Are you looking to scale your team quickly and efficiently, ensuring that your projects meet their timelines and quality standards? Have you struggled with hiring, training, and retaining skilled professionals in a highly competitive market where the demand for talent often exceeds the supply?
We understand the pressure that comes with project management hiring full-time employees. That’s why, with our experience connecting businesses with the precise resources they need, we’re here to guide you through the differences between two of the most popular outsourcing strategies: staff augmentation vs managed services.
What Is the Staff Augmentation Model?
The staff augmentation model is a business strategy in which a company hires a staff augmentation company instead of investing in full-time employees to supplement its workforce. The hired company is responsible for sourcing and managing the personnel and ensuring they have the qualifications to meet the client’s needs.
Imagine the following scenario. A software development company has just secured a large contract requiring specialized skills in AI that their current team lacks. They partner with a staff augmentation firm that specializes in tech talent, which quickly provides several experienced AI professionals.
These professionals work as part of the company’s existing team for the duration of the project, allowing the company to meet its project deadlines and technical requirements efficiently. After the project’s completion, the augmented staff members can be released, optimizing the workforce according to the company’s immediate business goals without long-term financial commitments.
What Are the Pros and Cons of Staff Augmentation?
Staff augmentation has become an increasingly favored strategy for companies that need to adapt swiftly to project demands without permanently increasing their workforce. However, while staff augmentation offers substantial benefits, it also poses certain challenges that may impact a business’s operational dynamics.
Here are four advantages and disadvantages to consider before opting for staff augmentation:
Pros
Access to specialized skills
This model enables companies to access specialized skills and expertise in core technical concepts that their in-house employees may not have.
Increased productivity
Bringing in qualified and experienced individuals to complete specific tasks helps businesses increase their productivity levels and produce better results.
Scalability & flexibility
Allows businesses to scale resources up or down depending on the project’s requirements without making a long-term commitment to additional staff.
Cost savings
It eliminates the need to hire and manage a full-time employee, saving businesses time and money.
Cons
Poor communication
Poor communication may lead to misunderstandings, misalignment, reduced team cohesion, and inefficient knowledge transfer.
Clearly define the scope of work from the start to avoid miscommunication and misunderstandings.
Lack of trust
Without trust, team members may be reluctant to work together and unable to collaborate effectively, leading to delays, low morale, and an overall decrease in productivity.
Take the time to build a good relationship with the external team to ensure that all parties have the same goals and objectives.
Hidden costs
Hidden costs can be a potential challenge because, if not taken into account from the start, they can cause delays in the project timeline.
Plan ahead for additional costs and always communicate with your staff augmentation provider to ensure the prices are transparent and agreed upon.
Poor quality of work
Poor quality of work can lead to project delays and increased costs, causing frustration and dissatisfaction.
Not all staff augmentation companies can guarantee a network of experienced professionals, so it is essential to do your research.
WillDom, for example, has a network of highly skilled professionals who will ensure that your project is completed quickly, efficiently, and to the highest quality standard.
When Is Staff Augmentation the Best Choice?
Staff augmentation is the best choice for situations where businesses require specialized skills that are not present within their current team, or when there is a temporary surge in workload that requires additional resources. It allows flexibility, as staff members can be increased or decreased when needed.
Additionally, it is ideal during periods of uncertainty, such as economic fluctuations or industry-specific downturns, where companies might be hesitant to hire full-time employees. In such cases, augmenting staff provides the flexibility to scale the workforce up or down based on real-time business performance and market conditions.
What Is the Managed Services Model?
The managed services model is a comprehensive approach in which an IT service provider takes complete responsibility for installing, maintaining, and managing the IT services under a contractual agreement. This model is designed to offload specific IT operations from the customer, allowing businesses to focus more on their core competencies.
For example, a mid-sized retail company wants to ensure its e-commerce platform operates smoothly, especially during high-traffic events like Black Friday or Cyber Monday. Instead of managing this in-house, the company might contract with a managed services provider (MSP) that specializes in e-commerce systems.
The MSP would oversee all technical aspects of the e-commerce platform, from server management and data security to software updates and user support. This arrangement ensures that the platform is optimized for performance and resilient against downtime or cyber threats, with the MSP offering 24/7 monitoring and immediate troubleshooting.
What Are the Pros and Cons of Managed Services?
