Which Strategy Best Suits Your Business Needs?

Thanks to globalization and the democratization of IT services, companies all over the world no longer need to rely solely on domestic software development providers to furnish their businesses with credible applications, infrastructure solutions, and corresponding services.

They can hand over to third parties everything from the tiniest tasks to entire projects, including custom software creation, marketing & promotion campaigns, software design services, and even human resources.

IT outsourcing can help businesses save a good part of their budget. By various estimates, companies cut 20-30% of their expenses due to outsourcing.

These savings mostly come from paying lower wages in areas like Asia (China, India, Thailand) and Eastern Europe (Poland, Ukraine) and not having to bear excessive costs like office space and supplies that come with in-house staff.

According to Statista, the global gain in the IT outsourcing direction of the IT services market is projected to grow by huge leaps, reaching a total of $541 billion in 2024.

With all this information in mind, it becomes pretty clear why organizations regard IT outsourcing in all its forms (staff augmentation, managed services, full outsourcing) as the primary model to perform a wide scope of technological tasks.

Today, we will make up a detailed tet-a-tet comparison of managed services and staff augmentation models to help you normalize your staff expenditures and reach optimal results.

Staff Augmentation

Essentially, staff augmentation is when you employ outside talents to temporarily labor with your in-house department or for a specific project. You get to decide how they’re used and supervise their work just like you would with your own team.

The best thing about such a is flexibility. You can easily adjust the size of your team up or down depending on your conditions and consequences.

By and large, this approach is great for short-term projects that need unique or superior mastery, filling temporary skill gaps, or running busy periods with lots of work.

Ups and Downs of Staff Augmentation

It goes without saying that staff augmentation has its ups and downs.

The good thing about this format is how pliable it is. You can quickly add more people to your team when you need them or cut back when things calm down.

Plus, you get to administer the augmented talents directly, so you can keep everything aligned with your undertaking goals. Since they work right alongside your in-house software developers, it’s easier to mesh their skills with what you already have going on.

On the flip side, managing extra staff means more work for you. You’ll need to oversee their tasks and coordinate their efforts, which can take time away from other important things.

Also, because they’re not permanent team members, they might not be as invested in the project, which could affect their performance. Lastly, if the project goes on longer than planned or isn’t managed well, costs can creep up.

Managed Service Model

Managed services, in turn, mean entrusting certain tasks or functions to a third-party company that takes care of certain aspects so you don’t have to worry about it day-to-day.

It’s normally a long-term arrangement with steady support, rather than just short-term fixes. Clear agreements, known as SLAs, outline what you can expect from the service.

Managed services are great for IT and cloud hosting, help desks and customer service, and general supervision and operations. Thus, you get expert management of these functions while you stay focused on what you do best.

Pluses and Minuses of Managed Services

On the plus side, the managed service model is super convenient. You hand off certain tasks or functions to a third-party company, so you don’t have to think about how they come around.

Costs are usually more predictable with fixed prices or service packages, which makes budgeting clearer. Plus, you get access to expert skills and resources that you never had in-house.

Nonetheless, since you’re not governing these tasks on your own, you might have less impact on how things get done.

Managed services also often involve longer-term contracts, which can tie you down. If your conditions suddenly change or the service provider isn’t meeting your expectations, making adjustments can become a nightmare.

Deliberations for Time and Materials in Both Models

When deciding between staff augmentation and managed services, it’s helpful to think about how each one tolerates time and costs, as this can influence your project in different ways.

With staff augmentation, you have a lot of space to move. You control how time is spent and can alter something on the fly. This means you’re actively governing the project and can make quick modifications if needed, but it also means you have to stay on top of everything yourself.

Costs are usually based on hourly rates, so you can scale your team up or shrink it as required. Still, if the project drags on or gets complicated, costs might rise.

Managed services, on the other hand, imply a more predictable format. Time management is held through service agreements, so you don’t have to worry about daily details.

Costs are often fixed or based on service packages, which makes budgeting easier. You don’t manage the tasks directly, so any changes to the project might implicate renegotiating the agreement or added charges.

This model guarantees undeniable stability and lets you focus on your core chores without getting bogged down by routine points.

To briefly sum it up, staff augmentation gives you control and adaptability, while managed services suggest predictability and less daily administration. The most satisfactory pick depends on how much control you want versus how much convenience you’re looking for.