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IT Staff Augmentation vs. Managed Services: Which to Choose?

24.06.2021 Darya Tryfanava
2 Comments
IT Staff Augmentation vs. Managed Services: Which to Choose?

In a global economy characterized by instant communication and state-of-the-art technology, remaining competitive is both imperative and tricky.

But what should a company do if it has no internal resources to deal with an issue?

If you hire an in-house team, you risk spending too much energy, time, and money on recruitment, rather than project completion and launch—especially when you have a fast-growth and time-limited project.

That’s why more and more companies today are seeking IT outsourcing solutions. There are two well-known options in this area: staff augmentation and managed services. Both SA and MS models are viable alternatives to a full-time in-house team, but which model will be the most effective depends on your project type and size.

In this article, we compare staff augmentation vs managed services and discuss their relative advantages and disadvantages to determine which solution is better.

Next, let’s take a closer look at these two methods.

IT Staff Augmentation vs. Managed Services Models: What Do They Mean?

A properly chosen IT outsourcing business model will allow you to cut app development costs and save time. In short, the difference between staff augmentation and managed services is as follows:

  • Under a staff augmentation model, all processes remain under your control. Providers of managed services, however, assume external control of the client’s non-core systems, managing all aspects of their functioning.
  • Managed services providers deliver services as well as consultations to help the client use their services. A managed IT services model means that a third party takes over a project and does not typically provide consultation services.
  • Staff augmentation allows for rapid scaling of specific functions. Managed services, in contrast, are best for handling processes related to (for example) infrastructure and security over the long term.
Managed Services vs Staff Augmentation Models

So, what is the actual difference between managed services vs staff augmentation models? What are the advantages and disadvantages of these two models? Let’s find out.

What Is IT Staff Augmentation?

Imagine that your team is working on a software development project and keeps hitting the same roadblocks. Even though every teammate is immensely talented, you’re still missing the key skills required to launch your product.

One of the most affordable solutions is to incorporate IT staff augmentation into your workflow. Staff augmentation allows you to bring outside personnel on board to enhance the capacity of your development team. It combines the reliability of a full-time workforce with the flexibility of project outsourcing, enabling you to scale your team up or down based on your current needs. This approach can leverage existing resources or involve hiring contract workers.

It’s considered a temporary solution, as new employees are brought on and engaged for a limited period of time. As a long-term solution, staff augmentation has fewer benefits than long-term external sourcing models such as managed services.

How Does the Staff Augmentation Process Work?

The staff augmentation process in most companies involves three core steps:

  • Determining the skill gap. At this stage, you should identify your skill gaps and ask hiring specialists to find and hire the required developers.
  • Onboarding recruited staff. Once the specialists have been recruited, they should be familiarized with the in-house team and core technical concepts. They should also be integrated into the client’s work environment.
  • Adoption of supplemental staff. This stage involves ensuring that supplemental staff engage in continuous learning and development. New team members should become valuable assets of the company’s in-house team who can deliver exceptional value on your projects.

Types of Staff Augmentation

There are two main types of IT staff augmentation models: short-term and long-term collaboration.

Short-Term Services

This type of model is commonly used by companies during busy periods as well as when an in-house specialist is on vacation or has taken sick leave.

Long-Term Services

These services are best suited for long-term projects when a company needs to fill a skill gap, cut operational costs, or save time in the in-house hiring process.

Staff augmentation types

Staff augmentation can be further divided into three categories:

Commodity

You require reliable employees to perform a specific task, but they don’t need to be highly skilled.

Examples include basic factory or warehouse work, retail, and events.

Skill-based

You’re looking for employees with specific skills, but their specific skill level is also not crucial.

Examples include data processing and basic copywriting.

Highly Skilled

You require a specialist with advanced skills.

Examples include software engineering and brand design.

Pros and Cons of the IT Staff Augmentation Model

Below are some of the pros and cons of IT staff augmentation.