As businesses strive to optimize their IT operations and focus on core competencies, many are turning to managed services. This model can offer significant benefits. However, while the approach has its distinct advantages, it also introduces specific challenges that may not be suitable for every business.
Below are four benefits and drawbacks of selecting managed services over staff augmentation as an outsourcing model:
Advantages
Improved communication
Customers have direct access to the vendor and receive regular updates on the project’s progress, allowing for better collaboration and communication.
Increased security
Provides a comprehensive security architecture to protect your data and systems from malicious attacks.
Increased reliability
Provides a thorough monitoring service to detect and address any issues before they occur and keep the IT services running.
Reduced complexity
A managed services company takes the complexity out of IT operations, allowing you to focus on your core business.
Disadvantages
Downtime
Downtime can result in disruption of services, loss of data, and decreased productivity because you do not have access to the resources or tools required to do the job.
Ensure your service provider has a reliable and up-to-date infrastructure, including regularly scheduled maintenance and testing of their systems and hardware.
High-costs
Depending on the services required and the provider you choose, it can be expensive. Unexpected costs can significantly impact a business’s budget.
Always read the agreement’s fine print and ask your provider for a detailed breakdown of all fees and associated costs.
Poor customer service
The level of customer service that managed service providers offer can vary greatly, and poor customer service can result in frustration and dissatisfaction with the services offered.
Research the provider’s customer service history and inquire about their response times and availability.
Incompatible services
Different managed service providers can offer various services, some of which may be incompatible with your existing systems and processes.
Before signing, consult with your provider to ensure their services are compatible with your company’s existing IT infrastructure.
When Are Managed Services the Best Choice?
Managed services can be an ideal solution for various business scenarios, as it helps offload routine IT tasks to experts who can manage them more effectively, ensuring both operational excellence and cost efficiency.
Below are three specific scenarios where opting for managed services could be the most beneficial decision for a company:
#1 – Companies experiencing rapid growth
For businesses that are scaling quickly, the pace of growth can often surpass the ability of their IT infrastructure to support new demands. For instance, a startup experiencing rapid user growth might use managed services to manage their expanding server needs and cybersecurity, ensuring robust and scalable IT support that grows with their business.
#2 – Organizations with cyclical or seasonal demands
Companies that experience significant fluctuations in demand, such as retail businesses during holiday seasons, can benefit from the flexibility of managed services. In such scenarios, managed services can dynamically adjust the level of support and resources available, ramping up during peak times and scaling back when demand diminishes.
#3 – Businesses with limited IT expertise
Small to medium-sized enterprises (SMEs) often lack the resources to sustain a full-time IT department that can manage all aspects of technology effectively. Managed services allow these companies to access expert IT support and the latest technology without the significant investment that comes with building an in-house team.
What Is the Difference Between Staff Augmentation and Managed Services Models?
The primary difference between staff augmentation and managed services lies in how responsibilities and control are distributed between the client and the service provider. The chart below offers a detailed comparison to illustrate their key distinctions:
| Differences | Staff Augmentation | Managed Services |
| Project management | With staff augmentation, clients retain control over project management and execution. | With managed services, providers manage the entire project from start to finish. |
| Project length | Staff augmentation is often used for short-term projects or specific project phases | Managed services are designed for long-term projects and ongoing service provision. |
| Skills & resources | Staff augmentation provides specific skills or additional resources to supplement the client’s team. | Managed services involve outsourcing complete end-to-end management of entire IT functions. |
| Costs | Staff augmentation costs are variable and dependent on the immediate needs and duration of staff use. | Managed services typically involve a fixed monthly or annual fee as a long-term cost, providing predictable budgeting. |
| Expertise | Staff augmentation adds expertise directly to the existing team without altering its structure. | Managed services offer external, specialized expertise to fully manage and optimize specific IT domains. |
| Project outcomes | With staff augmentation, clients are responsible for the project outcomes and overall success. | Managed services providers are accountable for meeting specific performance metrics stated in the service-level agreements. |
Which one is right for my business?
Staff augmentation is likely better if your project requires more resources and expertise than you have in-house. However, if you don’t have the time or resources to manage the project, you can focus on other tasks while managed services provide the additional knowledge, resources, and support needed to complete the project.
