Staff Augmentation vs Outsourcing: Key Comparison!

Are you considering hiring outside IT support for a specific project or to handle an unexpected surge in demand? When faced with a staffing crisis, you have a lot of options; nevertheless, you still end up selecting from two approaches: staff augmentation and outsourcing.

In this article, we will go over the benefits and drawbacks of staff augmentation Vs. IT outsourcing, and how it might impact your company. As a software development company specializing in IT-related services, we’ve prepared this blog which will explore the differences between IT staff augmentation and IT outsourcing.

1. IT Staff Augmentation

Staff augmentation is a form of software outsourcing service in which a corporation hires temporary skilled professionals from a software development company to increase the production of its in-house software development team. Generally, software development businesses provide staff augmentation on work and materials agreements. In which customers spend the manpower at an hourly rate and the materials required to execute the entire project.

The staff augmentation model has been utilized by a variety of organizations to address labor shortages when demand surpasses availability. Staff augmentation may be a cost-effective and straightforward option for businesses with temporary labor needs, like during seasonal spikes, seasons of enhanced activity or expansion, etc.

Let’s examine IT staff augmentation vs outsourcing in further detail, including its obvious benefits and drawbacks.

1.1 Types of Staff Augmentation

Now, we’ll take a look at the most common types of staff augmentation and how they might help your business.

• Project-Based

No matter how big or small your team is, there may be moments when you need to bring in outside technical expertise to help you reach your goals. Project-based staff augmentation becomes necessary in such a situation. In this case, you assemble a team of professionals to work on a single, discrete project. This tends to be goal-oriented and focused on the immediate future.

• Skill-Based

If your in-house teams are lacking in certain areas, you may compensate for it with staff augmentation. There will be instances when you aren’t working on a single project, but your team as a whole needs your expertise in a certain area. We see this all the time in the IT industry. Skill-based staff augmentation becomes a viable option in such a situation. Here, you search for experts who offer the knowledge your in-house existing team does not have, rather than focusing on completing a goal.

• Time-Based

Companies frequently favor temporary augmented teams. Some in-house programmers may be on vacation at the moment, or your business may be expanding and new positions are opening up, so this may be a temporary solution. Those situations can necessitate the temporary assistance of professionals.

• Hybrid

The term “hybrid staff augmentation” describes the method that combines elements of the previous two or more methods.

• Onshore

Here, you assemble a team of professionals from the same nation as you to tackle your assignment. This gets rid of a lot of the problems that staff augmentation has with time zones and cultural barriers.

• Nearshore

You can choose to bring in specialists from a neighboring nation in this particular augmentation approach.

• Offshore

As far as augmentations go, this is the most widely used one in the world. With offshore augmentation, you’re free to recruit workers from wherever in the world. Problems with project timelines, time zones, languages, and cultural variations arise from this method.

• Dedicated Team

With this form of team augmentation, you bring in an outside group of IT experts to help out your existing staff.

2. Key Benefits of Staff Augmentation Services

Staff augmentation offers numerous benefits, which is why many businesses prefer this model. Let’s explore some of these advantages.

2.1 Cost-Effective

IT staff augmentation managed services provider reduces recruiting and training expenses of new employees, in addition to full-time salaries and perks, which are unavoidable in-house. Consequently, you only spend the real hours worked on the projects, reducing both short and long-term costs.

2.2 Fast Onboarding Narrow Specialists

CIO Harvey Nash states in a KPMG study that “The IT sector is witnessing a scarcity of competent and committed IT personnel. Consequently, locating a suitable professional  in your industry might be a challenging endeavor.” Staff augmentation vendors enable your company to utilize a pool of qualified and skilled software developers and discover the individuals most matched for your IT projects.

2.3 Seasonal Employment

IT staff augmentation offers adaptable engagement strategies for remote teams. It implies that you may recruit IT specialists, when you need them the most and reduce their number when their help is no longer required. For instance, to choose a staff augmentation approach to finish a certain deadline-focused project or to reinforce your in-house employees with additional personnel during pick-ups. In addition, terminating a staff augmentation agreement is significantly simpler than laying off or dismissing an in-house staff person.

2.4 In-house Management

If you choose to recruit assets from a software development firm, the external factors will collaborate closely with your internal team. They will adhere to internal regulations and submit straight to their superiors. This implies that business team leaders and project managers will examine when and where skill shortages need to be filled with the appropriate resources.

3. Staff Augmentation Drawbacks

Staff augmentation has its disadvantages as well. Following are some of their drawbacks.

3.1 Management Capacity

When employing an external staff, the company’s management should be ready to manage extra individuals and give more direction.

3.2 Supplementary Instruction and Integration

Even though an external staff will acquire the essential IT technical capabilities, the company project managers will still be required to clarify your company’s internal processes, procedures, and rules. In addition, when new professionals are added to the existing in-house team, time must be allocated for them to understand the company’s core business operations and policies.

4. Outsourcing Overview

The term “outsourcing” refers to the practice of contracting with an external organization to provide a team of experienced and skilled employees with labor for a defined duration or mission. Companies providing outsourcing services ultimately help you to achieve your business objective. 

With an IT outsourcing company, you are spending for particular IT services, prescheduled results, and discussing the risk involved with the project outsourcing vendors, while sacrificing specific power over such factors of the operational processes.

Businesses can hire, equip, and supervise an outsourced development team of experienced people to complete the projects you assign. This external team will operate independently from your organization and will not be intimately associated with the remainder of the domestic development efforts or other in-house technical tasks.

