Remote Development: Staff Augmentation vs. Managed Services

Throughout the recent years, outsourcing was already a booming sector, projected to exceed one trillion U.S. dollars by  2021. Like most industries in the global economy, IT services outsourcing was hit hard by COVID-19. 

COVID-19: impact on IT outsourcing

In the beginning of 2020, companies were increasingly implementing remote work, and many decided to stick to it — partly or completely. Due to COVID-19, the rapid need to adjust to the digital environment has resulted in a demand for better software services to sustain the conditions for a  seamless work-from-home transition.  

Enterprises became more concerned with the functionality and security of the tools, websites, and platforms they are using. As not every company wants or even has the means to invest in a fully-armed IT department, outsourcing has become an increasingly popular and highly-effective solution. The problem is that, often, businesses don’t realize the difference between various outsourcing models or how they can fulfill diverse needs for different projects. 

Shortly, the circumstances of 2020 have made companies vulnerable to disruptions. As a result, businesses are interested in cutting their costs and staying as flexible and resilient as possible. IT services outsourcing perfectly fulfills these needs. According to the 2020 Global Managed Services Report, 45% of organizations plan to increase their outsourcing in the next 18 months. 

Considering the variety of outsourcing models available, it might be tricky for a business to choose the right one, suited for their needs. One of the most common services includes staff augmentation and managed services. Although both models act as an extension of your business, nevertheless, they have crucial differences. Let’s take a closer look at each.

What is staff augmentation?

Staff augmentation is an outsourcing model that allows you to outsource certain tasks and short-term projects. With staff augmentation, you already have an in-house IT department, and/or engineers that you have long-term contracts with.  In short, you’re really just adding an extension onto your existing team. This way, you can easily tackle gaps in your projects without spending excess time and money on the hiring process. For short-term projects and tasks, staff augmentation provides many benefits.

Pros: 

• No recruitment effort needed

• Not limited by geographical location

• No infrastructure investment required

• Transparent pricing

• Customer maintains control over the workforce

Cons:

• No guarantee for a certain outcome

• Limited commitment

• Doesn’t work for complex and long-term projects

IS IT RIGHT FOR YOU?

Staff augmentation serves as an extension of an already existing team and is an excellent option for occasional task management, or cases when you quickly need expertise in a specific field with time constraints relating to in-house recruitment. Staff augmentation also provides a very simple and transparent pricing model, usually tied to hourly pay; however, if you want more strategic involvement and are looking for long-term cooperation, you should consider switching to another outsourcing option. 

What are managed services?

Managed services is another outsourcing model that anticipates more involvement in your business process and more accountability for the final outcome. With managed services, a company can take over an entire project from scratch. This can encompass many things, including creating a customized team for delivering and tracking ultimate results. With managed services, you don’t even have to have a development team or specific tech knowledge to properly use this system. 

Pros:

• No need for  an IT team or tech expertise

• Wide scope of services 

• Responsibility for the output

• Fixed prices

• Defined requirements

Cons:

• Longer implementation process

• Less control 

• Doesn’t work for small tasks or short-term projects

Is it right for your company?

Managed services encompass a much wider scope of services and involve long-term, strategic planning. With this type of outsourcing, you don’t need an IT team as the company you’re outsourcing acts as a temporary team for a particular project. With managed services, you are usually provided with a fixed estimated price range after you have clearly communicated all of the project requirements. Though Implementing a managed services model might take more time in the beginning, when it comes to long-term use, it is the most beneficial solution in terms of budget.

Conclusion

Like all outsourcing models, both staff augmentation and managed services have their pros and cons and serve different purposes. In the end,  It all comes down to the company’s needs: staff augmentation is not a suitable option for a long-term partnership, and managed services can be too much if you just need to tackle a few tasks. It all comes down to clearly defining your business needs, which is the key to making the right choice. 

Here at Erbis, we have experience with both outsourcing models. Depending on your current business needs, we can provide top-notch assistance with staff augmentation and managed services, and help you define which option is a better fit for your company.