Deciding on the right approach for scaling your business’s capabilities can often feel like navigating a maze without a map.
Tech leaders frequently face the dilemma of choosing between integrating new talents directly into their existing teams or outsourcing certain functions to specialized service providers.
As David Gracey, Founder & President of Network 1 Consulting says, “Choosing the right IT support model impacts not only the immediate project’s success but also the long-term agility and efficiency of the business.”
This blog explores the nuances of staff augmentation vs. managed services, offering insights to help you align your strategic decisions with your business objectives.
Staff Augmentation vs. Managed Services: Understanding the Essentials
Staff Augmentation: An Overview
Staff augmentation is a strategy used by companies to hire skilled professionals on a temporary basis to complement the skills of their existing team.
This approach is particularly useful for short-term projects or when there is a need to fill a specific skill gap without the commitment of hiring full-time employees. It allows businesses to remain agile and responsive to market demands while controlling long-term costs.
Managed Services: A Closer Look
Contrary to staff augmentation, the managed services model involves outsourcing certain business operations or IT functions to a third-party provider.
These providers offer specialized skills and expertise and take full responsibility for the outsourced function, including adhering to a service level agreement. Managed services are ideal for companies that want to focus on their core business without the burden of managing non-core yet critical, functions. In fact, 49% say that freeing up resources to focus on core business is the most widely cited reason for outsourcing IT functions.
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Staff Augmentation vs. Managed Services: Comparing the Two Models
1. Flexibility and Control
Staff Augmentation: Offers high flexibility, allowing businesses to scale their workforce up or down based on the project demands. It provides more control over the project since the augmented staff works as an extension of the in-house team.
Managed Services: Less flexibility in scaling, but offers a hands-off approach to managing specific business functions, which can free up internal resources to focus on core business activities.
2. Cost Implications
Staff Augmentation: While staff augmentation can offer cost savings by avoiding the expenses associated with hiring full-time employees, such as benefits and long-term commitments, it is essential to monitor costs carefully. If not managed carefully, the price of continually rotating contract professionals can accumulate, potentially offsetting the initial cost benefits, especially if the augmented roles become semi-permanent fixtures within the team.
Managed Services: Opting for managed services can translate into predictable budgeting, with fixed costs for defined services, enabling better financial planning and control. Additionally, research shows that managed services can cut IT expenses by 25 to 45% and boost how well operations run by 45 to 65%.
3. Expertise and Skill Level
Staff Augmentation: This model enables businesses to select highly specialized talent that fits precisely with the project’s requirements, offering an opportunity to inject cutting-edge skills and fresh perspectives into the team. Moreover, staff augmentation facilitates knowledge transfer, allowing in-house employees to gain new insights and competencies from the augmented professionals, thereby enhancing the overall skill set of the team.
Managed Services: Businesses gain access to a pool of experts who are continuously trained and learning the latest trends and technologies in their field, ensuring that the service provided is competent and leading-edge. This arrangement also allows companies to leverage the collective knowledge and experience of the service provider’s team, which can introduce more innovative solutions and efficiencies than might be achievable in-house.
4. Risk Management
Staff Augmentation: The responsibility for managing project risks largely remains within the company, requiring effective oversight and integration strategies to mitigate potential issues arising from new, temporary team dynamics. Additionally, the company must ensure that the augmented staff adheres to its risk management protocols and project standards, maintaining consistency and quality across the board.
Managed Services: By outsourcing to an MSP, a company can leverage specialized risk management expertise, benefitting from the provider’s robust frameworks and industry-specific knowledge to anticipate and mitigate risks. This shift not only alleviates the internal burden of risk management but also provides a level of assurance that challenges will be proactively addressed and resolved by the service provider, often before impacting the business.
5. Quality
Staff augmentation: Quality control is primarily in the hiring organization’s hands when staff augmentation is utilized. The company must establish clear standards and oversight mechanisms to ensure the augmented staff meets expected quality levels.
Managed Services: Managed services providers must maintain a high level of quality to uphold their market reputation and fulfill contractual obligations. They bring structured quality assurance processes, methodologies, and expertise, often applying industry best practices to ensure consistent service delivery.
6. Scalability
Staff augmentation: Businesses can dynamically adjust their team sizes and skill compositions to meet project demands. This flexibility allows companies to respond swiftly to market changes, project scope adjustments, or emerging challenges.
Managed Services: Managed services provide a scalable model that is often predefined in the service level agreements. This allows businesses to scale their operations up or down in a structured way, ensuring service delivery is adjusted and aligned with the current business requirements.
7. Company Culture
Staff augmentation: Introducing external professionals into an existing team can have nuanced effects on company culture. These temporary team members must assimilate quickly into the company’s working environment, which can be both a challenge and an opportunity for cultural exchange and enrichment.
Managed Services: Managed services typically operate more autonomously from the client’s internal culture. This separation can minimize direct impacts on the day-to-day cultural experience of in-house employees, maintaining a clear delineation between external services and internal operations.
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8. Employee Morale
Staff augmentation: The impact on permanent employees’ morale can vary. On one hand, the infusion of new skills and perspectives can invigorate teams and foster a dynamic working environment. On the other hand, if not managed well, it could lead to feelings of insecurity or undervaluation among existing staff.
Managed Services: The effect on employee morale can be predominantly positive, as outsourcing non-core functions often frees up internal resources to focus on strategic, fulfilling tasks that align with the company’s core values and objectives. However, transparency about the role and scope of managed services is crucial to avoid misconceptions and resistance from the internal team.
Additional Differentiators: Managed Services vs Staff Augmentation
| Attributes | Staff Augmentation | Managed Services |
| Engagement Model | Flexible, project-specific engagement | Long-term, ongoing partnership |
| Focus | Enhances existing team capabilities | Comprehensive outsourcing of functions |
| Decision-Making | Client retains significant control over project details | Provider makes decisions within the scope of services |
| Integration | Integrates with in-house teams | Operates independently, with minimal integration |
| Talent Access | Access to a broad talent pool | Access to a team with consistent, specialized expertise |
| Resource Management | The client manages augmented staff | Provider manages all resources |
| Outcome Responsibility | Client bears project outcome responsibility | Provider is accountable for service outcomes |
Make Informed Staffing Decisions with Network 1 Consulting
Choosing between staff augmentation and managed services hinges on understanding your business’s unique needs, project scopes, and long-term objectives.
Whether it’s the agility and specialized skills offered by staff augmentation or the comprehensive, worry-free solution of managed services, the decision should align with your strategic goals and operational requirements.
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If you are still confused about which path to choose, we’re here to offer clarity and support.
Network 1 Consulting is equipped to provide you with the insights and advice you need to make an informed choice that aligns with your business objectives.
Contact us today to schedule a free consultation, and let us help you navigate the complexities of IT staffing and management solutions.
