Staff Augmentation VS Managed Services: What To Choose?

It is a common situation when the company who are seeking for some assistance in non-profile areas evaluates staff augmentation vs managed services. After all, anyone who has ever been engaged in the time sensitive project with large financial investments understands the importance of the sufficienеntly stuffed team. Lack of well-trained professionals can complicate even routine tasks. Give the complex and time-consuming job to a small team — and you’re on the way to the collapse. You shouldn’t let that happen.

Here we are going to take a look at the external assistance that is required almost to every company on one or another stage of the workflow. The most well-known approach of the external service methods is outsourcing which is often accompanying outstaffing. IT outsourcing — is a practice of complete delegation of some component of the development process. The variety of the outsourced services is huge and you may find anything that development implies: from testing to coding or design. At the same time, the main disadvantage of the outsourcing is in its risks due to client-company’s low control level. So, what should the company do if there are no internal resources deal with an issue? How to advance the project if it is too risky to look for the outsourcing contractor at the moment? The solution exists in two incarnations: managed services and staff augmentation. Both of them bear the resemblance of the outstaffing and outsourcing, but the differences are still notable. Here we will try to help you with the decision of what solution is better among the competition of staff augmentation vs managed services. So let’s take a closer look at these two methods starting with the Staff Augmentation.

STAFF AUGMENTATION

Basically, the staff augmentation is a simple hiring in a rate of one developer to the whole fully equipped team into the in-house office. The only difference is that unlike simple hiring, the staff augmentation reckons only a temporary use of the resources, analogically to the outsourcing. “Why staff augmentation?” you may ask. “Why not to hire few more people for the project on the permanent basis?”. This is simple: you won’t need additional staff permanently. You will need the highly-qualified and narrowly-aimed professionals for the work to be done, or improve that what you already have only sometimes. Here are key advantages for the staff augmentation.

  • COST-EFFECTIVENESS — What is the reason to pay for the additional workers annually, if you need them only during the short period of time? With the staff augmentation you pay only for the required work when you need it, and for the expected skills at the right time. Paying no full-time wages annually companies save huge financial resources each of the short-time and the long-time perspective.
  • FLEXIBILITY — Staying flexible in the business is sometimes even more important than staying powerful. The adaptivity — is a great feature that helps reach top lines in your business area. This is very simple to increase the intensity of your team with the augmented staff.
  • CONTROL — With the augmented staff it is elementary to maintain the full control on all the aspects of the project developed. Project manager simply monitors of who is allocated to the important work, who is on the minor tasks and who is working on the critical issues. Controlling the process — is controlling the quality of the end product.
  • LOWER RISK — One of the aspects of the software development with the high-risk concentration — is full outsourcing. Giving all the responsibility for the development to the outsourcer, you lower the control and status monitoring almost to the very end of the development. Augmenting your staff you basically do the same thing as the outsourcing, but you keep it in-house: you see people, you hold the situation under control, and you react to any issue in the blink of an eye.
  • COUNTERACTING ATTRITION — The latest studies have demonstrated, that up to 50% of the IT specialists are ready to look for another employer as the economy improves. As the attrition in IT sphere is inevitable during the economic upturn, the augmented staff will fill your need for software engineers.

However, the perfection of this model is accompanied by the disadvantages as well:

  • You will never find the universal all-knowing team for the reasonable price, so it can happen that the augmented staff will need some additional knowledge to get done with that or another task. And that requires the education which means additional time and finance expenses.
  • If there are some flaws in the internal company processes, the additional expenses for the staff augmentation may harm each of the in-house team and the company workflow overall.
  • The companies who use the staff augmentation, are only getting the resources. Ideally, the company is getting top-quality resources, but not the result. The company that is using the staff augmentation is fully responsible for the development process and quality control, so the result is also company’s responsibility.

MANAGED SERVICES

In the relative contrary of the augmented staff, there is another method of sourcing the development of your project is managed services. Managed services — is the permanent control, feedback and high level of business adaptation. Here we should clarify: different people understand managed services differently. The classic definition offered by analytic agencies and some vendors is: this is the complex of the services which imply external control of one company’s non-profile systems. In this very context, the client-company is not only sourcing the maintenance of the system but completely delegates full control of it: maintenance, support, control of the main business affecting indicators, monitoring, reports.

Let’s now proceed to this model advantages that will closer describe its meaning and we’ll see if this model is better among staff augmentation vs managed services confrontation.

  • TIME-SAVING — The first and main purpose of the managed service is saving client’s time. Having available resources, as like developers skills and knowledge or required equipment (for instance, running servers) will relieve the client-company from excessive time and finance expenses
  • CONTROL — The managed services wouldn’t be managed if won’t imply the control and monitoring. And that is not only about hard/software, but it’s about creating business idea directly. For example: if the data transferring service is provided, you should control that data is transferred qualitatively, instead of monitoring that channel remains open.
  • FINANCIAL SIMPLICITY — Standard services provided by a vendor are preliminarily formed in a complex, which also has a preliminary formed price. It varies only by the amount of the services requested and additional options. Individual prices are determined in the case of the big-volume or non-standard project.
  • MANAGING INFRASTRUCTURE — Taking full responsibility for the execution, the managed services vendor is also responsible for the management of the process. As from the client-company, there are only overall task and details are described, all the other management aspects are on the vendor’s control.

The disadvantages of the managed services are similar somehow to those related to the staff augmentation or outsourcing: risk, reliability and sometimes management.

  • The first and main risk in the managed services is the vendor reliability. As like the outsourcing, the client puts his resources to the risk, having no major influence on the workflow. The most secure fact that helps to avoid such risk are recommendations and comments from the previous clients.
  • As it was already mentioned before, the advantage of the managed services vendor is the availability of rare skills and/or technical equipment. All these instruments are not so simple, cheap and fast to get. The qualified and experienced vendor’s services will require significant expenses. Of course, it is relatively cheaper and significantly faster than if you do this by yourself, but the price is still high, making it a strong disadvantage when comparing staff augmentation vs managed services.
  • Despite the inquiry for entire work execution, the responsibility for the result lies on the client-company. That means that in the case of flaw, the compensations outgoings are also client’s responsibility. In its turn, the expenses may exceed the contract cost.

For the most of the companies, there is no one versatile approach to the project sourcing. Some of the requirements are better to execute with staff augmentation, the other ones with the managed services, and sometimes there can be even some combination of the approaches. The choice of the suitable model can be a tough decision. Many of the facts mentioned above can become part of a detailed cost benefit analysis. Whereas some companies feel comfortable, making this decision internally, some others prefer to apply to the IT consulting company. When you chose a vendor, you may not only chose better one among staff augmentation vs managed services but take both of the methods to consider. If you can’t choose one — you may combine the decisions.

So, the answer to the main question, what model is better among the staff augmentation vs managed services confrontation — is up to you to decide. Despite the models are similar, their functions remain contrasting.

Picking up the best model for your business? Existek is a custom software development company with reach expertise in both IT staff augmentation and managed IT services. Contact Us and or visit our Services Pageand we’ll help you select and implement the approach that will be the most effective for your specific business case.

Download “2017 Global Custom Software Development Rates” to get a comprehensive analysis of the pricing in three most popular onshore and offshore outsourcing locations. Hourly rates cards for these territories are included.

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