Difference between Staff Augmentation and Project Outsourcing
Staff Augmentation is an outsourcing strategy where companies add staff to the team based on the additional skills required in the project. In project outsourcing, you can execute your entire project with the resources of another company. Both staff augmentation and project outsourcing have their pros and cons, and both are beneficial depending on the company and project.
Let’s look at some interesting stats:
Staff augmentation services increased from 5.2 percent to 6.3 percent in 2018-2020, according to Statista. These figures reveal that an increasing number of firms around the world are turning to staff augmentation services to locate professionals with the necessary technical capabilities and satisfy their personnel requirements.
We will see some of the most notable distinctions between staff augmentation and project outsourcing in this book.
What is Staff Augmentation?
Even though the United States continues to be the world’s largest technology market, other regions such as Asia-Pacific, India, and even Latin America. Other emerging markets, in terms of technological innovation, have made great progress forward in recent years. It means that North American companies’ design, IT, and software divisions must sharpen their competitive edge in the face of likely challenges from domestic and international rivals. One of the most effective ways is to keep expenses low while easily accessing top-tier engineering expertise when required. Staff augmentation, which temporarily augments the size of your software engineering team with skilled personnel during a project or certain stages, is one delivery technique that an IT staffing agency may give to help you maintain your competitive edge.
What are the Benefits of Staff Augmentation?
- Staff augmentation enables organizations and corporations to scale up or down their teams easily – without the headache of recruiting, employing, and then dealing with the expenditures associated with full-time personnel (Staff augmentation vendors handle administrative duties).
- Additional personnel collaborates directly with your in-house team, allowing managers to monitor how temporary workers integrate and collaborate with your employees. Additionally, your full-time staff will not be threatened by additional talent brought in from technical staffing firms, as these new team members will be working on a project temporarily.
- The staff augmentation model makes it significantly easier to locate and integrate external engineers into an internal team instead of working with an outsourcing vendor’s team, which frequently comes with deep-seated cultural and linguistic barriers.
- Through staff augmentation, you may swiftly cover skill shortages in-house with external expertise. Additionally, when implemented properly, the augmentation model may save you money by lowering general overhead expenses and the related costs of employing and training additional staff (as previously described).
What are the Drawbacks of Staff Augmentation?
Like everything, staff augmentation also has its set of drawbacks. The disadvantages of staff augmentation models are:
- You’ll need to prepare your management team to cope with expanded staff members by reallocating organizational resources or even office space when temporary recruits arrive.
- Your IT staffing firm will source the best-qualified individuals for you. You may still need to commit some money to train and educate your employees about how your business runs. Like a worldwide brand entering a new territory, Supplemented employees may need time to acclimate and integrate with your team. It may sometimes hinder production, at least initially, while your augmented team becomes familiar with your business procedures and standards.
How to Implement Staff Augmentation for Your Business?
When organizations worldwide seek methods to save operational and managerial expenses, staff augmentation is ideal for connecting with remote experts who are educated about a certain technology and can work efficiently on projects. While staff augmentation is an excellent collaborative model, businesses often underutilize it. Staff augmentation may provide both the stability of a full-time workforce and the flexibility of project outsourcing if managed properly. We will examine many strategies for using staff augmentation to benefit your organization and ensure long-term success.
1. Communicate Clearly
Inadequate communication may result in workplace failures. There should be an opportunity for open communication between the staff augmentation agency and the newly founded firm. Because augmented personnel are often located remotely, keep all communication lines open to ensure seamless collaboration with your in-house team members.
Establish frequent meetings and promote idea exchange to enhance teamwork. Additionally, identify the duties and responsibilities of each team member so that everyone understands their specific contribution to the project.
2. Select Projects with a Short Duration
Staff augmentation is most effective for one-time initiatives with strict time constraints. Hiring offshore developers is typically the best option for software development, website development, and app development projects. Hiring a full-time employee for a one-time project will place significant financial pressure on the company’s finances. Allow your in-house personnel to handle the long-term upkeep of your website or mobile application. Hire developers on a project-by-project basis to maximize the advantages of staff augmentation.
3. Identify Talent Gaps
Conduct an in-depth review of business processes or a talent audit to get insight into the organization’s current talent deficiencies. Always go for augmentation if a unique skill set is necessary to produce a high-quality job on time. Developers from IT staffing firms are used to completing short-term tasks quickly without sacrificing quality. Numerous management solutions, such as Asana and Jira, can assist you in staying on track, staying under budget, and adhering to quality standards.
