Evaluation of IT staff engagements such as augmentation services and managed services have become quite popular in recent times. Managed services are defined as services provided by third party IT staff augmentation companies promising measurable outcomes delivery to client project in terms of better efficiency and reduced costs, however, keeping more control over the process. Adoption of staff augmentation model provides organizations with benefits like access to diversified talent pool and a flexible team for shorter project engagements.
What is the difference between staff augmentation & managed service?
A very popular trend noticed among many IT companies in recent times is the increased need for improved agility and to beat the challenges of short term hiring restrictions by making use of services provided by independent IT staff augmentation agencies or contractors. It is a temporary arrangement having a number of benefits when compared to traditional direct staff hiring. In the IT staff augmentation system, the cost of engaging and disengaging staff is far lesser than the cost of hiring permanent staff. Also, this model offers the flexibility of minimum staff contracting costs and formalities and has a minimum impact on the current operational process of the client business. The downside, however, includes the requirement for transformation into a permanent operating model for the project. It is advisable not to adopt this model as a long term solution as it does not offer the benefits of other prevalent alternatives of external IT staff sourcing methods. For organizations already into IT staff augmentation process, evolving to a managed service of outsourcing can provide the advantages of skills access and flexible workforce at the same time overcoming the challenges associated with the staff augmentation model. The managed services and staff augmentation differ in more than one way. This blog will further attempt to explore some of the key differences such as:
- Managed services by IT staff augmentation companies commit to a specified outcome delivery at a specific price, whereas staff augmentation model offers only an input against a price that may or may not deliver the desired results.
- Pricing is directly proportional to costs in managed services providing expansion with demand, often unavailable with the staff augmentation model.
- A service commitment associated with staff augmentation is the number of hours of work done, whereas, in a managed service, the commitment extends to assuming the risks associated with the service commitment. Since this model offers huge value creation at a fixed cost, the service provider is more committed to adopt effective productivity measures manifested in application of efficient processes and tools.
- Better flexibility and control of remote staff can be retained with staff augmentation.
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While there are advantages and disadvantages associated with both the software development staff augmentation models, let us look at some statistics to determine whether staff augmentation and managed services are mutually exclusive. While Brickred Systems [ https://brickredsys.com/ ] advocate against the mutually exclusive nature of the two models and believe that IT organizations can hugely benefit from striking the right balance between the core competencies offered by IT staff augmentation and managed services, according to a report on global outsourcing industry statistics(2018-2022) by https://www.techtic.com, the value of the staff outsourcing industry stood at around 85.6 billion dollars in the year 2018 and was predicted to reach 481.7 billion dollars by 2022. An important conclusion of this study is the growth in preference for staff outsourcing and hiring in the future years.
The debate of better viability with respect to each model cannot be settled in a few words. Because no two organizations are exactly similar in ways of operations, it is critical to understand the suitability of the software development staff augmentation model to the unique business operational needs. Though some organizations are more comfortable with the control over remote staff that can be retained through IT staff augmentation, it can be said that both models of staff outsourcing offer the benefits of reduced time and energy that is otherwise spent on in-house and permanent staff recruitment process.