IT outsourcing is being explored by more enterprises than ever before. Employing an in-house IT team may be time-consuming, difficult, and expensive, not to mention inconvenient if you have a high-growth or short-term project. This article will help you differentiate between IT Staff Augmentation vs Managed Services models.
In case you did not know, the outsourcing sector was valued at USD 261.9 billion in 2022 and is projected to expand at a compound annual growth rate (CAGR) of 9.4% from 2023 to 2030.
The main implication of this expectation is that in the coming months, more organizations will continue to embrace outsourcing as a method of employing and working with specialists.
IT staff augmentation and managed IT services are the two most common IT outsourcing methods. Both approaches are viable alternatives to hiring full-time employees in-house; however, the most effective strategy will depend on the nature and scope of your projects.
Specific jobs and responsibilities are outsourced using staff augmentation. In the managed services model, the entire problem and solution are outsourced to a third-party vendor (output).
The ability to swiftly scale certain functions is a fundamental benefit of staff augmentation, but managed services are excellent for the long-term management of processes like infrastructure and security.
What is IT Staff Augmentation, and how does it work?
IT staffing services can help your business scale up or down depending on its present demands. Staff augmentation allows you to work with competent specialists on a project-by-project basis rather than investing time and energy so that purpose need to hire dedicated developers.
The IT outsourcing staff augmentation approach allows you immediate access to a pool of the greatest IT talent in the market.
Staff Augmentation Features
One of the most important benefits of staff augmentation services is that they allow you to easily scale up your resources. Additional resources can be quickly deployed to handle a temporary spike in workload.
When you need to bring on talent with specialized abilities, this is a good method to use. Instead of starting the recruiting process all over again for a full-time employee, businesses can use staff augmentation services to fill in the gaps as needed.
While some say that staff augmentation is ideal for small to medium-sized businesses, Rootstrap has successfully scaled processes and products for big giants, including Google, Spotify, and Disney. With IT staff augmentation, both startups, and established businesses can increase efficiency while saving money.
According to a study, up to 75% of businesses are likely to work with outsourcing bespoke software development companies to obtain services and people as needed.
The following are some of the benefits and drawbacks of IT staff augmentation:
Benefits of IT Staff Augmentation
Consider the following key advantages of staff augmentation:
- Staffing costs have decreased. Health insurance, retirement programs (sometimes with matching contributions), and other expenses are required for all employees. Companies can swiftly acquire specific skills thanks to augmentation, allowing them to conserve money for selective recruiting or investing directly in IT technology solutions.
- Adapt quickly to changing business situations. When unforeseen events occur, IT frequently requires employees with a wide range of skills to solve problems or capture new possibilities. Staff shortages caused by layoffs or workers leaving the company can be alleviated via augmentation. It is also great for seasonal changes, as when online shops need to ramp up their IT support during the holiday shopping season.
- Minimal influence. Augmentation staff can be added or deleted at any time, and they are designed to seamlessly integrate into the work environment. They make it simple for IT to finish critical projects without disturbing the business strategy.
Staff augmentation is not always the best approach, despite the possibility of lower costs and other benefits. When augmentation becomes a permanent fixture within a company, its value is often diminished in comparison to a managed service arrangement.
Augmentation is better suited to short-term initiatives with a clear requirement and goal, as it keeps costs low and takes advantage of the increased capacity to meet demands flexibly.
Also Read: Cost To Develop An App
Drawbacks of IT Staff Augmentation
IT staff augmentation plans have the following disadvantages:
- Additional supervision. The disadvantages of staff augmentation must be considered while deciding between staff augmentation and managed services. Since the resources brought in to work on the project are not firm employees, additional control is required when onboarding external talent. This may demand extra oversight of their job to ensure that nothing is overlooked.
- Internal stumbling blocks. It can be a bottleneck if there are strict internal protocols that must be followed for all work to be completed. New employees must initially be brought up to speed so that they can follow the protocols at all times.
- Costs are rising over time. Any condition that causes the resources to be retained for a longer amount of time can negate the cost savings that staff augmentation brings. It is not well adapted to long-term resource allocation.
