If you are looking to manage development costs, stay competitive, and deliver projects on time and within budget, outsourcing is definitely a reasonable solution for addressing your IT issues. But what type of outsourcing to choose: staff augmentation vs managed services?
Both models offer unique advantages and disadvantages, and understanding the difference between staff augmentation and managed services can help businesses make informed decisions.
In this article, we will discuss the pros and cons of staff augmentation and managed services to help you understand when each model is more appropriate. We will also provide guidance on how to choose between the two models based on your requirements and the resources available.
Difference between staff augmentation and managed services models
Although both staff augmentation and managed services are IT services outsourcing models and may seem very similar at first sight, they differ in their focus and scope.
Let’s discover the difference between staff augmentation and managed services, and what are their pros and cons.
Managed services model
What is a managed services model?
Managed services refer to outsourcing IT services to a third-party provider to manage the full scope of services to deliver the agreed product.
Unlike in-house software development, where a company has to manage the entire development process themselves, with a managed services model, the Managed Services Provider (MSP) takes on the responsibility of managing the entire development lifecycle including planning, design, development, testing, deployment, and ongoing maintenance.
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This way, a business can focus on the core business functions and strategic growth while relying on a professional software development company to handle its day-to-day IT needs.
Benefits of managed services model
Turn-key IT support and management
By choosing a managed services model, you get everything done by a team of professionals with little to no supervision. You can provide the MSP with your requirements and expected results, and the team will do their job while you can focus on your business.
Managed services model means that your MSP will be 24/7 monitoring how your software is performing and efficient troubleshooting. Compared to the in-house or dedicated team that works 8 hours per workday, a managed services model can provide considerable piece of mind to other outsourcing models.
Flat monthly fee
However, every MSP charges on their own terms and conditions which can be agreed in advance, it is a common practice to charge a fixed monthly cost for managed IT services. So, this type of engagement may be more comfortable because you know what sum you will have to pay every month and plan your expenditures accordingly in advance.
Predefined service levels
Based on the Service Level Agreement (SLA) which is the main document you sign to get managed services, you will have guaranteed service levels and expected response time to every issue based on its severity.
Drawbacks of managed services model
More costly than staff augmentation
Compared to the staff augmentation model when you can hire one or several specialists, with managed services you engage a whole team including managerial staff which obviously leads to a higher budget.
Requires trust in your MSP
Managed services type of engagement means that you rely on an external team that handles all your IT issues autonomously. Thus, to make it work effectively you have to provide a certain level of freedom in making decisions to your MSP. For someone, it may be a hard thing to do, but without trust, this model won’t work appropriately. So, the service provider should be a reliable agency that you can rely on.
Staff augmentation model
What is staff augmentation?
Staff augmentation is an outsourcing model when a business hires from one to an unlimited number of skilled specialists to supplement its in-house development team. These resources work alongside the existing development team and are usually brought in for a limited time, such as a few months to a year.
Staff augmentation is most appropriate when a business requires extra resources or specific technical skills for a particular project or task but is hesitant to commit to hiring full-time employees. This approach is particularly useful for short-term projects, seasonal work, or when businesses need to rapidly scale up their team to fulfill a specific demand.
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Billing for the staff augmentation model is generally done on an hourly or monthly basis including any additional expenses associated with the services, such as equipment or software.
Benefits of the staff augmentation model
Staff augmentation allows companies to control their costs more effectively because they only pay for the resources they hire based on the hours spent. Plus, there are no hiring or HR-related costs. Therefore, this model is particularly useful for short-term projects or when companies need specialized expertise for a specific period.
Another staff augmentation benefit is that this model is more flexible in terms of resource allocation. Businesses can adjust the size of their team based on their current needs and can quickly scale up or down as the project progresses.
Preserve full control of your project
By hiring developers within the staff augmentation model, businesses have greater control over the development process than with managed services approach. The project is managed in-house: the business manages resources, sets priorities, and makes changes as needed, ensuring that the project meets its specific requirements.
Access to a larger talent pool
The staff augmentation model provides access to a large pool of skilled professionals from around the world. This gives businesses access to a broader range of expertise, skills, and experience to adhere to their projects when required.
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Drawbacks of the staff augmentation model
Requires strict control and responsibility for the result
Unlike managed services, where an MSP is responsible for project management, monitoring, and maintenance, staff augmentation resources work under the client’s maintenance. Thus, the project results are under the client’s responsibility.
So, the staff augmentation model requires a high level of coordination between the client and the resources, as well as the necessary expertise and resources to manage the project effectively.
Since the dedicated resources are typically external to the client's organization, they may have different communication styles, cultural backgrounds, and levels of proficiency in the client's language. These differences can lead to miscommunication, which can impact the quality and timeliness of the project.
Sometimes working with remote specialists may cause delays in response time, difficulty in establishing rapport and building relationships, and a lack of face-to-face interaction. It also may result in a lack of loyalty and dedication to the client’s project.
If you want to dive deeper into staff augmentation, check out our article about the dedicated team model of IT outsourcing. There, we disclosed everything you need to know about this model: pros and cons, when it is the best option, and costs.
Managed services vs staff augmentation: what to choose?
There is no universal solution for which model staff augmentation or managed services to choose. As both types have their pros and cons, the decision should be based on your objectives and priorities.
In short, a staff augmentation model is good if you already have an in-house development team and need to hire several specialists. Managed services model, on the other hand, is for those who don’t have any in-house team and looking to outsource software development and support.
If you need a more detailed overview of various cases read the list below.
Cases to choose the staff augmentation model
You have an in-house development team. If you already have a team working on your project, it’s better to look for additional team members via staff augmentation rather than hiring the whole team from scratch.
You need specific expertise or a specialist. In this case, you can use staff augmentation services to quickly find and onboard the required professional. Plus, a broad talent pool available globally will provide you with a greater variety of high-quality specialists.
You need a flexible engagement. As staff augmentation is a very flexible cooperation model, you’ll have the freedom to increase and reduce a specialist’s workload upon request. The costs will be aligned with the actual amount of work performed.
You need a specialist for a limited period of time. If you foresee the limited amount of work that should be done and see no reason to hire a specialist in-house, it’s a great option to find a dedicated resource. The specialist will jump on the project, perform the required scope of work, and leave once the tasks are completed without additional costs.
Cases to choose managed services model
You don’t have an in-house development team. Obviously, when there is no development team in your company, hiring the whole team from scratch will cost a pretty penny including all the hiring and HR costs. Plus, the new specialists will need to have time to get along and start performing as a tight-knit team. This way, a managed services model makes a perfect solution to outsource your IT needs.
Your project is long-term. Contrary to staff augmentation which is better for limited periods of outsourcing, managed services are more relevant approach for long-term projects in terms of effectiveness, cost-wise and reliability.
You don’t want to manage development. In case you are not into controlling and leading the project, managed services will provide you with peace of mind. You can rely on your development service provider and expect the project to run according to your requirements with little to no engagement.
We hope this article helped you to get an understanding of both staff augmentation and managed services models to be able to choose the one that is right for your business.
If you are still hesitant, contact us for a free consultation. We’ll discover your priorities and help to decide how to make your project up and running.