Pros Cons
  • Seamless team integration. The added “resources” are treated as members of your existing team. They work as a solid mechanism.
  • Staffing flexibility. You can easily add or reduce staff to match demand. Further, individuals fall into step more effectively and more quickly than do entire separate teams.
  • Faster addition of skills at a reduced cost. Bringing on additional team members complements the missing required skills that your team lacks. In addition, you don’t have to train these employees on new skills, as they’re being hired specifically for their pre-existing skillset.
  • In-house specialist expertise. When a software project’s needs consist of specialized skills, staff augmentation can quickly fill those gaps, allowing you to focus on the overall growth and development of your business and on meeting IT needs.
  • Reduce management issues. Staff augmentation helps avoid the costs and liabilities of directly employing a larger staff. You can see the complete picture and all essential details, influence the process, and stay involved at all stages.
  • Internal acceptance. Permanent employees are more likely to quickly work well with supplemental staff than with an outsourced team and will not feel that their jobs are being threatened.
  • Meet strict deadlines. Staff augmentation is beneficial when you’re facing time constraints and strict deadlines. It can help you meet deadlines on time and implement the project smoothly.
  • Need for training. You should train your supplemental staff on the company’s internal processes, which will most likely differ from their previous projects.
  • Need for management resources. Onboarding new team members requires additional time and effort from the established team (though this is only a negative if you don’t have the resources and vision needed to supervise your IT project).
  • Integration of new team members. While the new staff gets acquainted with your company and processes, your team may not work as efficiently as you would typically expect.
  • Better suited for short-term IT support. If your company requires consistent heavy lifting in the IT department, it may be more cost effective for you to hire an in-house team.

Normally, the augmentation team members are treated as new hires for an expanding team. This means that your existing team will not feel that their jobs are being threatened and will understand that the additional members are supporting them, not replacing them.

However, new employee onboarding requires more time and effort from the established team. You should assign tasks to the appropriate team members to ensure a smooth transition for your new teammates. You should also consider security measures, access issues, and other contingencies for the work to be done.

What Is Managed IT Services?

Managed IT services means that you can outsource certain IT functions to a third-party provider, a so-called managed service provider (MSP). Services can cover almost everything, from cybersecurity needs to VoIP solutions to backup recovery and more. Organizations typically seek out outsourced IT support when they lack the capital to hire and manage their own in-house IT teams.

In an effective managed services relationship, you will benefit from predictable pricing and the ability to focus on core business concerns rather than IT management duties.

However, it’s important to note that serious problems could arise if you choose the wrong provider, which could lock you into a multi-year deal that doesn’t fit your business needs. It’s therefore crucial that you take the MSP vetting process seriously.

Types of IT Managed Services

Networking and Infrastructure

In this case, an MSP generally takes on the entirety of network tasks: establishing a LAN, WAPs, and various connections for your business. The MSP also manages backup and storage options.

Security Management

This service for remote security infrastructure involves everything from BDR solutions to anti-malware options and keeps all such services updated.

Communication Services

This service covers the monitoring and management of messaging software, VoIP, data, video, and communication apps in general. In certain cases, your provider can operate as a third-party call center.

Software as a Service

The provider offers a (usually subscription-based) software platform for businesses. Examples include Microsoft 365 Office apps, universal communication software, and antivirus software.

Data Analytic

If you’re looking for monitoring services for data management, you will most likely need data analytics. This service encompasses business intelligence to target specific trends, creating roadmaps to boost business performance.

Support Services

This option typically covers all services related to IT help, from troubleshooting routine issues to dealing with advanced cases.

Pros and Cons of IT Managed Services

Pros Cons
  • Time and cost effective. You can avoid costs related to buying new hardware, training IT staff, and paying the salaries of in-house IT professionals.
  • Skills and knowledge. Outsourcing the needs of your business to professionals allows you to enjoy the unlimited expertise they provide so that you can stay ahead of the competition.
  • Security. Outsourcing your IT needs allows you to reduce the risks of data breaches, since the provider can ensure that your business is up to par with security standards.
  • Flexibility. Unlike an in-house team, who have working hours, managed IT services providers are always available, which in turn enhances performance.
  • Monitoring. The provider monitors all the processes during the project and takes care of finding the necessary tools and resources.
  • Outcome. Normally, the managed services organization assesses the risks and provides the most suitable plan for the project.
  • Actual presence. As the IT managed services company works remotely, you will have to fix any issue that arises on site yourself.
  • Higher costs. It is not always possible to get a full package of tools and resources for a low price. Some of them require higher fees.
  • Security and control. When you hire a provider’s services, you are granting access to your business’ sensitive data and information.
  • Switching costs. If your managed IT services provider goes out of business, you may have to scramble to find a new solution, which may take a toll on your business.
  • Changing IT needs. Dealing with an IT service provider that does not address your business needs limits your efficiency and ability to scale.

