INTechHouse BLOG 09.08.2023 14 min.
Staff Augmentation and Managed Services
INTechHouse BLOG 09.08.2023 14 min.

Staff Augmentation and Managed Services

Staff Augmentation vs. Managed Services: Understanding the Distinctions and Implications

In today’s dynamic business landscape, companies often face the challenge of meeting their growing demands for specialized skills and expertise. As a result, they must explore different strategies to bridge the gaps in their workforce. Two popular approaches that have gained traction are staff augmentation and managed services. While both methods serve as viable solutions, understanding their differences and implications is crucial in making informed decisions for your business.

Staff Augmentation: Empowering Your Team with On-Demand Talent

Staff augmentation is a strategic outsourcing model where companies engage external talent to complement their existing workforce. In this arrangement, businesses can temporarily hire skilled professionals to work on specific projects, tasks, or for a fixed period. The augmentation process enables companies to scale their team up or down as per project requirements without the long-term commitment of permanent hires.

When Staff Augmentation Began

Staff augmentation as a business strategy emerged in the 1970s and gained prominence in the following decades. It was primarily driven by the growing demand for specialized skills in the technology sector, coupled with the need for cost-effective solutions. As businesses sought to access specific expertise for temporary projects without committing to permanent hires, staff augmentation became an attractive option.

Several technology companies were pioneers in adopting staff augmentation as a business model. Some notable early adopters included:

  • IBM: As a leading technology and consulting company, IBM recognized the benefits of staff augmentation in responding to clients’ varying needs and project demands. They leveraged external talent to augment their internal workforce for specialized IT projects.
  • Microsoft: Microsoft, a global software giant, utilized staff augmentation to access niche skills for specific software development projects. By engaging external talent, they could handle diverse projects efficiently.
  • HP (Hewlett-Packard): HP, a prominent hardware and software company, embraced staff augmentation to address resource constraints and respond to clients’ IT requirements promptly.
  • Oracle: Oracle, a renowned database and enterprise software company, recognized the value of staff augmentation in building specialized teams for various client engagements.
  • IBM Global Services: The consulting and IT services division of IBM, known as IBM Global Services, adopted staff augmentation to offer scalable solutions to their clients worldwide.

These companies, among others, paved the way for the widespread adoption of staff augmentation across various industries and sectors. Over time, the model evolved, and numerous specialized staffing agencies and consulting firms emerged, catering to the increasing demand for flexible and skilled workforce solutions. Today, staff augmentation continues to be a popular approach for businesses seeking agility, scalability, and access to specialized expertise without the commitments of traditional permanent hires.

Pros of Staff Augmentation:

Select staff augmentation if flexibility and time are crucial for your business.

  • Flexibility and Agility: Staff augmentation offers unparalleled flexibility, allowing companies to quickly respond to changing project needs. It is ideal for short-term projects or urgent requirements where specialized skills are needed on-demand.
  • Retaining Control: In staff augmentation, the client retains direct control over the project’s management and decision-making process. The augmented resources work collaboratively with the existing team, integrating seamlessly into the company’s culture and processes.
  • Skill-Specific Hiring: With staff augmentation, businesses can access specialized skills that may not be readily available in their internal talent pool. This empowers them to take on complex projects and tackle challenges beyond their core expertise.
  • Cost-Effective Solution: Staff augmentation eliminates the costs associated with onboarding and training permanent employees. Companies only pay for the specific time and skills required, optimizing resource allocation and reducing overhead expenses.

When Businesses Should Think about Staff Augmentation

Businesses should consider staff augmentation in the following scenarios:

  • Specialized Skill Requirements: When a project requires specific expertise or skills that are not available in the current workforce, staff augmentation is a suitable option. It allows businesses to access niche talents for short-term or temporary assignments.
  • Temporary Workload Surges: During peak seasons or when faced with sudden spikes in workload, staff augmentation can help businesses scale up their workforce quickly to meet demands without the long-term commitment of hiring permanent employees.
  • Short-Term Projects: For short-term projects or one-time assignments, staff augmentation provides a cost-effective solution. Companies can bring in external resources for the duration of the project without the overhead costs of permanent hiring.
  • Urgent Project Deadlines: When faced with tight deadlines and limited internal resources, staff augmentation enables businesses to augment their team with skilled professionals who can contribute immediately.
  • Resource Constraints: If a company has budget constraints or is unable to hire additional full-time employees, staff augmentation allows them to access talent on an as-needed basis, optimizing resource allocation.
  • Access to New Technologies: To adopt new technologies or implement complex solutions, businesses may require specialized skills not available in-house. Staff augmentation provides access to experts proficient in cutting-edge technologies.
  • Testing New Roles: Before committing to permanent hires, businesses can use staff augmentation to test the viability of new roles or positions within their organization.
  • Lack of Local Talent Pool: In some regions, there might be a shortage of local talent for certain roles. Staff augmentation enables businesses to tap into a global talent pool and find the right professionals regardless of location.
  • Risk Mitigation: Staff augmentation can be used to mitigate risks associated with permanent hires, such as mismatches in skillset or cultural fit. Businesses can evaluate external resources before making long-term commitments.
  • Budgetary Flexibility: Staff augmentation provides budgetary flexibility, as businesses pay only for the specific hours worked or services rendered. It allows for better financial planning and cost control.

Managed Services: Leveraging External Expertise for Holistic Solutions

Managed services, on the other hand, involve outsourcing specific functions or processes to external service providers. Rather than hiring individual professionals, companies engage managed service providers (MSPs) to take full responsibility for managing and delivering particular services. MSPs are specialized organizations that offer end-to-end solutions, often with a focus on a specific domain or industry.

Managed Services Advantages:

There are many managed services advantages you should know.

  • Comprehensive Solutions: Managed service providers offer comprehensive solutions that encompass planning, execution, and ongoing management of specific business functions. They bring extensive domain expertise, best practices, and advanced technologies to the table.
  • Strategic Partnerships: Engaging managed services company is akin to forming strategic partnerships. MSPs become integral to the client’s operations, collaborating closely to achieve shared business objectives.
  • Focus on Core Competencies: By outsourcing non-core functions, companies can focus on their core competencies and key strategic initiatives, enhancing overall efficiency and productivity.
  • Predictable Costs: Managed services are often offered under predictable and transparent pricing models, providing companies with greater cost predictability and stability.

When Managed Services Began

Managed services as a business model began to emerge in the late 1990s and early 2000s. The rapid advancement of technology and the increasing complexity of IT infrastructure led to a demand for comprehensive and outsourced IT management solutions. Managed services offered a proactive approach to IT support, focusing on preventing issues and maintaining the health of IT systems, rather than just reacting to problems when they arise.

Several technology companies were pioneers in adopting managed services company and offering them to their clients. Some notable early adopters of the managed services model include:

  • IBM: IBM, a leading technology and consulting company, recognized the value of providing end-to-end IT solutions to its clients. They started offering managed services, managing and maintaining clients’ IT infrastructure and systems, and providing ongoing support and monitoring.
  • Hewlett-Packard (HP): HP, a prominent hardware and software company, saw the potential in offering managed services to support their products and provide customers with comprehensive IT solutions.
  • Dell: Dell, a major computer technology company, ventured into managed services to offer proactive support and management of their products, including servers, storage, and networking equipment.
  • Cisco: Cisco, a global leader in networking and IT solutions, integrated managed services into their offerings, providing customers with expert support and management of their network infrastructure.
  • Microsoft: Microsoft expanded its portfolio to include managed services, supporting clients with the management and maintenance of their Microsoft-based IT systems and applications.
  • Accenture: As a global consulting and professional services company, Accenture recognized the demand for comprehensive managed services and began offering end-to-end IT solutions to their clients.
  • CSC (Computer Sciences Corporation): CSC, a multinational IT services company, embraced managed services to cater to the growing need for outsourced IT management and support.

These companies, among others, paved the way for the widespread adoption of managed services as a preferred model for IT management and support. As technology continued to evolve, the scope of managed services expanded beyond traditional IT to include various domains, such as cloud services, cybersecurity, data management, and more. Today, managed services are offered by a wide range of companies, from global IT giants to specialized managed service providers, to help businesses effectively manage their IT infrastructure and stay competitive in the ever-changing technological landscape.

