As digital transformation has forever changed the world of business, more and more companies are interested in IT outsourcing. In fact, the global staffing industry, one of the primary suppliers of staff augmentation talent, is estimated to support $490 billion in annual spending.
While this trend is growing fast, there is still some uncertainty regarding the healthiest and most convenient way for a business to use outside personnel. This article discusses two of the most popular contingent working models—staff augmentation and managed services—and how to choose the best option for your business needs.
What Is Staff Augmentation?
Staff augmentation allows companies to expand their in-house team with additional skilled resources to join a particular project. This type of outsourcing model chases once the project is over, and it's suitable for companies that don't need to hire someone permanently.
Staff augmentation is best used for short-term projects and can also be used as a "trial run" for potential full-time employees.
With this type of outsourcing, organizations can leverage specific skills on a per-project basis without going through costly and time-consuming hiring processes.
What Is Managed Services?
Unlike the staff augmentation model, which enables companies to expand their team with additional skilled professionals, managed services outsourcing practices imply hiring a fully-equipped team of professionals to take care of your specific project.
With the managed services model, you save many resources—time, costs, and effort—as you hire an entire team of skilled professionals who have the right tools and tech to complete your project.
While a service provider will handle your project on its entire length, from beginning to end, your job is to ensure that you select a reliable company that you can trust will deliver positive business outcomes.
The managed services model is the best fit for companies looking for stable and reliable long-term business cooperation.
Staff Augmentation or Managed Services?
To help you figure out which one of these outsourcing models is the one you should choose for your organization, let's have a look at the pros and cons of staff augmentation and managed services.
Pros of staff augmentation
- Specialized expertise. Staff augmentation allows access to a wide range of professionals with specialized skills and knowledge that may not be available in-house. This can be particularly beneficial for projects that require niche expertise or cutting-edge technologies.
- Flexibility and scalability. With staff augmentation, businesses can quickly adapt to changing demands and scale their workforce up or down as needed. This flexibility helps optimize resource allocation and reduces costs during slower periods.
- Cost efficiency. Compared to hiring full-time employees, staff augmentation can be a cost-effective solution as it eliminates recruitment and onboarding expenses. Businesses only pay for the services rendered during the contracted period.
- Retaining control. By leveraging staff augmentation, organizations retain direct control over project management and decision-making. External professionals work alongside the existing team, ensuring seamless collaboration.
Cons of staff augmentation
- Not suitable for long-term projects. Staff augmentation is practical only as long as you look for short-term business engagements as projects come and go.
- Increased dependence on third-party talent organizations. This can put your sustainability plans more at risk.
- Lengthy staff integration. New professionals that join specific, complex projects may require some time to get familiar with your products and expectations.
Pros of managed services
- Access to expertise. Managed service providers (MSPs) have extensive experience and expertise in their respective domains. By engaging their services, businesses can leverage the knowledge and capabilities of industry experts.
- Operational efficiency. MSPs follow standardized processes and best practices to deliver efficient and high-quality services. This helps organizations improve operational efficiency, reduce costs, and achieve better outcomes.
- Scalability and flexibility. Managed services can easily scale up or down to match the evolving needs of the business. The service provider can quickly allocate additional resources or adjust service levels as required.
- Reduced risk and responsibility. By outsourcing specific functions to a managed service provider, organizations can mitigate risks associated with those tasks. The responsibility for managing and delivering results lies with the service provider.
Cons of managed services
- Hard to ensure security. When opting for the services of a provider, you provide access to sensitive data and assets. Therefore, companies that require high levels of data and information security might want to think twice before choose a managed services outsourcing model.
- Higher costs. Although hiring a managed services company might be cost-effective in the long run, it's not always possible to get the complete services package at a low price. The costs of handing over your project to an IT firm might be higher than when opting for staff augmentation since managed IT services cover both IT functions and project management.
- Less control and autonomy. If you are looking to internalize your project management process and supervise outsourced staff, a managed services model might not be a suitable option for you.
Although outsourcing is becoming more popular, finding an external reliable development team can be a struggle. There is a plethora of options available on the market, making it challenging to make a choice. A wise choice.
At Optasy, we understand how important it is to have a dedicated team of professionals that can handle a wide range of projects. So have a look at your services and contact us to learn more about how we can collaborate for success.
Image credit: Annie Spratt on Unsplash.
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