Choosing Between Staff Augmentation And Managed IT Services

Stratistics Marketing Research Consulting released the figures for spending in the worldwide IT outsourcing market. Expectations are that the amount will reach $481.37 billion by the year 2022. 

The figure is not at all surprising- this is because companies are looking forward to reduce their IT component spending. The focus is shifting to the main functions of the organization.

To solve the various enterprise challenges, the two models of IT outsourcing- staff augmentation and managed IT services are considered the best. 

We take a closer look into both these models to determine which one is better suited to the needs of companies.

staff augmentation services


Staff Augmentation

Staff augmentation refers to hiring professionals from outside the company. This is done on a contractual basis to cover up for the in-house staff.

Staff augmentation model has several benefits-

  • Cost-Effectiveness

There are a lot of companies without the need for added staff. This eliminates the point to pay regular wages. Staff augmentation provides businesses with complete support through skilled professionals.

  • Adaptability

Whenever a project comes up to a company, it is easy to understand and make a note of the missing skills to complete the project. Staff augmentation comes with the feature of adaptability. As a result, you can quickly scale up and down as per the project range.

  • Resistance to Attrition

Obtaining and keeping a permanent staff is a difficult task for companies today. Because IT services are growing in demand, employees move over from their present employer to another more quickly.

There is not much companies can do to avoid this, but staff augmentation makes it less difficult to fill their staff with qualified specialists.

These are the important attributes of staff augmentation. However, it is interesting to note that staff augmentation is perfect only as a short-term solution. Future-oriented companies want to keep their technological development safe for a long time.

With the benefits on offer through staff augmentation, many people in the top management look to make this model a permanent one in their operations.


A Few Limitations of Staff Augmentation 

Choosing staff augmentation from a permanent hiring model brings two critical disadvantages to light-

  • Overall Cost- Effectiveness Gets Challenged

When you choose staff augmentation, the labour costs increase. These expenses include overheads and positive margins too. Regularly hiring freelancers on a contractual basis is not a permanent solution, as the administrative costs become higher also.

  • You Don’t Get Enough Insights For The Work Done By Your Contractor

Staff augmentation model does not generally mention any other service commitments than the work hours. As a result, the permanent staff often ‘invents’ new tasks to keep temporary hires busy. 

Staff augmentation brings you high-cost permanent resources. Yes, the quality of their services will be outstanding, but every company will also need favourable results too.

With staff augmentation, the customer company is entirely responsible for the infrastructure management procedure as well as quality assurance. The result, therefore, also becomes the responsibility of the company.


Managed IT Services

The managed IT service model is a definite mix of services, responsible for applying an external degree of control on a company’s non-core systems.

The model brings in all benefits of flexibility and skill access of staff augmentation. It then overcomes the major disadvantages the former model has to offer.

The advantages of managed IT services are the following-

  • An Improved Cost Model

The vendors of managed IT services tie the pricing of the contract to the outcome. In other words, if customer demand for certain services grows or decreases, the price of the contract will differ accordingly.

  • Guaranteed Output

Because service delivery includes a service level agreement (SLA), the overall scope and time limit of the service are all documented. Service providers try to fulfil their commitments, so they are required to put their value of work at a maximum.

  • Access To Many Different Skills

Organizations providing managed IT services are often more significant than staff augmentation companies. 

As a result, these companies offer their customers an extensive base of skills, knowledge and solutions necessary to meet the ever-evolving requirements of customers.

Managed IT service model keeps your focus on the core business and transfer all the supporting services to a skilled and result-oriented company.


Adopting Managed IT Services

Stepping to a managed service model is not a single step, but involves a gradual procedure of four phases-

  • Planning

Firstly, it is essential to have a clear definition of what to outsource.

It is vital that you do not delegate the processes, knowledge-intensive and makes you stand apart from the crowd. If you choose the wrong service for outsourcing, it can result in vendor lock-in.

Also, have a clear decision regarding the scope of managed IT services. If it is a hosting service, for instance, you should have a clear idea when the hosting begins and ends. It looks pretty ordinary but can have problems in the future.

  • Choosing a Vendor

The reliability of a managed IT service vendor is a huge factor in making companies doubtful of selecting this model.

Shortlist managed IT service providers based on criteria like recommendations from experts, the capabilities of vendors for a particular technology and testimonies from previous customers.