4. Maintain a Record of Your Codes
Always place a high premium on documentation since the software needs continual upgrading and maintenance. If a project involves numerous developers, the documentation will assist them in identifying flaws or possible dangers. By outsourcing team members at various phases and maintaining sufficient documentation, the employing firm can keep track of the progress. Businesses must guarantee that the expanded team maintains an audit trail of their code at all stages.
5. Collaborate with a Reputable Staffing Firm
Implementing a staff augmentation model without having solid knowledge and expertise might be a risky task. A reputable staff augmentation firm with demonstrated competence and a track record of completed projects can help you a lot with the overall process.
What is Project Outsourcing?
Project outsourcing is fundamentally different from staff augmentation, and each has its own set of advantages and disadvantages. With project outsourcing, you buy engineering resources while still retaining direct management over your team.
With staff augmentation, you purchase engineering resources while maintaining direct control over your team (along with the associated risks of a potentially negative outcome). Whereas, with outsourcing, you pay for a predetermined outcome and share risk with the outsourcing vendor while relinquishing direct control over certain aspects of your business operations.
An IT outsourcing company will recruit, train, and manage a team of experienced individuals to complete your assigned development tasks. This outsourced team will operate independently of your organization and not be engaged in other internal development initiatives or in-house programming work.
What Are The Benefits Of Project Outsourcing?
- Reducing expenses is one of the most evident advantages of project outsourcing. Once the contracts have been signed, the task of setting up, training, and maintaining a remote workforce falls to the vendor – as does delivering the final product, and with a respected vendor, presumably assuring the quality of that final product as well.
- Gaining access to individuals with unique, sought-after technical abilities is another huge bonus for project outsourcing, particularly when such specialist candidates aren’t accessible locally.
- By adopting the project outsourcing model, companies can save the time of in-house personnel by outsourcing some activities to outsourced project teams. In this way, managers gain greater flexibility in using their onsite staff and can deploy them to work on projects that fit within a company’s specific area of expertise.
What are the Drawbacks of Project Outsourcing?
Like everything, project outsourcing has its own set of drawbacks. Among most of the cons of project outsourcing, the risk of losing sensitive data and the loss of confidentiality tops the list of the most significant disadvantages of outsourcing business processes.
- Organizations might lose direct management control in the project outsourcing model. It might lead to dissatisfaction with communication procedures (sometimes aggravated by time zone variations). You can also find language and cultural hurdles when explaining your growth objectives to foreign staff and management.
- Because you give up direct control with this approach, you may run into some quality difficulties with the final product, impacting productivity and overall team morale as workers, managers, and outsourcing suppliers attempt to find out who is accountable for these issues. Coding mistakes that fall short of your firm’s stringent development standards, unreported technical debt, or other technical difficulties from an outsourced development team may be time-consuming and difficult to rectify.
How to Implement Project Outsourcing for Your Business?
The steps are necessary to develop a successful outsourcing strategy.
1. Outline Specific Outsourcing Objectives
A company that establishes its outsourcing goals explicitly from the outset is already one step ahead of the competition in this regard. Firms that meticulously articulate their outsourcing goals, step by step, will be in a better position to choose the best staff augmentation model for their sector than firms that skimp on these processes since they’ve taken the time to study the benefits and drawbacks of outsourcing.
An organization that has well-defined outsourcing goals early on will be able to optimize its information technology workforce’s efficacy, increasing productivity while saving money by scaling up or down auxiliary employees as business or budgetary circumstances dictate.
2. Establish a Budget for the Anticipated and Unanticipated
When developing monthly, quarterly, and annual budgets, businesses must consider their current staff augmentation needs while also considering how augmentation can help them reduce their overall personnel budgets if and when implemented properly. However, they must budget for the unexpected, such as unexpected employee turnover or a new contract that requires more skilled labor than the company currently has on staff.
Managers often cite “hidden expenses” as a significant reason outsourcing initiatives fall short of early expectations. A reputable IT staffing firm can assist a business in invalidating its supplemental staffing plan, balancing affordability and expected results. While also identifying hidden costs, enabling the client to increase or decrease additional staff as needed rapidly or on short notice without breaking the bank.
3. Identify the Appropriate Outsourcing Engagement Model
Several outsourcing models to select from, including onsite, onshore, nearshore, and offshore engagement models, have distinct advantages and disadvantages. A company looking to offload non-critical technical operations will likely pursue a different outsourcing model than a software firm searching for extremely rare programming skills. It will likely differ even further from the model chosen by a gaming studio to fill a few in-house skills gaps.
