Staff Augmentation vs. Outsourcing — Which Do You Need?
In the dynamic world of business, meeting project demands and staying competitive often requires supplementing your in-house team with external talent. Two popular strategies for achieving this are staff augmentation and outsourcing. But how do you decide which approach is the right fit for your organization? In this comprehensive article, we break down the nuances of staff augmentation and outsourcing, outlining their strengths, potential drawbacks, and ideal scenarios for their implementation.
You’ve come to the realization that you need help. Your team lacks the resources necessary to keep your systems up-and-running, or you simply can’t attract and retain the kind of talent you need to keep your data center operational.
You’re not alone. Nearly 16 million temporary and contract employees are hired every year. Of those, 13% are Engineering, Information Technology, and Science workers.
IT staffing can be quite frustrating, because IT specialists have the ability to translate their knowledge to a wide range of industries, and they do. One in five temporary workers choose temporary or contract work because of the scheduling flexibility, and the majority — nine out of 10 — are satisfied with their IT staffing company.
Staff augmentation and outsourcing allows you to have options above and beyond typical hiring scenarios. But, which option is best for your specific conundrum?
Staff augmentation
The definition of augmentation is described as “the action or process of making or becoming greater in size or amount.” As it implies, therefore, staff augmentation means adding to your internal IT team. Whether it’s a specific skillset that’s missing, or for the duration of a specific project, the benefit of staff augmentation is that you bring on resources as you need them — not for the long term.
These short-term agreements are accompanied by a low-formality contract that outlines whether you require assistance for a couple of days, a couple of weeks, or even a couple of months. The concern is that as you keep these contracted employees on for longer terms, you start to lose out on the cost-saving benefits of augmenting your staff instead of hiring.
Considering that these staffers function as members of your in-house staff, it’s up to your IT manager to assign work and to manage their daily duties. Anything administrative such as payment goes through the staffing company.
The key to success when contracting staff for short periods of time is understanding that you require an individual’s input into a project. You’re paying for the time they’re on-site, whether or not the project is completed.
When Staff Augmentation May be Right for You:
You’re unable to hire or retain staff to meet your workloads
If, during a short-term hiring freeze or long vetting processes, you require immediate staff to keep your business afloat, staff augmentation allows you to add those members to your team as soon as possible. The biggest benefit to staff augmentation is that there are IT techs available when you need them. So don’t let your business suffer while you find the right candidate.
You require IT for specific project or specialized skills
If your team has created an innovative project, but needs help with deployment — or even monitoring systems while they deploy — then staff augmentation adds that extra body to your team. A larger team means that you can initiate those new projects without hiring a permanent staffer.
Additionally, as you roll out new technologies, you can request specialized skills that your team may lack so that they can provide on-the-job training while working with your team.
Staffing flexibility
Sometimes your IT needs ebb and flow throughout the year. Having an entire position for a job that’s only needed twice a year just doesn’t make economical sense. Augmentation allows you to temporarily hire so that you’re staffed for those busy times, yet lean throughout the rest of the year.
Cost of hiring/firing/vacations/salary/benefits
If you’ve decided that you need to bring on an extra resource, doing a cost analysis of consulting versus hiring means that you’ve thought it through. If you’re planning to bring on a consultant for 10 months or more, there’s a good chance that you’re paying more than the cost of hiring, firing, vacations, and benefits for an in-house employee.
If hiring on for a longer term, consider the salary vs. the consultants rates. If you want your employee to work 2080 hours in a year (40 hrs/wk x 52 weeks), divide the salary by 2080 to get their hourly rate. Don’t forget to factor in vacation days, and the cost of benefits.
Background Screening and The Vetting Process
Double-checking someone’s qualifications, trusting Human Resources to do the proper follow-up, and conducting interviews can take an incredible amount of time. Research states that IT professionals don’t even put that much stock in traditional resumes.
- 64% say that resumes include buzzwords that are actually irrelevant to personal experience
- And 39% of resumes are complete fabrications
Staff augmentation through reputable staffing companies ensures that employees are frequently tested, trained, and kept up-to-date with industry standards. Extensive background screening — including a tech assessment, behavioral interview, and reference checks — is done for you to avoid placing an individual in a situation where they are not qualified.
According to an IT Professional Perspectives Survey (ITPPS), 81% of IT professionals say that a thorough vetting process is integral for a good match. However, one out of four IT professionals say that it’s still common for unqualified individuals to land the job.
The Pre-Employment Directory declares that a poor hire can end up costing you more than $50,000! So take the time and get it right!
The benefits of staff augmentation include all employee management; time and attendance, payroll, and training is handled by your staffing company. Meaning that your team can focus on the project at hand and not the paperwork required to pay this member of your team.
The Definition of Outsourcing:
Outsourcing means to obtain goods or services from a third party in place of an internal resource. In IT, this would entail things like handing the management of your data center, your telecommunications, or your cloud services to another company.
These contracts are long term, usually for a number of years, based on a fixed rate, and considered a partnership between the two companies. Your outsourcing vendor decides how many staff are required to handle the job, the technical expertise needed to complete it, and whether it can be done on or off-site.
The benefits to outsourcing is that you’re hiring a company that promises to deliver an outcome, and everything they need is decided by them and included in their initial rate. By opting for an end-to-end, completely managed service solution, you don’t have to worry about managing that portion of your technology and can then focus on new innovations.