So What to Choose for Your Project: INTechHouse Advice

Prefer staff augmentation if:

  • You have a new or ongoing project and need urgent assistance. Flexibility is crucial to easily engage and disengage specialists as needed.
  • You want to maintain direct control over all software development stages and have a deep understanding of the internal processes. Staff augmentation allows for personalized responsibility, unlike managed services.

Remember, communication is vital in staff augmentation, and fluency in English should be one of the criteria when selecting the right team member.

Source: EF

While choosing your team player, look for smart, outgoing individuals with high qualifications and skills. Embracing staff augmentation will allow you to fully enjoy its advantages over the managed services model for your desired project.

INTechHouse advises being attentive to feedback and activities of a company when choosing managed services or staff augmentation cooperation. Evaluate the managed capacity versus staff augmentation based on experience and real proofs.

Use managed services if:

  • You lack a skilled technical manager and want to delegate the responsibility to a talented and experienced vendor.
  • You are prepared to fully entrust the management and are aware of the risks involved, ensuring proper contract formalization to align expectations and consequences.

Choosing managed capacity over staff augmentation may come with higher costs due to the risks involved, but it is a common practice, with expenses increasing by an average of 30 percent.

In summary, the difference between staff augmentation and managed services lies in control, where staff augmentation offers specific “input” at a defined price, while managed services focus on delivering outcomes.

In the competition between managed services and staff augmentation, there is no particular winner. The true prize lies in choosing the right model that aligns with your business goals and utilizing it correctly.

Source: MWDN

Whether you opt for staff augmentation or managed services, finding a reliable software development outsourcing contractor is essential. Take your time to research reputable companies with a high reputation, a common vision, and definitely rates. Look for contractors with relevant experience and industry expertise, first, then look at the rates!

INTechHouse recommends prioritizing quality over cheap services. Choosing a vendor that values projects over profit will lead to more productive and successful partnerships in the long run.

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The decision between staff augmentation and managed services depends on your company’s unique needs and goals. Staff augmentation is ideal when you require specific skills for a finite duration, and you want to maintain direct control over the project. On the other hand, managed services are beneficial when you seek comprehensive solutions and want to offload specific functions to specialized external partners.

Ultimately, both staff augmentation and managed services can significantly impact your business’s growth and success. By understanding their distinctions and implications, you can make well-informed choices that align with your company’s vision and aspirations.

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Staff Augmentation: Temporary hiring of external professionals for specific projects or skill requirements, offering direct control and flexibility for businesses.

Managed Services: Complete outsourcing of specific functions or IT services to external providers, providing proactive support and relieving businesses from day-to-day management.

Limited Integration: Augmented staff may take time to integrate fully into the existing team, potentially impacting collaboration and communication.

Dependency on External Talent: Reliance on external professionals may lead to uncertainties in resource availability, particularly during high-demand periods.

Management Complexity: Managing a blend of in-house and external staff requires efficient coordination to ensure smooth project execution.

IT Staff Augmentation: Hiring specialized IT professionals to fill skill gaps or support technology-related projects.

Creative Staff Augmentation: Engaging designers, writers, or other creative professionals for specific creative projects.

Administrative Staff Augmentation: Temporarily hiring administrative personnel to handle clerical tasks and administrative duties.

Dependency on Service Provider: Businesses relinquish control over certain functions, relying on the service provider for timely and effective support.

Initial Adjustment Period: The transition to managed services may require adjustments and adaptation to new workflows and processes.

Fixed Contracts: Long-term managed service contracts may limit flexibility for changing needs or unforeseen circumstances.

One of the most famous and widely adopted IT managed services models is the ITIL (Information Technology Infrastructure Library) framework. ITIL is a set of best practices and guidelines for IT service management (ITSM) that helps organizations align their IT services with business needs and objectives. It provides a structured approach to delivering and managing IT services, ensuring efficiency, effectiveness, and customer satisfaction.

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