The need for competent IT services (or any form of services, really) is always increasing in an unpredictable and dynamically changing corporate climate. The shortage of competent software developers, on the other hand, is a fact that today’s market must face and adapt to.
Fortunately, IT outsourcing comes to the rescue, offering various advantages such as reducing project time and expenses, gaining access to a qualified IT partner’s knowledge base, enhancing operational efficiency, and allowing you to focus on your main business. As a result, an increasing number of businesses are delegating IT tasks to third parties. Startups have the option of choosing between two forms of outsourcing: personnel augmentation and managed services.
There are many various forms of collaboration with a software supplier to select from, but the most prevalent are staff augmentation and managed services. Which one, though, should you pick?
Let’s start by looking at a quick summary of both models.
What are Managed Services?
Simply explained, a managed service is a service that takes care of the day-to-day operations of your specialized applications. A managed service can perform a variety of tasks. To begin, it can give your company’s end-users extra capabilities. It can also free up in-house IT resources to focus on more important IT initiatives. Managed services are also intended to free up your employees to concentrate on the key skills of your company.
When IT specialists see a drop in the existing repository of knowledge, the quality of IT service provided to your firm suffers. This is when managed services are required. A lack of achievement in specific sectors owing to a lack of service, as well as a high volume of service outages and downtime, are further signs that a managed service is required. Startups could also explore managed services if they overspent their budget on performance-degrading changes to business software. Another reason for a managed service might be data loss owing to a lack of solutions.
A managed service may assist both small and large client firms in addressing these issues. Many businesses make use of managed services in a number of ways.
With this in mind, let’s consider how staff augmentation could be a potential alternative.
What is Staff Augmentation?
Staff augmentation is an outsourced alternative for bringing in the capabilities your organization requires at a cheaper cost. Your augmented personnel will be handled directly by your firm as if they were your workers, but with substantially lower hiring and maintenance expenses and responsibilities. Staff augmentation is typically utilized to meet a short-term requirement for a certain resource.
Staff augmentation is a sort of outsourcing service in which a software firm hires external engineers, generally on a “time and materials” contract basis. In reality, the outsourcer’s in-house team is supplemented (or entirely made up of) third-party professionals who operate on the buyer’s premises for the duration of the project.
Companies save money on recruiting, payroll services, and project implementation by using staff augmentation. This approach is also highly scaleable — dissolving a partnership is considerably simpler than terminating an employment contract, thus full-time staff may be reduced (or increased) fast if necessary.
Furthermore, this total shift of duty allows the outsourcer to focus more on the core business while avoiding HR and employment formalities.
Now that we know what managed services and staff augmentation do, let’s consider the key differences between the two models so you can make a more informed decision.
Managed Services vs Staff Augmentation: The Key Differences
Two considerations explain the difference between staff augmentation and managed services: control and accountability.
You have complete control over the duties that the enhanced employee will do with staff augmentation. They will essentially be your own employees, thus they may require training to integrate into your company’s operations or project.
Managed services, on the other hand, entails completely outsourcing one of your departments to a third-party provider. This implies you’ll have little to no say over who is hired and how they’re used. This method has the advantage of allowing you to focus on your company’s core skills while the managed service provider handles day-to-day operations and employee management.
Let’s take a look at responsibility now. Your organization is totally liable for the performance of the augmented personnel since you have complete control over the process.
In contrast to managed services, the managed service provider is held accountable. Typically, MSP clients are covered by a service level agreement (SLA) that ensures the managed service provider meets specified goals and objectives.
The Benefits of Staff Augmentation
The most significant advantage of staff augmentation is cost savings. Most staff augmentation businesses are able to deliver workers at a substantially reduced cost since they utilize resources from all around the world.
You’ll also have complete control over your team. Because augmented workers are effectively your own employees, you’ll have complete control over their hours, duties, processes, and more. This gives you complete control over the result of a job or endeavor.
Staff augmentation service is a good option if you need to quickly increase or decrease your workforce. Staff augmentation allows you to simply add or remove resources based on your business’s needs. For example, if you have a project that needs unique abilities, you may use staff augmentation to temporarily increase resources and then reduce them after the project is done. Because you are not recruiting full-time staff, this strategy allows you to expand your firm with less risk and expense.
The Benefits of Managed Services
Managed services offer a comparable set of advantages. To begin, if an MSP is functioning properly, it should be able to prevent technical difficulties from developing. It accomplishes this by continuously monitoring various areas of IT, such as hardware, apps, security, and the internet, and alerting you when an issue or anomaly arises. In the end, you’re paying for someone to protect your company from having problems rather than someone to cure them.
Another advantage is expertise. If a company relies on a single “computer man” for all IT needs, it’s likely that this individual lacks experience in all areas. They may be skilled at repairing Microsoft Word, but what happens if your network fails? MSPs, on the other hand, often have dedicated people for each IT function. This typically indicates that they are better equipped in every way.
Which Outsourcing Option is Better For Your Organization?
The answer to this question depends significantly on your organization’s use case. In general, we would recommend staff augmentation. However, for more long-term needs, a managed services provider (MSP) may be a smarter choice.
Some business leaders may be apprehensive about the loss of control that comes with implementing an MSP. Others may be concerned about internal IT team opposition or transitional interruptions. Because of apparent cost savings and a sense of increased control, these organizations frequently favor staff augmentation. Working with an MSP may not be the best solution for organizations that merely want assistance with one or two brief tasks.
While there are certain short-term benefits to staff augmentation, as compared to managed services, staff augmentation over a long period of time (or across numerous projects) has various hidden costs. Specialists, for example, may not need subject-matter training, but every new staffing resource must be taught in client-specific procedures and tools. An MSP’s resources are trained once they have gained a thorough understanding of your environment. Staff augmentation raises management overhead, even if it saves money compared to recruiting internal people. MSPs control their own resources, lowering both of these costs. Because you pay about the same amount for each new resource, your prices rise dramatically if you require more staff augmentation resources. You’re paying a predetermined amount for a guaranteed service with an MSP.
Managed services are also a more appealing alternative for executives who want to see better outcomes overtime on all IT (or another sector) projects. Staff augmentation is all about getting projects done, but utilizing the same, defective internal procedures that hindered internal personnel from fixing the problem on their own, it might be difficult for a staff augmentation resource to generate results. However, by enlisting the help of a reputable and experienced staffing business, this problem may be resolved.
MSPs provide not only issue solvers, but also problem solvers who understand why problems emerge. As a consequence, IT projects are completed, and customers are proactively improving their working habits through meticulous counseling based on industry best practices, all while maintaining a predictable pricing structure.
To put it simply, we would recommend augmented staff for short-term projects because they are affordable, fast, and simple to employ through a reputable firm. For longer-term projects, managed services might be more ideal.
How was our guide to the differences between staff augmentation and managed services? Tell us which option worked best for you in the comments below.