, go for a service agency that specializes in something (i.e. testing, cloud hosting, software development).

If you need to outsource a whole suite of business processes and need consultations, you should definitely work with a big outsourcing company that has resources and expansive expertise.

And if you have any questions or comments please contact us!


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Written by
Anna Khrupa, Researcher/Marketing Manager

Anna is a self-motivated and curious research analyst who keeps her eye on digital marketing trends, IT market state, audience response to the content our team puts out, and examines content strategies of competitors. Anna’s multi-tasking skills overlapped with an in-depth understanding of IT outsourcing make her a powerful player on our team. In her free time, Anna likes reading crime fiction and swimming.