The demand on businesses to create digital products and solutions in tight timeframes can leave many leaders struggling with the right decision to make. Like Neo in the Matrix, these leaders face a choice between two "pills" that provide solutions to save time, resources, and stress: staff augmentation (out-tasking) and managed IT services (outsourcing). Still, this presents a dilemma for anyone who wants to optimize cost and performance.
Both offer clear advantages and disadvantages depending on a company's specific needs at a given point in time, but the wrong decision may produce more headaches than necessary. Whether for short-term projects or long-term technology support, this article will explore staff augmentation and managed IT services to help companies understand the best option to maximize savings and output.
The basics of staff augmentation and managed services
On a basic level, staff augmentation focuses on adding specific skilled professionals to an existing team to fill temporary skill gaps, while managed services involve outsourcing entire technological functions or departments to an external provider. The key difference is that staff augmentation extends an internal team's capabilities, and managed services replace or entirely handle a specific technological need for a business.
Staff augmentation: short-term team expansion
When a company faces the challenge of launching a new software development product but lacks specific skills within its existing IT team, staff augmentation can be an optimal solution. Staff augmentation is an out-tasking model that involves hiring additional employees for the duration of a specific project.
This model is designed to improve development team efficiency by temporarily expanding technical capabilities. Augmentation allows companies to expand their team's capacity or adjust workforce size for a project and offers a flexible short-term solution to skill and resource gaps. For example, the team may require a specialist in Kubernetes for a project, but there is little need for this specialist on a long-term basis. This strategy is ideal for dynamic technology environments, where businesses can add specialized talent on a temporary basis to address technical requirements without the long-term commitment of permanent hiring.
Staff augmentation vs freelancing
These two terms sound similar, but there are significant differences between them. Staff augmentation and freelancing are both strategies for bringing external talent into a company. In staff augmentation, a business hires skilled professionals who are seamlessly integrated into an existing team, working alongside internal employees. These individuals are typically managed through a staffing agency. Freelancers, though, are independent contractors who work more autonomously, often remotely, and are hired for specific, discrete projects with less direct team involvement. The key distinction is in the level of integration into in-house teams, the style of management, and the context of the working relationship. Companies that want to ensure consistency and professionalism throughout a project will benefit more from staff augmentation as opposed to freelancers.
Managed services: long-term technological transformation
Managed IT services offer a strategic approach that allows companies to outsource their technological needs to specialized service providers. Unlike traditional temporary staffing models, managed services provide long-term technological support and expertise.
Types of managed services:
- Networking and infrastructure: Network task and storage options.
- Security management: Backups and anti-malware solutions.
- Communication services: Monitoring and managing communication apps, data, video, and calls.
- Software services: Platforms for businesses like antivirus software and Microsoft Office applications.
- Data analytics: Helping businesses identify and analyze key performance indicators and business trends.
- Support services: Comprehensive IT-related assistance from small tasks to advanced technical challenges.
Managed services are ideal for companies that want to transform their technological operations and free in-house teams to concentrate on strategic initiatives with a robust and professionally managed IT infrastructure. It is also an optimal solution for companies that lack in-house teams or their employees don’t have the required level of expertise in a particular function, such as security.
The pros and cons of staff augmentation and managed services
Staff augmentation: pros & cons
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| Pros: ➕ Balance of productivity increases with cost reduction. ➕ In-house employees have more time to focus on quality. ➕ Minimizes the time and effort required to complete a project. ➕ Direct control over external resources. | Cons: ➖ Extra resources required for onboarding augmented staff. ➖ Knowledge transfer issues when temporary staff leave. ➖ Possible work culture mismatches. ➖ Temporary workers may be less motivated. |
Managed services: pros & cons
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| Pros: ➕ Businesses can hire a full team of experienced professionals. ➕ Keeps projects on track and on budget. ➕ Regular updates and service provided by vendors. ➕ Reduced management burden. ➕ Service companies calculate all the risks and prepare all stages of the project. | Cons: ➖ It is not always possible to get all the tools and services for a low price. ➖ Less direct control over day-to-day operations. ➖ Security concerns with third-party access. ➖ Possible vendor lock-in with long contracts. |
While a simple comparison of the advantages and disadvantages of these approaches can help create a clearer understanding of their surface-level benefits, it isn’t always enough for business leaders to know which to choose. In this case, it’s best to consider a company’s specific project and staff needs.
Staff augmentation vs. managed services: 6 questions to consider
The choice between these outsourcing models can be overwhelming; however, it's helpful to start with the requirements of a business or project. Here are 6 questions to guide business leaders to select the most appropriate model.
1. Is this solution within the project's scope or for the entire company and future work?
Staff IT augmentation provides an extra pair of hands to launch a specific project and is suitable for a short-term scope. In most cases, the contract is finished once the project ends. Managed IT services, on the other hand, play a significant role in providing ongoing technical support across a large scope. This arrangement supports a business as it grows to streamline working with large volumes of tasks and information.
2. Is this a short-term or long-term partnership?
A staff augmentation contract fills in the gaps of a project team for temporary workload or skill needs. The company that hires augmented staff can choose to scale down when the project is completed. Teams that provide managed services are better viewed as strategic partners with extended contracts. They focus on improving IT operations over time through consultations, business analytics, and assistance in the implementation of new ideas and technologies.
3. What is the desired level of control?
Businesses that hire a new employee as part of staff augmentation to a team are responsible for this team member's adaptation to their processes. There is a greater level of control across all stages of development, and managers can check the quality of their work. In the case of a managed team, businesses enjoy less direct control. They provide updates, describe the requirements, and then step aside. The service provider takes responsibility for the management of personnel and resources to meet the established success criteria.
4. What level of flexibility does a business get with each model?
Staff augmentation provides high flexibility for companies that need to adjust their team's size for changing project requirements. They can add specialists with specific skills for short periods and reduce them as needed. Managed services offer less flexibility but more long-term stability. It is possible to make changes, but they often require formal amendments or new agreements.
5. What are the business's current financial resources?
A company that utilizes project-based budgets or variable financial resources will benefit most from staff augmentation. They can scale costs based on usage and change them as needed. Of course, while the Initial investment is lower, hourly rates for specialized talent may be higher than permanent employees. Managed services require a consistent financial commitment that involves fixed monthly or quarterly payments. Businesses know the expenses but need to allocate budget resources for them on a regular basis. There are lower costs over time, but the vendor may require a minimum commitment period.
6. What are the required security parameters for sensitive data?
With staff augmentation, companies can maintain existing security protocols and direct oversight of data handling. Augmented staff can be required to sign an NDA and adhere to internal security policies within established frameworks. On the other hand, companies that choose managed services will need to transfer some security responsibilities to the provider, who should have robust security certifications and dedicated security teams. To avoid any security challenges, businesses must evaluate the vendor's capabilities and establish clear data protection agreements to safeguard sensitive information.
Both businesses and vendors benefit from a clear understanding of the context and needs for a particular project or scope to choose the right pill for the task.
Using outsourcing to drive performance
That is what businesses need to know in order to choose the right pill for their technology needs. Regardless of the choice, companies that find the right vendor for software augmentation or managed services can reap the benefits of global talent for any long-term or short-term project. This includes specialized expertise, advanced technological solutions, and continuous support at cost-effective rates. As in any such situation, the selection process for such a partner requires careful evaluation of their experience and capabilities.
If you still have some hesitations on the best option for your business, feel free to contact Morpheus for a free 30-minute consultation.
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