IT staff augmentation and managed services are two commonly used models for businesses to manage their IT needs. While both models involve outsourcing IT tasks, they differ in several key aspects, such as the level of control over the IT function, cost structure, and scope of services.
Understanding the differences between IT staff augmentation and managed services is crucial for businesses to choose the right option that aligns with their goals, budget, and resources. In this article, we will explore these two models and help you determine which one suits your business needs.
Many companies of all sizes and expertise during this period of digital transformation have sought to increase their agility, overcome short-term capability deficiencies, and accommodate the impact of hiring restrictions in developing digital products, applications, web pages, software, and more.
Most of these companies specialize in a single area and lack the necessary IT teams or resources to take on digital products. However, there are two types of external recruiting models that these companies can consider as alternatives to hiring regular staff.
Understanding Staff Augmentation & Managed Services
Staff augmentation and managed services are two of the most common types of collaboration. Although both SA and MS have proven to be time and cost effective, they have significant distinctions.
This blog will go over their fundamental principles and compare staff augmentation vs. managed services to help companies choose the best model that works best for their needs.
During this period of rapid digital transformation, companies of all sizes and expertise have sought to improve the agility of their workforce, overcome short-term capability deficiencies, and mitigate the impact of hiring restrictions for their IT Projects.
Traditionally, when companies lack specialized IT teams or resources to work on their projects, they directly hire employees to work for them. This process, however, is quite time-consuming and may be expensive as taking in new employees will have various additional costs. Recently, companies are engaging in two recruiting models as alternatives to direct hiring.
Staff augmentation and managed services are two of the most common types of collaboration companies avail of nowadays. While both are proven to be time and cost-effective, how do you know which one suits your company better?
What Is the Difference Between a Staff Augmentation and a Managed Services Model?
Staff augmentation implies expanding your current team by hiring specialized resources, usually from a staff augmentation service agency. It’s a type of temporary employment that is based on the duration of a project or contract.
Managed services is another type of outsourcing practice where the supplier/agency assumes control or management of IT services or resources availed by the client.
Differences Between the Models
| Staff Augmentation Model (Out-tasking) | Managed Services Model (Outsourcing) |
| - Provider commits to providing resources of defined capacity and skills at a price > No service commitments relative to outputs - Limited commitment - Pricing tied to hours worked and availability - Client manages the delivery model (including individual subcontractors), process, and tools - No change to the customer operating model - Knowledge vested in the individual - All delivery risks remain with the Client Committed to providing inputs | - Provider commits to providing resources of defined capacity and skills at a price > No service commitments relative to outputs - Limited commitment - Pricing tied to hours worked and availability - Client manages the delivery model (including individual subcontractors), process, and tools - No change to the customer operating model - Knowledge vested in the individual - All delivery risks remain with the Client Committed to providing inputs |
Benefits and Drawbacks of Staff Augmentation and a Managed Services Model
Let's compare managed services to staff augmentation and look at the pros and downsides of each method.
When you choose Staff Augmentation, the project's success is determined by your in-house team, while temporary workers provide the needed input.
Staff Augmentation Model (Out-Tasking)
| BENEFITS AS A TEMPORARY SOLUTION | ISSUES AS A PERMANENT MODE OF OPERATION Services Model |
| Rapid access to missing capabilities and skills Accommodable staff shortages due to unexpected events Avoidance of hiring / de-hiring costs Cost scalable to demand No impact on the operating model Easily contracted Cost model transparent | Higher cost Foster a management style that does not have a long-term plan No service level commitment All issues attributed to insufficient staffing Increase overhead managing individual subcontractors Knowledge wasted in the individual (as with internal staff, but with less control) |
When you choose Managed Services as a hiring model, you gain several benefits that will benefit your business and ensure a successful project conclusion.
Although SA is a temporary solution, it has numerous benefits and adds value for the companies that consider this model of talent outsourcing.
Managed Services (Outsourcing)
| BENEFITS AS A TEMPORARY SOLUTION | ISSUES AS A PERMANENT MODE OF OPERATION Services Model |
| Confirmed services for a committed price Provider assumes delivery risks - productive incentive Lower cost operating model than internal or Staff augmentation models Transparent line of site between services and cost Foster IT planning and documentation of knowledge | Necessitates focus on planning - must review service demands in line with business needs The operating model necessitates that the IT department relinquish execution responsibility to the provider Partnership model - long term Provider drives operating model and methods within defined parameters and requirements |
As you may have seen, the two ways are very different, and it might not be easy to tell which is better at first glance. The answer is highly dependent on your requirements.
Final Thoughts
Staff augmentation is a good option if you need a short-term solution that demands talent to come on board right away and fill specific gaps for a limited time. This strategy provides the versatility and cost-effectiveness you're looking for.
The managed services approach is the best solution if you want to outsource complete projects. Your project will be handled by specialized staff. You can save money in the long run by making your IT outsourcing costs predictable.
If you are interested in finding out more about staff augmentation or managed services and how to make it work for your company, please get in touch with our team via email at sales@lanexcorp.com or call (858) 371-9424.