Even with digital centers bursting up all around the globe, from often-overlooked regional choices like San Diego, or Durham, to more conventional offshore locations like India or Brazil, which is now producing its own worldwide marketable technology companies. Project outsourcing remains a strikingly feasible alternative when it comes to stuffing actual skill shortages, discovering outside expert knowledge, or reducing costs.

4.1 Types of Outsourcing

Here are the many primary kinds of outsourcing models to know how they might help your business.

• Process Outsourcing

By outsourcing particular business processes, your company may save money, focus on what it does best, and cut down on the time it takes to fulfill client orders.

• Project Based Outsourcing

If you’re having problems keeping track of several software projects with tight deadlines, you may hire a project management company to handle them for you. Projects that your in-house team isn’t up to snuff on might also be outsourced to save money and time.

• Professional Outsourcing

Professional outsourcing has become one of the most popular types of outsourcing due to the significant cost savings and skill gaps it can address. By utilizing our top-notch resources and highly qualified people, your firm may greatly reduce overhead expenses. You are only charged for the services that are used.

• Offshore Outsourcing

Staff augmentation and outsourcing are not the same, however they both rely on similar ideas. The idea behind this strategy is to send your project to a different part of the world for completion.

• Onshore Outsourcing

When you choose an onshore outsourcing provider, they are physically located in the same nation as you are.

• Nearshore Outsourcing

You have outsourced your project to a business that is geographically near to you in nearshore outsourcing.

• Multi-Source Outsourcing

The multi-source outsourcing strategy is what you’ve chosen if you’ve contracted with more than one IT provider for a single project.

5. Key Benefits of Project Outsourcing Services

5.1 Reduction in Costs

When you choose to outsource software development processes over staff augmentation, you do not have to engage in hiring, training, and developing talent, nor do you have to be concerned with their pay or incentives. This considerably reduces the expenses.

5.2 Quick Project Start

For internal teams, launching a project might take a considerable amount of time. To begin the project, the staff may need further training. In outsourcing, the outsourcing team manages the whole software development cycle, from paperwork creation through product delivery and management.

5.3 Technical and Management Arrangement

With outsourcing, businesses are able to explore the massive talent pool of developers worldwide. Software development businesses are responsible for personnel recruitment and training. Consequently, you receive an entire team for a set fee.

5.4 Reduced Risks

When companies decide to outsource IT services, outsourcing vendors supply highly qualified personnel who bear full accountability for project results. As a consequence, they embrace the hazards involved with the technological solution’s growth.

6. Disadvantages of Project Outsourcing

Outsourcing also has its disadvantages. Following are some of their drawbacks.

6.1 Coordination Breakdowns

It may be challenging to coordinate with outsourced teams from other businesses. Notably when engaged in a project that demands mutual cooperation. Physical isolation, such as when employees work in separate offices, towns, or even nations, exacerbates breakdowns.

6.2 Chances of Conflict

Since project members do not adhere to the same interests and environment, stressful situations are more likely to arise. Loyalty is crucial to the achievement of a project. It can be tough to establish when exchanges are restricted, and individuals belong to separate organizations.

6.3 Security Issues

Outsourcing can pose security risks, including the potential exposure of corporate and sensitive trade information, especially if the contractor also works with competitors.

7. Difference between Staff Augmentation & Outsourcing

Key Parameter	Staff Augmentation	IT Outsourcing
Hiring model	Software engineers work full-time for companies as part of their staff augmentation contract. It allows businesses the freedom to swiftly adjust the size of their development staff.	The chief technology officer (CTO) or product owner (PO) of an organization’s internal team may delegate management of a project to an external supplier in the case of outsourcing.
Business use	Staff augmentation is a popular method for companies to cut down on technical liabilities, boost development, and relieve internal teams of non-essential activities. When a project calls for specialized knowledge that an organization doesn’t already possess, it will often turn to outside contractors for assistance.	When a company needs a whole team of experts to handle user experience research, interface and UX design, software development, project management, and quality assurance, they turn to traditional outsourcing.
Cost-Effectiveness	Possible to save money in the short term, but it might end up costing you more in the long run.	Due to possibly cheaper operational expenses and wages in some nations, it is often more cost-effective in the long term.
Training	It may be necessary to undergo a first training or orientation.	Little to no training will be needed as the outsourcing firm is presumed to possess the requisite knowledge and experience.
Tools and Processes	Stick to the tried-and-true methods and products used by your organization.	A common practice in outsourcing is for the supplier to set up and oversee the necessary tools and processes.

Further Reading on:

Advantages and Disadvantages of IT Outsourcing

8. Wrapping Up

After thoroughly discussing both concepts and the differences between them, it is safe to say that there is no ultimate solution when it comes to talent recruitment. Things can go wrong if you don’t consider your requirements. They determine which approach would be suitable for your project. 

IT staff augmentation works well if you are working on short-term projects and you need specific expertise or skills temporarily. Meanwhile, outsourcing is ideal if you are working on long-term projects that require a wide range of expertise across various IT domains. 

In any case, you have to be careful during the hiring process. It doesn’t matter if you are recruiting a team or a vendor, check out their portfolios and consult with their previous clients if needed. Verifying their experience and expertise helps you ensure that they are the right fit for your project. 

9. Frequently Asked Questions

Why choose outsourcing?

Ans: By outsourcing to professionals, companies may save money and work more efficiently, enabling them to concentrate on what they do best.

Why choose staff augmentation?

Ans: When contrasted with alternative forms of IT models, staff augmentation offers a superior strategy that is result-centric. It guarantees that companies may get their hands on skilled workers who can propel them ahead.