Managed Services vs. Staff Augmentation

The modern economy heavily relies on communication systems and other IT advancements. Staying on top usually depends on a company's ability to research and develop new tech. However, having an elite internal team takes a lot of money, which is especially cumbersome for smaller businesses.

What's even worse, organizations often struggle with technicalities. Instead of putting their energy into product development, they spend the majority of their resources recruiting or managing top talent. This can be damaging, especially when you're dealing with a time-sensitive project.

As a result, most companies have to outsource part or the entire work to stay afloat. Between several different options, IT staff augmentation and IT managed services are considered the best alternatives.

These two business models serve two distinct functions, and you can hire both of these companies simultaneously. Generally speaking, the staff augmentation model is better for fulfilling short-term needs, while managed services are better in the long run. In this article, we'll compare managed services vs. staff augmentation analyzing the pros and cons of both approaches. 

The main differences between staff augmentation vs managed services model

IT outsourcing is similar to any other form of outsourcing. For example, it allows companies to reduce software development time while increasing cost-effectiveness.  Furthermore, it eliminates hiring and training for the IT team. A company can focus on its primary activity without having to worry about the technical side of things.

Here is how staff augmentation and managed services compare to each other:

  • The best thing about staff augmentation is that the client company retains full control over the processes. On the other hand,managed IT services providersare external entities that work outside of the company.
  • IT augmentation model presumes a more hands-on approach. The provider's employees become a part of the client's team, working under their supervision. Managed services providers are independent, and they might possess the skills that no one in the company does.
  • Staff augmentation is excellent when you need to tackle an issue quickly. For example, you can hire these specialists when some of your employees get sick or take an indefinite leave. Managed services model is much better for handling long-term infrastructure and security.

As it usually goes, there's some overlapping between these approaches. For example, most outsourcing companies will do their best to make the project a success regardless of the concept they're using.

So, you can receive consultation and business ideas from both augmented staff and managed service providers. Top providers are even willing to provide services that weren’t in the initial contract.

Definition of managed IT services

Managed IT services are a type of external outsourcing. A customer gives a specific task to a third-party company, which they execute during an allocated period. These providers can perform various tasks, including VOIP, cybersecurity, disaster recovery, etc. Managed IT services are especially popular among businesses that don’t have enough money to create their own department.

The best thing about such services is that you’ll never have to think about IT problems. The provider solves all these issues for you, and once they’re done, you get a finished product. Unfortunately, this also means that you have little control over their processes.

Like with other outsourcing processes, issues might occur if you choose the wrong provider. Given the importance of IT, unprofessional or bad service can set your business several months, if not years, back. The situation can escalate if you sign a multi-year MSP contract.

Managed services pros and cons

Pros:

Extremely effective approach

The main reason why you should hire one of these providers is for their efficiency. Instead of purchasing all this equipment and training your staff, you can simply delegate tasks to an external organization. However, there are situations where it’s much better to establish your in-house team.

Improved security

In most situations, outsourcing your IT tasks can improve yourcyber security. These organizations have excellent protection, ensuring that all your data is safe. Furthermore, they have much more experience compared to fledgling in-house teams.  

Know-how

Speaking of experience, managed service companies usually consist of experts from different IT fields. In most cases, their top management includes several informational veterans.

Flexibility

Most managed service providers are highly motivated entrepreneurs who work on per project basis. It’s in their best interest to get things done as soon as possible. They are not constricted by anyone, which can’t be said for people who are a part of your in-house team.

Objectiveness

One of the common issues when running an in-house team is bias. In other words, the management is too close to the problem that they often neglect obvious issues. Managed service providers are much more objective and can create solutions to tackle specific situations.

Cons:

Slower response

Although customers have a direct line of communication with their service providers, it sometimes takes time to address the issues. Response time to a crisis is much slower compared to that when you have a dedicated team.

Higher long-term costs

Although creating your own team can be painful at first, this is an efficient strategy in the long run. The biggest issue with these teams is that you'll need to spend a lot of money on training and infrastructure. However, once things are set up, it becomes easier to manage costs and employee turnover.

Lack of control

The biggest problem for customers is that they won't maintain complete control over their processes. We've previously mentioned slower response, but you should also consider other potential issues, such as access to sensitive data. If managed solution company encounters an issue, they might be reluctant to inform you.

Provider-related issues

You should always keep in mind that the IT managed service provider is a separate entity. Like your company, they encounter various challenges that might transform their organization over time. In the most drastic cases, the provider might go out of business, forcing you to quickly find a replacement. 

Scaling issues

When a company creates an IT department, they use it to address all its current and future needs. By adding new software and employees, they can scale almost indefinitely. The same can't be said for providers that might, eventually, become too small to meet your needs.