Best for the following project if that has:
- Short duration
- A limited budget
- Demand adaptability
What are Managed Services, and what do they entail?
Another prominent outsourcing strategy in the comparison of IT Staff Augmentation vs Managed Services is the managed IT services. Your company outsources IT processes to another company with managed IT services.
The IT business commits to operating within the parent company’s defined norms and requirements. The managed IT service business, on the other hand, is in charge of IT staffing, management, and project execution. The parent company and the IT firm will agree on the deliverables or desired outcome while drafting a contract.
Managed Services Features
It is common for business owners to want to outsource their entire IT operations so that they can concentrate on growing their company. IT Outsourcing services are the ideal solution for such requirements.
The complete IT infrastructure is handled by third-party professionals. They are now in charge of maintenance, management, and upgrades, as well as any other responsibilities that the client may require.
Managed IT services are ideal for businesses that require a specific technological output but lack the capacity to participate fully in the process. This outsourcing strategy is also a strong fit for businesses with long-term, labor-intensive development requirements.
In 2020, the global managed services industry is expected to be worth 152.02 billion dollars. North America is the largest market, while the Asia Pacific is the fastest expanding. By 2026, it is expected that the global managed services market would be worth roughly 274 billion dollars.
The following are some of the benefits and drawbacks of managed services:
Benefits of Managed Services
The following are some of the advantages of using a managed service:
- Concentrate on the company’s goals. Is IT infrastructure management taking up too much of your time and preventing you from focusing on your main business goals? That could be harmful to your company’s long-term success.
An end-to-end solution can be utilized to liberate yourself from the headache of managing infrastructure by depending on a managed services provider. The service provider takes care of everything, allowing you to concentrate on your company objectives.
- Sharing of information. The knowledge gained through outsourcing will be documented and given to the employing firm during the duration of a managed services arrangement. It can be difficult to retrieve this knowledge from augmented staff who establish a segregated environment when using long-term augmentation.
- Clearly defined outcomes. A managed service is primarily concerned with delivering a specific result to a client. It is possible that IT will require assistance with the installation of BI. They can enlist the help of a managed services provider to complete the project in a specific period of time for a specific payment that is linked to the outcome’s completion. Resources are scaled up or down depending on whether the project is more complex or easier than predicted.
With managed services, the outsourcer bears the risk of fulfilling project goals and timetables, giving them an incentive to deliver projects satisfactorily and on time. Companies should be cautious about implementing “augmentation by default” and consider the advantages of managed services, especially for longer-term agreements.
Drawbacks of Managed Services
Managed Services have the following disadvantages:
- Reduced adaptability. Internal IT teams are open to new ideas, experimenting with various programs and frameworks in order to discover the greatest fit for the company. It is likely that your managed services provider has a preferred framework or program. They might not want to collaborate with your own team to try out new ideas.
- Concerns about privacy. When you outsource your IT administration to a service provider, keep in mind that they may also outsource some of their technical responsibilities to teams based in other countries. Whether you desire anonymity, always check with your managed services provider to see if this is the case and if they would sign an NDA.
- Limitations may exist among service providers. The way many managed service providers handle the project has limits. While some may allow you to add users whenever you want, others may limit you to a certain number of users at a time. Again, talk to your service provider to see if there are any limitations you should be aware of.
Best for the following project if that has:
- Long duration
- Entire projects are outsourced
- Over time, you will save money
Also Read: Fixed Price vs Time & Material vs Dedicated Team
What to choose and when to use?
The model’s effectiveness is determined by its demand. In the comparison of IT Staff Augmentation vs Managed Services, both paradigms are equally useful. The number of things produced, for example, is controlled by demand. The company will quickly adjust to a model that will enable them to increase their production security rate without having to rely on any stroller.
Companies that like to work in a small group with personnel that is spread out around the country. Most of these businesses choose staff augmentation, and if they like to have everything in one location in a physical format, managed services are the way to go.
If there is anything else that needs to be said, it can be done in a few words. It is dependent on your requirements. And, in order to understand your requirements, a corporation must consider all elements that benefit and harm their business. Customers must be clear about their requirements and the outcome they want before choosing one of these options.