The rest of the process is simple. Interact through one-on-one sessions to get more information and proceed ahead.

  • Transition

A transition plan is generally in an SLA, where the methodology and schedule of a project are specified. Over-specification on the way the service will be delivered is a common problem to avoid in this phase.

Transition is the phase where the actual transfer of knowledge happens. At the start, a new vendor observes how the internal staff works. Right after that, this vendor takes over the overall responsibilities of service management.

  • Governance

For maintaining the consistency of managed IT services, it is vital for a customer to conduct regular reporting and performance audits, review the services in line with the SLA and ensure that the vendor stays alert to what the IT service market offers.


The Dilemma Among Staff Augmentation and Managed IT Services

Choosing between these two models depends on the kind of company looking for them. Essentially, the best way to choose is to have a detailed cost-benefit analysis.

If your company requires specific services for a limited period, staff augmentation is the perfect option for you.

However, if you are looking for a continuous operating model, having a predictable cost structure, you will want to consider managed IT services for your company.

You can connect any time in case of any doubts about the two models we have discussed above. Also, we offer staff augmentation services and co-working space, Reach out to us, if any of the above service interests you.

5 reasons IT Firms should use Staff Augmentation Services

How Staff Augmentation can help your Business

Having a tough time hiring nerds every week?

Can’t get your hold on the cream talent of the mass?

Working in an IT firm means the staff turnover ratio is quite high. We have only one straight simple solution for all your hiring related worries – Outsource!

At GoodWorkLabs, we have helped both startups and fortune 500 companies with their technology needs by providing them with the right resources. Be it popular, on-demand, or niche skills, we have helped thousands of clients achieve their product development needs by deploying the best talent pool.

Not just that, GoodWorkLabs has also helped companies set up large teams in design, development, and QA with a concentrated staff augmentation strategy.

In this blog, we share FIVE reasons why you should outsource your tech requirements.

Staff Augmentation Benefits

1. Massive reach of a highly-skilled talent pool

Consulting or staff augmentation firms have a grip on both the active and passive market. While an active resource pool is accessible to all, the real cream of talent sits in passive markets that are mostly untapped. Here is where outsourcing to a staffing firm makes all the difference to your hiring process.

The reach of consulting firms is much higher and you can hire highly skilled professionals easily. We all want technology experts to work on ever-changing product demands. Hence, it definitely makes business sense to outsource hiring.


2. Credibility with hiring managers

Staffing firms often work with the same hiring managers in order to keep the trust factor high. Corporate recruiters, on the other hand, work with several hiring managers. This trust factor and credibility is leveraged by the staffing firms and they continue to source better candidates for a given profile in comparison to the corporate recruiters.


3.  Longer guarantee periods

The best add-on benefit that comes with using staff augmentation services is that they offer an employee guarantee of 6 months to 1 year.  This is a great assurance and also a big relief to the IT firms as usually the minimum project length is 6 months. Businesses will be able to complete at least one project with the resource in the minimum guarantee period. 


4. Very Flexible and Cost-effective

The compensation of the staffing firm depends on the placement and not on how many candidates they managed to schedule for an interview. One of the biggest advantages of outsourcing your technology needs is that you enjoy the flexibility of utilizing a resource. From 6 months to 2 years, you can choose to renew your outsourcing contract and not worry about having too many resources on bench.

The staff augmentation model is very cost-effective as well. You don’t have to worry with admin and other employee onboarding costs as all of this will be taken care of by the staffing agency.


5. More consultative and less transactional

The primary aim of a technology consulting company is to find resources that are passionate, skilled, and are the perfect fit for your organization. Rather than being transactional, they go over and beyond to hand-pick candidates who will support your business in the long-run.

“Build relations and not quick transactions.”  At GoodWorkLabs, we give quality of candidates the highest priority.


Final Takeaway

Using the services of a high-quality external recruiting firm should be in your talent acquisition strategy if you are an IT firm. Instead of forcing these firms to stick to your internal control policies, leverage their potential of finding the best resource for you. Look at staff augmentation services as a multi-year investment that will continue to give you ROI. 

Get a gist of the consulting services provided by GoodWorkLabs and if you would like to get a free consultation on your outsourcing needs, then contact us.


Ready to start building your next technology project?