Digital transformation pushes companies of any kind and expertise to develop digital products, applications, web pages, software, etc.
In most cases, these businesses specialize in one particular industry and do not have IT departments to take on projects of this kind or lack some resources. Still, solutions exist, as there are different types of external hiring modes.
Two of the most popular cooperation types are staff augmentation and managed services. SA and MS have proven to be time- and cost-effective solutions, but there are significant differences.
We will discuss their main principles and compare staff augmentation vs managed services. So, it will be easier to choose the most suitable type for your ongoing projects.
Staff Augmentation vs Managed Services Model: What Do They Mean?
Staff augmentation implies expanding the existing department by hiring additional resources to join a project. It’s a type of temporary employment that ends once the case is over. Businesses choose this form of cooperation when they do not need to hire someone permanently.
Managed services is another type of outsourcing practice that means hiring a fully-equipped organization of professionals who will be responsible for maintaining and supporting the case.
Once the project is over, a service provider bills the customer for the on-demand service performance.
So, the difference between these two types lies in the following: whereas the SA model enables you to expand the in-house team with additional skilled resources, the MS model implies hiring the whole team, for instance, if you do not have an internal IT department.
Let’s take a closer look at the advantages and disadvantages of these two modes and compare managed services vs staff augmentation.
IT Managed Services Model Principles
IT managed services model is experience-driven and strategic cooperation of a customer and provider where a third-party offers specialized skills, technologies, and processes to achieve an expected outcome.
This employment model lets you hire an entire team of professionals with the right skills and knowledge and all its technical tools necessary for the project.
Companies that consider finding a third-party provider to cover specific projects should take into account the following:
- Reliability: make sure you can count on your new partners, ask for regular reports and analytical stats to keep track of the project, and ensure that your partner works according to the agreed plan;
- Background: check partner’s previous experience, contact their customers, or read the reviews, so you know you are hiring a professional and experienced team who will take care of your project from end-to-end and deliver a high-quality product;
- Prices: review the pricing policy and check whether there are no hidden expenses, so your company will not pay extra costs.
When you choose managed services as a hiring format, the project’s outcome depends solely on your partner. The company takes full responsibility for the project and ensures the case is completed within stated time frames and meets the fixed costs.
IT Managed Services Model Pros & Cons
By choosing MS as a hiring model, you get several advantages that will help your company and ensure an excellent project outcome. Let’s do a detailed review of the model’s pros and cons.
Pros of MS model:
- Time- and cost-effectiveness: MS model allows you to hire an entire team of skilled and experienced professionals who have all the necessary tech tools and resources to work on your project. In this way, you save time, costs, and efforts, as you get everything you need. There is a fixed price for their services, and it varies from the amount of performed work;
- Control: a service provider takes care of the project from its beginning to its end. But it is vital to choose an experienced and reliable company that has proven to deliver high-quality products and the best results;
- Monitoring: the supplier monitors all the processes during the project, takes care of the necessary tools and resources;
- Outcome: the result of the project depends on the vendor. MS organization calculates all the risks and provides a suitable plan for the project.
Cons of MS model:
- Accountability: ensure that you choose a reliable company. Before selecting a vendor, you should go over the previous customers’ reviews, contact them, and find out more information about the company, how it works, etc.
- Costs: it is not always possible to get a full package of tools and resources for a low price. Some of them require higher fees. In case a vendor makes a mistake or doesn’t meet the customer’s expectations, extra expenses are the customer’s responsibility.
Staff Augmentation Model of Outsourcing
The staff augmentation model is used when there is a need to temporarily involve outside staff to increase your company’s capacity to develop new products or upgrade the existing ones.
In this case, the project’s outcome depends on your in-house team, while temporary staff adds the required input. So, when do companies think of using SA? Here are some reasons:
- Increased capacity (there is a need to boost the company’s efficiency to complete everyday tasks during a project run);
- Bridge to hire (if you have just moved to a new location or start a new product line, you can use SA while you are hiring permanent employees);
- Specialized skills (you can find the right resources to cover specific tasks for a short period);
- Strategic (SA is a quick way to hire a flexible team of experienced professionals to help you be more agile, and increase speed to market, resulting in gaining the advantage over your competitors).
Although SA is a temporary solution, it has numerous benefits and adds value for the companies that consider this mode of talent outsourcing.
Staff Augmentation Model Pros & Cons
The SA model, as well as MS, has its benefits and drawbacks. Companies might experience SA downsides if they choose the wrong type of outsourcing that does not suit their needs. Let’s view the model from both sides.
Pros of SA model:
- Cost-effectiveness: thanks to SA, you can pay only for the required set of skills and time spent on the work. There is no need to keep full-time employees in permanent positions and pay high annual taxes when you know that additional resources are needed only for a short period.
- Flexibility: you can quickly get access to missing capabilities and skills and cover staff shortages due to some unexpected events during the project run;
- Control and lower risk: SA allows you to control the project outcome and track every aspect of the process. The team’s project manager will allocate the tasks accordingly and maintain the quality of the end product. When outsourcing a third-party provider, you give away the authority to control the development processes, but with SA, you house the whole team in your company and monitor the project, thus lower the risk of ending with the wrong product quality;
- Easy employment: you just conclude a contract with one or several employees that will provide you with the necessary skills during the development process.
Cons of SA model:
- Dependence on third-party providers that help you find the right talent which can influence your plans;
- Inability to find all the appropriate skills, experience, and knowledge in one person. Hired employees might need some time to study your product in detail to join the team and provide you with a high-quality product. It means that you can spend some time on training and educating the additional staff;
- Not suitable for long-term projects, there is a chance that augmented staff may leave the project before it is over, and you will need to start the hiring process every time someone quits.
Outsourcing is becoming more popular, but finding an external dedicated development team might be a challenge. Numerous companies offer their services, and it is hard to choose, mostly when you have never collaborated like this before.
We, at Intellectsoft, help other companies to deal with different projects within stated time frames. Our team of professionals will come up with the most suitable solutions for your case.
Get in touch with us and find out everything you need, from terms and conditions to prices and after-project support so your team can get full advantage of outsourcing software development.