Factors to consider When Choosing between Staff Augmentation and Managed Services
When deciding between staff augmentation and managed services, short-term and long-term factors must be considered. Ultimately, the decision should be based on the specific needs of the organization’s entire team, so here are some questions to help guide the decision-making process:
| Short-term considerations | Long-term considerations |
| Business objectives and IT needs: What are my business objectives? What IT needs do I have to meet my business objectives? How quickly do I need to meet these objectives? | Balancing in-house and outsourced resources: How much of the project should I outsource? What are the benefits and drawbacks of outsourcing specific tasks? What resources and expertise do I need to keep in-house? |
| Internal resources and expertise: What resources and expertise already exist in the in-house team? Are my current resources and expertise sufficient to handle the project? How quickly can I acquire an outsourced team with the expertise needed? | Adapting to changing industry trends and technologies: What technologies are necessary for my business to stay competitive? How can each outsourcing model help me keep up with changing industry trends? What is the best way to ensure access to the latest technologies? |
| Budget and cost considerations: What is my total budget for the project? What are the costs associated with staff augmentation and managed services providers? Which option is more cost-effective for my business? | Talent acquisition and retention strategies: What is the best way to find and retain the right talent? How can each outsourcing model help me find and retain talent? How can I ensure the talent I hire is up-to-date on industry trends? |
| Control and flexibility requirements: How much control do I need over the project? How much flexibility do I need for changes to the project? What level of control and flexibility do such services offer? | Developing a sustainable and scalable IT infrastructure: What IT infrastructure do I need to support my current and future business objectives? How can each outsourcing model help me build a sustainable and scalable IT infrastructure? What is the best way to ensure my IT infrastructure is secure and reliable? |
Can Staff Augmentation and Managed Services Be Combined?
Yes, staff augmentation and managed services can be combined. To do this, the service provider first provides the additional resources and expertise needed to complete the project through staff augmentation. Then, the service provider takes on the role of project manager to ensure that the project is completed on time and within budget.
Staff Augmentation Real-Life Case Studies
WillDom is a leading staff augmentation company that has helped businesses worldwide achieve their goals by providing highly skilled and experienced professionals to supplement their in-house team.
The following are some of our staff augmentation case studies, demonstrating how companies used this strategy to improve their operations and become more competitive.
WillDom’s success story with staff augmentation in the cloud management industry
WillDom’s cloud-specialized developers provided their services to help a leading spa management software and online scheduling system expand from Canada to US markets, arrive in Europe and Africa, and add new functionalities to their platform.
By building a new reservation setter, integrating payment methods, and developing a CRM for spas, WillDom’s web developers helped the company improve its customer experience and digital transformation.
The team used a variety of technologies, such as ASP.NET Web Forms, .Net, MongoDB, SQL Server, AWS, and Amazon S3, to complete the project. After four years of fruitful collaboration, the client expanded their reach and improved their services.
WillDom’s success story with staff augmentation in the media and entertainment industry
WillDom provided two Senior Full-Stack Developers to join an eight-person team on a project for a free, advertiser-supported video-on-demand platform.
The project involved transitioning from custom-based development to a cutting-edge framework. The team worked on video-on-demand, front and back-end development, analytics, and architecture redesign.
The technologies used in the project included React, TypeScript, JavaScript, Redux-thunk and Redux-saga, CSS, and HTML. Thanks to WillDom, the customer could transition smoothly to their new platform while avoiding disruption to their regular operations.
Impact of Emerging Technologies on Staff Augmentation and Managed Services
Emerging technologies such as artificial intelligence, machine learning, and cloud computing are having a significant impact on staff augmentation and managed services:
- AI and machine learning are enabling organizations to automate processes, reducing the need for manual labor.
- Cloud computing allows organizations to access and store data more efficiently, enabling them to quickly access and analyze the data they need to make informed decisions.
- Virtual and augmented reality allows service providers and companies to simulate real-world scenarios, providing a more realistic and cost-effective way to train employees.
Making the Right Choice – Let WillDom Help!
Choosing between staff augmentation and managed services can be challenging, as both have advantages and disadvantages. At WillDom, we can help you make an informed decision by providing access to expert advice, a comprehensive overview of the options available, and customized solutions tailored to meet your unique needs. Contact WillDom today or reach out to us through LinkedIn to find the optimal staffing solution for your project!