By selecting the appropriate outsourcing engagement model from the start — in consultation with an experienced technical staffing firm — businesses can quickly and efficiently put additional staff to work without wasting time or resources or sacrificing productivity for an extended period.
4. Monitor Outsourcing Progress and Added Value Actively
Outsourcing has several pros and cons that must be tracked by a company or development team. To do so, the team must set some specific key performance indicators (KPIs). These signs may assist executives in determining if the staff augmentation plan they’ve selected is the best fit for their organization. And, while these performance indicators can vary significantly, a reputable outsourcing vendor should be able to provide multiple indicators. Including but not limited to benchmark procedures for comparing outsourcing costs to supplemental staff job performance, outsourcing expenditures to productivity, and comparing the output and efficiency of various augmented teams to expected levels.
Tracking the advantages and progress of the outsourcing engagement model chosen by a firm may take remedial actions if staffing expectations are not fulfilled. However, if those established expectations are reached, actively monitoring outsourcing advantages and progress may help enhance the model being used, ensuring continuous outsourcing success.
5. Develop Strong Channels of Communication and Relationships With Clients and Vendors
Finding a specialized staffing agency that fits a client’s business is one of the easiest and most evident stages toward outsourcing success. Corporate culture and communication norms vary significantly among industries. Businesses seeking to recruit enhanced personnel locally or remotely want to engage with technical staffing firms that are transparent, responsive, and capable of resolving any outsourcing concerns that arise immediately and professionally.
An outsourcing vendor that invests the time to learn about a client’s internal business culture and how it manages its technical and creative teams lays the groundwork for a partnership characterized by open communication. This strong connection, in turn, enables IT staffing organizations to deliver the most tailored company-specific staffing solutions possible while being flexible enough (as a result of continuous client/vendor contact) to respond and anticipate future requirements.
Businesses that have a well-defined blueprint for what they expect from their outsourcing agency and are aware of the benefits and occasional drawbacks of outsourcing and staff augmentation (particularly about their specific industries) will be better positioned to maximize the benefits while mitigating the risks. By taking a systematic, precise approach to outsourcing from the start of a project, managers can lay the groundwork for a long-term, effective outsourcing strategy that will eventually help them reach their business objectives.
What are Managed Services?
While this ebook focuses on the distinctions between staff augmentation and project outsourcing, managed services is another kind of “outsourcing” that you should be aware of — all the more so given the managed services market’s projected growth to $282.0 billion by 2023. Managed services have some similarities to project outsourcing, which might create confusion since experts do not agree on an accurate definition of the phrase. In essence, managed service providers provide remote IT solutions continuously, while project outsourcing is often done on a per-project basis.
A typical use of a managed service would be to contract with a managed services provider (complete with its staff and IT infrastructure) to support your company’s day-to-day operational needs. Such as software updates, repairs, or managing the platform-as-a-service (PaaS) or software-as-a-service (SaaS) that keeps your offices running efficiently. You would contract with a managed services provider on an ongoing subscription and pay a fixed monthly charge.
This strategy may provide your personnel with more time to concentrate on the most crucial mission-critical activities at hand rather than on internal IT service difficulties.
Choosing the Most Appropriate Technology Delivery Model for Your Organization
Selecting the most suitable technology staffing partner may be a time-consuming and complex task. There are numerous variables to consider, including a firm’s IT and personnel budgets, and anticipated staffing requirements before implementing managed services. Suppose you’re looking for a flexible staffing solution that enables you to bring in outside technical expertise as needed, with augmented staff capable of quickly integrating with your existing team. In that case, staff augmentation may be the best fit for the duration of an entire project, specific stages, or a final software review. Suppose you’re not opposed to directly managing a project or lack the administrative resources necessary to manage the increased workforce. In that case, project outsourcing may be the right engagement model for your business. While project outsourcing has negatives (lack of quality control and communication concerns), it may help you save money while providing your in-house programmers more time to focus on their most critical development activities. Depending on your software development requirements, you may choose staff augmentation, project outsourcing, or a hybrid approach that combines both models with managed services to round out your overall staffing strategy. As your company expands, you can always make changes to these engagement models to suit your needs. A partnership with an experienced vendor that can help you overcome existing staffing difficulties while simultaneously working with you on introducing another outsourcing model is the most prudent course of action. Adjust your current staffing model to maximize efficiency and competitiveness in national and international markets if and when necessary.