When Outsourcing May be Right for You:
Your need isn’t for a core business function
Tasks that aren’t part of your core service offerings can be overseen by a third party. Examples include mainframe operations, help desk and support, data center operations, or telecommunications. These services don’t vary drastically from business to business and their core expertise can ensure that you’re operating in line with best practices.
Major skills gap or an inability to retain staff
Whether it’s for a new technology or platform, the necessary expertise to regularly maintain just isn’t available within your organization. If an in-house team member just simply cannot be found, outsourcing for the long term ensures that your systems are regularly maintained, monitored, and updated so that you’re always on.
You want to reallocate your internal resources for innovative purposes
According to Statistics brain, 28% of companies who outsourced their IT functions were better able to plan ahead and develop new technologies to better line up with their business goals. When you’re able to take advantage of the knowledge and expertise of an external IT team, you can divert your resources to high-priority tasks and stop playing catch-up.
Access to a wide range of knowledge
When your services are outsourced, you can rest assured that the task is being handled by a team with the best industry-knowledge. In stark contrast to staff augmentation, or even staffing, your services are being handled by an entire team of specialists who are sharing their knowledge in order to deliver the best outcome.
Risk transfer
Whether it’s for disaster recovery and backup, your cloud services, data center maintenance and operations, or systems administration. The liability to properly maintain and deliver the best possible uptime sits squarely with your outsourcing partner.
Hint: Make sure to pour over your SLA with a fine-toothed comb so that risk and liability are clearly laid out.
The biggest benefit to outsourcing your services is that you can breathe easy that it’s being managed and that your business will always be on — without investing in an internal team to manage it for you. With white glove treatment, most managed services providers ensure that the partnership is a profitable one by taking advantage of new technologies, automation, and both on-site and off-site monitoring.
Staff Augmentation vs. Outsourcing: Which one is right for you?
What it comes down to is the type of IT services your business requires and what your goals are. If it’s a short-term solution, staff augmentation may be your best bet. However, if it’s a function that requires frequent monitoring and maintenance, coupled with changing industry expertise, outsourcing may be a better consideration.
Of course, you need to weigh the pros and cons of hiring one individual versus a provider, and factor in how long you’ll need the services. Consulting with a managed services provider who offers both staff augmentation and outsourcing can help you determine which service would benefit your specific business goals, but understanding the basic differences means that you can make an informed decision.
| Difference | Outsourcing | Staff Augmentation |
|---|---|---|
| Cost | Fixed rate | Based on hourly wage |
| Contract | Long-term | Short-term |
| Type of duties | Data center, telecommunications, mundane tasks that are not always business specific | Project-based |
| Manager’s role | Vendor decides on the number of staff required, hours worked, and oversees operations | Internal IT team manages employee while supplier pays wages |
| Knowledge | Access to knowledge of team | Relying on knowledge of individual |
| Commitment | Deliver on SLA — provide an outcome | Committed to providing input |
| Risk | Provider assumes risk | Risk remains within IT department |
Staff Augmentation vs. Outsourcing FAQ
What is the difference between staff augmentation and outsourcing?
Staff augmentation involves adding temporary or contract-based resources to your in-house team, usually for a specific project or skill requirement. Outsourcing, on the other hand, involves delegating entire operations or functions to a third-party service provider on a long-term basis.
In what scenarios is staff augmentation considered the best choice?
Staff augmentation is ideal when you have short-term projects, need specific skills for a limited time, experience workload spikes, or want to keep control over the project. It's also suitable when you prefer not to commit to long-term hiring but need to quickly ramp up your team.
When would a company opt for outsourcing over staff augmentation?
Companies choose outsourcing when they want to delegate non-core functions, face major skill gaps, or want to reallocate their internal resources for innovative purposes. Outsourcing is also a good option when access to a wide range of knowledge is required or when risk transfer is a significant concern.
How does staff augmentation impact a company's cost structure?
Staff augmentation can be cost-effective for short-term needs as you only pay for the services when you need them, avoiding long-term salary commitments, benefits, and overhead costs associated with full-time employees. However, if these temporary roles become long-term, the cost benefits might diminish.
How does outsourcing mitigate risks in IT operations?
Outsourcing transfers some of the operational risks to the service provider. These include risks associated with service delivery, performance, compliance, and technology changes. The service provider is contractually obligated to meet specified service levels and outcomes, thereby bearing the associated risk.
What are the main benefits and potential drawbacks of staff augmentation?
The benefits of staff augmentation include flexibility, cost-effectiveness, access to specialized skills, and retained control over projects. Drawbacks can include management challenges, potential loss of cost benefits over the long term, and retaining the risk within the company.
What are the key advantages and potential challenges of outsourcing?
Outsourcing benefits include access to wide-ranging expertise, freeing internal resources for core functions, risk transfer, and long-term cost-effectiveness. Challenges can include loss of direct control over outsourced tasks, potential issues with service quality, and reliance on the vendor for critical functions.
How does the commitment differ between staff augmentation and outsourcing?
Staff augmentation usually involves short-term commitments, typically project-based, whereas outsourcing entails long-term contracts often spanning several years.
How does staff augmentation and outsourcing affect management roles in an organization?
In staff augmentation, the management of augmented staff typically remains with the organization's internal team. In contrast, for outsourced services, the service provider assumes management responsibilities for the contracted functions.
How can I decide whether to choose staff augmentation or outsourcing for my business?
The decision depends on your specific needs, goals, and the nature of the tasks. If you need specific skills for a short-term project and want to retain control, staff augmentation might be best. If you want to delegate entire functions, free up internal resources, or tap into extensive expertise, outsourcing could be the right choice.