Staff Augmentation vs Managed Services: Which Should You Choose?

The differences behind staff augmentation vs managed services may seem small, they’re far from the same thing. In fact, depending on the needs of your organization, choosing the wrong option can significantly reduce the return on investment you receive. 

In this article we’ll discuss both of these outsourcing models and help you decide which option is best for you:

  • What is staff augmentation and its pros and cons
  • What are managed services and its pros and cons
  • What factors influence managed services vs staff augmentation
  • How to decide which option is the best for you

Staff Augmentation

Staff augmentation is a business process outsourcing strategy that organizations use when they need to complement the skill set and resources of an in-house team. 

Outsourced professionals are usually brought in for short periods of time, often to implement projects or meet unforeseen demands. Generally, you will be liable for quality assurance and managing your own IT infrastructure. 

As a short-term solution, staff augmentation offers:

  • Cost-Effectiveness Fulfill business needs without paying full-time wages. 
  • Flexibility – Access new IT skills and improve organizational scalability.

Protection from attrition Stay better protected against employee migration.

Staff Augmentation Model – Benefits & Drawbacks

Benefits Drawbacks
  • On-demand scalability
  • Can quickly resolve staff shortages
  • Gain missing skills and capabilities
  • IT stack remains under your management
  • No service level commitments
  • Knowledge stays with the individual
  • Increases subcontractor overheads
  • Limits planning for management
  • Does not resolve issues of insufficient staffing
  • Can be expensive in the long-term
  • Lack of skills

As a long-term solution, staff augmentation loses its appeal. It results in higher labor costs, additional administrative and contracting costs, which offset the advantage of savings on payroll. 

Managed Services

Managed services look to fulfill the same role as staff augmentation but aim to deliver an outcome rather than an input. Meaning, managed services are value-based, and staff augmentation is volume-based. 

Pricing is tied to the task’s outcome, and should service requirements disappear, so do their respective costs, allowing for better on-demand scalability. 

Naturally, value creation is a focal point for successful managed services. Since the provider assumes all risk, there is greater incentive to streamline processes to meet service commitments. In simple terms, you should receive better ROI than if you were to simply have augmented staff.

Managed Service Models – Benefits & Drawbacks

Benefits Drawbacks
  • Cost-effective even in the long term
  • Leverage new skills and knowledge
  • Deploy institution-wide security policies and coverage
  • Benefit from compliance insight
  • Predictable costs and service outcomes
  • Operational performance metrics
  • Gain the same skills and flexibility of staff augmentation
  • Scalability to grow with business
  • Potential for data security risks if you don’t know who’s handling your systems
  • Initial time for the MSP to understand your business requirements
  • Some MSPs have rigid pricing structures which may mean paying for services you don’t need

Comparing Staff Augmentation vs Managed Services

staff augmentation vs managed services

As similar as staff augmentation and managed services might seem, there are core differences that may make one or the other more suitable for your needs. 
Staff augmentation can be considered out-tasking, where a certain amount of working hours are provided at a preset rate. Managed services, on the other hand, are outcome-driven. Specific performance metrics are to be met while the risk remains with the managed IT services provider (MSP).

Staff Augmentation vs Managed Services Comparison

Staff Augmentation Managed Services (Outsourcing)
  • Knowledge remains with the individual
  • Requires no change to operating model
  • Customer managed delivery model
  • Costs fixed to hours worked & availability
  • No service delivery commitments relative to output
  • No incentive to maximize value from service
  • Superior customer service
  • Price fixed to service agreements
  • Knowledge is documented and transferable
  • Supplier managed delivery model
  • Service levels are service delivery commitments
  • Employees may be impacted by new assets and contracts given to the supplier
  • Service provider assumes partial or complete responsibility for IT execution

There’s a Third Way… the Hybrid Approach

IT requirements are rarely static and it’s not uncommon for businesses to pursue multiple projects at the same time.

That’s where the hybrid approach can be of tremendous benefit. It lets you take advantage of the:

  • Accountability, value, and high service levels of MSPs; and
  • Specialization that’s achievable with staff augmentation.

Not sure how that might work? 

A fairly common scenario is when a business hires an MSP to handle day-to-day IT tasks and long-term IT management . In addition to that, it hires specialists to work on one-off projects (typically involving proprietary, legacy, or very specialized technologies) that are in their finishing stages.

Deciding Factors for Managed Services vs Staff Augmentation

Your company’s needs, focus, and mission statement dictate whether additional staff through staff augmentation or MSPs are best for your organization. 

As a general rule of thumb, managed IT services offer better value for most businesses because they are results-driven. You simply set goals and performance targets, letting the MSP allocate resources and undertake project management to achieve them most efficiently. 

Full-service IT companies also provide a broad range of services, which means you can pick and choose ones that suit your business needs.

Staff augmentation is usually reserved for extremely specialized projects, such as niche app development or supporting proprietary/legacy software. In that case, supplementing in-house talent can be the better option.
Another factor is the period of time you need skills for. Staff augmentation may be preferable as a weeks-long engagement, but anything longer than that and an MSP is the better option.

Learn more:

Which Strategy Is Right for You?

Staff augmentation, managed services, and a hybrid approach have a time and place in every IT scenario.

Not sure which route is best for your business? Talk to us. Netsurit is a leading managed IT services provider that works with small, mid-sized, and large businesses. 

Our clients rely on us to offer cost-effective, efficient solutions that satisfy their needs. Whether you opt for managed services or augment your in-house staff with IT experts, you’ll  benefit from:

  • Over 24 years of experience
  • Extensive support
  • A single point of contact for all your needs
  • An impeccable cybersecurity record

Discuss your requirements with us today.

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