With this approach, you can hire a team that can efficiently finish a specific project. You can choose a company according to your current needs. In other words, you can pinpointthe right programmerswith specific technical knowledge and tools so that everything goes smoothly.

To ensure that everything goes well, you should ask them for regular reports. Although you’ll never have full access to their internal processes, you should have at least some semblance of control over the project. That way, you won't be surprised if they're unable to meet deadlines or if something else goes awry.

Definition of IT staff augmentation

Hiring IT staff augmentation companies is an excellent solution when an organization hits unexpected roadblocks. When the project is too difficult for a company's team to handle, or they suddenly lose a team member, the best way to address this is by hiring outside experts.

Unlike managed service model, you're not outsourcing the entire process to another company. Instead, you're bringing outside contractors to work alongside your team. These professionals should be flexible enough to adjust quickly to other employees and provide feedback and expertise when needed.

Staff augmentation firms give you a lot of flexibility, both in terms of budgeting and required skills. With this approach, you can quickly scale up or down, depending on the situation. As you can presume, this is mostly a short-term solution meant to tackle the company's immediate needs. It's not ideal in the long run. 

These professionals work directly under the company's project manager.

Staff augmentation pros and cons

Pros:

Quick integration

Augmentation providers' success is based on their ability to adapt. Not only should they have fantastic technical skills, but they should also be good with other people. Great professionals can join a team on the fly without disrupting their flow.

Adding new skills at a low cost

When adding new team members, companies spend lots of money on hiring and training. Although the long-term cost of staff augmentation services is higher than traditional onboarding, it makes sense in the short run. Furthermore, you can get an expert with a polished skillset required to finish the project.

Flexibility

Similar to managed services, staff augmentation provides a certain level of flexibility. You can add or remove outside contracts at a whim without having to think about contracts, severance pay, and other things. This allows businesses to easily manage clients’ demands.

Easier management

Employees hired with staff augmentation tend to be easier to manage. You don't have to hassle by having a large team working under contracts when you can simply add a few experts when a need arises.

Meeting deadlines

As mentioned, staff augmentation is especially fantastic when you have tight deadlines. These employees work under a plug-and-play principle, providing results almost instantaneously.

Fewer internal conflicts

Compared to managed service providers, permanent IT personnel are less threatened by employees hired via staff augmentation. There is less friction between them and permanent workers, which isn’t always the case when you hire an external team.

Cons:

Certain training is required

Given that the augmented staff has to become a part of your team, they might still require some training. For example, you’d have to introduce them to internal policies and methodology.

Initial loss of productivity

Although this is a plug-and-play system, that doesn’t mean it will provide excellent results from day one. In fact, you might lose a week or more integrating these new staff members.

Initial loss of management resources

Among other things, your management might have to invest some time in onboarding these specialists. This is why it’s much better to hireIT staff augmentation companiesyou previously worked with.

Doesn’t work in the long-run

As previously mentioned, this approach is simply not good in the long run. You can always pay your in-house employees less than you would pay for temporary assistance. So, unless you’re dealing with tight schedules, there’s usually no point in hiring these specialists.

It's much easier to monitor staff augmentation experts than outsourced external teams. As they'll work on your premises, you can control their every move. This also means that it's much harder for them to misuse the company's sensitive data.

However, staff augmentation does come with a price. Paying for short-term service is always more expensive than having a dedicated in-house team. In fact, staff augmentation is more expensive than a managed services provider. As if that wasn’t enough, these professionals should get acquainted with your processes to provide optimal results.

MSP vs. Staff Augmentation: which one should you choose?

After going through all of this, it shouldn't be hard to compare the augmentation vs managed services model. Here are the situations when staff augmentation is a better choice:

  • The customer wants to have full control of every development stage.
  • The company doesn't want to risk a data breach.
  • There is a deadline looming over your head, and it feels like you won't finish a project in time without outside help.

On the other hand, there are situations where managed services provide better results:

  • For whatever reason, the company doesn’t want to recruit a specialist in a specific field.
  • The customer thinks that the outside business can provide better results in the long run.
  • The hiring company wants to delegate managerial processes.

Both of these approaches are very situational. In fact, you can use them simultaneously.

As mentioned, staff augmentation is an excellent, short-term solution, and managed services provide better results in the long run. However, none of them can compare to having a fantastic, flexible in-house department.

These approaches are really good if you’re doing certain things infrequently. As it doesn’t make any sense to hire a long-standing team, you’ll simply outsource work to staff augmentation experts and managed service companies.

The most important thing when choosing a company is to find someone who is a good communicator. This is especially important for staff augmentation experts as they’ll become a part of your team. The last thing you need is to pay someone who will bring discord into your offices.

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