The IT managed services model allows you to hire an entire team of professionals with the right skills, knowledge, and technical tools for the job.

To make sure you can rely on your new partner, you should ask for regular reports and analytical statistics so that you can keep track of the project. You should also ensure that your partner works according to the agreed plan and ensures that the case is completed on time and within budget. In this model, the project’s outcome depends mostly on your partner.

Check the partner’s previous experience and read reviews of their previous work. This will ensure that you are hiring an experienced team who will take care of your project and deliver a high-quality product. To avoid paying extra costs, review the pricing policy and check whether there are hidden expenses.

IT Staff Augmentation vs. Managed Services: Which to Choose?

So, which outsourcing model should you choose for your business? The comparison table below explains the differences between the IT staff augmentation and managed services forms of outsourcing.

IT Staff Augmentation Managed Services
Advantages
  • Seamless team integration
  • Staffing flexibility
  • Skills can be added faster and at a reduced cost
  • In-house specialist expertise
  • Reduced management issues
  • Internal acceptance
  • Ability to meet strict deadlines
  • Time and cost effective
  • Skills and knowledge
  • Secure
  • Flexible
  • Easily monitored
  • Outcome
Disadvantages
  • Requires training
  • Requires management resources
  • New team members must be integrated
  • Better for short-term IT support
  • Actual presence required
  • Higher costs
  • Possible security and control vulnerabilities
  • Costs associated with switching providers
  • Difficult to address changing IT needs
Processes Outsources tasks and functions (inputs) Outsources solutions and management (outputs)
Billing Billed based on time spent on the project, often biweekly Billed on retainer, often annually
Project types Flexible and scalable; best for rapid-growth projects Stable and reliable; best for long-term IT management
Recruiting Recruited by vendor Ready to go
Office facilities Vendor Vendor
Payroll Vendor Vendor
Management Client Vendor
Engagement Full time Full time or part-time
Overhead costs Vendor Vendor
Employee perks Vendor/client Vendor
Salary review Client Vendor
Ratings review Vendor Vendor
Communication Direct Via vendor’s PM
Best use cases
  • Short-term needs
  • Low-budget projects
  • Projects that require flexibility
  • Long-term projects
  • Outsourcing entire projects
  • Cost savings over a period of time

As you may have noticed, the two methods are entirely different, and it can be difficult to determine at a glance which one is best. The answer largely depends on your needs.

If you are looking for a short-term solution that requires talent to come on board immediately and fill certain gaps for a short period of time, you should opt for staff augmentation. This method offers the flexibility and cost efficiency that you’re seeking.

If you intend to outsource entire projects, the managed services model is the most suitable option. You’ll have a dedicated team looking after your project. Since this makes your IT outsourcing costs predictable, you can save money over the long term.

After reading this article, take a moment to watch the following video, which explains the most significant differences between IT staff augmentation and managed IT services.

Are you choosing the best model for your business? Contact us, and we’ll help you select and apply the approach that will be the most effective for your specific business case.

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2 responses to “IT Staff Augmentation vs. Managed Services: Which to Choose?”

  1. Geert H. says:

    Reply

    Hi. Now I’m going to outsource my project to an IT managed services company. But I’m not sure that the same people will be assigned to my project during the development process. Is this a crucially important issue? How to find it out without asking the vendor directly?

    • Darya Tryfanava says:

      Reply

      Hi, Geert.
      This is an important question. You should determine if your vendor can deliver and retain staff experienced with your software during the development phase and provide support and enhancements over time.
      Unfortunately, there is no clear answer. But before you get started, ask your provider a few follow-up questions about:
      – Will your staff work full time on my project?
      – Will I be told if you are changing the staff that works on my project?
      – Are the assigned staff employees of your firm, or do they work as contractors?
      – What is the turnover rate at your firm?

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