Managing a software development project can be overwhelming. Many companies choose to outsource parts of the project to make things easier. Recently, global spending on IT services has surpassed USD 1.28 billion, showing that more businesses are investing in specialized IT services.
When you need skilled developers, picking the right engagement model is important. The debate between staff augmentation vs outsourcing is common. To make the best decision, you need to understand the differences between these two models.
What is IT Staff Augmentation?
Staff augmentation means hiring temporary employees to complete your project and fill any skill gaps. Here’s how it works:
- You have an assignment that you want to finish.
- After evaluating your needs, you contact a staff augmentation vendor.
- The vendor connects you with skilled professionals based on your requirements.
- These are personnel whose services you hire at a certain time so as to assist in your project.
- They work together with your internal team so as to accelerate the process of software development.
Pros of IT Staff Augmentation:
- Expertise: Brings in specialists for specific tasks.
- Cost-Effectiveness: Not subject to the expenses that are likely to be incurred on permanent employees, such as wages and other emoluments.
- Scalability: Flexible in managing the team size with huge ease.
- Speed: Get projects running with well-sourced professionals fast.
Cons of IT Staff Augmentation:
- Integration Challenges: Ensuring good communication with your existing team is vital.
- Limited Knowledge of Company Policies: Temporary staff may not have full mastery of your business procedures.
- Potential for Disruption: New team members can affect team dynamics.
- Loss of Intellectual Property: Be careful about sharing sensitive information.
What is Project Outsourcing?
In project outsourcing, you hand over the entire project to an external party. The outsourcing company manages and completes the project without much involvement from your team.
Pros of IT Outsourcing:
- Cost Savings: They are sometimes even cheaper than employing people for the IT department.
- Improved Focus: It can also free your internal team of some heavy lifting so that they can dedicate their time to do other important tasks.
- Access to a Global Talent: These experts can be from anywhere in the world, and you don’t have to hire in-house.
- Increased Efficiency: Outsourcing companies often have streamlined processes.
Cons of IT Outsourcing:
- Loss of Control: It makes you somewhat impoverished in your control over the undertaking.
- Security Risks: Another one is the possibility of unauthorized access to customer data.
- Communication Challenges: Cross-tab issues involve issues of time difference, language and cultural differences within a company.
- Hidden Costs: There are also additional charges in managing the projects or in cases of changes.
Staff Augmentation vs Project Outsourcing: Head-to-Head Comparison
Now, let’s delve into a detailed comparison of these two sourcing strategies. Each of them should be assessed in order to select the method that is appropriate to your business needs at a certain point in time.
1. Structure of Working
In IT staff augmentation, the augmented staff becomes an integral component of your in-house team. Whether they operate on-site or remotely, these professionals collaborate closely with your team, sharing ideas and functioning as a cohesive unit.
Conversely, project outsourcing operates autonomously. The vendor’s team focuses on completing your tasks without necessitating collaboration with your staff.
Which Model to Select?
Staff augmentation vs outsourcing: Which prevails? This point concludes in a tie. In certain scenarios, you may necessitate skilled professionals to collaborate and integrate as part of your team. In other cases, you might prefer specialized services where managing a team is not requisite. This is true depending on the particular requirements that you have.
2. Onboarding Criteria
Compared to outsourcing, staff augmentation has a faster time to onboard resources. Contractors normally have a large stock of freelance professionals who are willing to take up work in line with the needs of the employers.
Conversely, IT outsourcing demands more time. The project requirements undergo multiple stages before work commences. Additionally, completing documentation and finalizing the quote necessitates discussions and scrutiny.
Which Model to Select?
Staff augmentation vs project outsourcing: Who triumphs? Staff augmentation is the unequivocal victor here. The premier team augmentation vendors have resources readily accessible, enabling you to hire temporary staff swiftly after posting your project needs.
3. Organized Business Connection with the Vendor
IT staff augmentation is mainly concerned with your communication with the augmented staff. Once a selection of temporary workers is made, there is not much social interaction between the organization and the vendor other than financial transactions, temporary working time, and non-disclosure.
However, outsourcing a project requires communication with the vendor throughout the period of the project. Maintaining regular contact allows you to cultivate a long-term, productive relationship.
Which Model to Select?
Staff augmentation vs project outsourcing: Who triumphs? If your objective is to establish a long-term partnership with a reliable software development vendor, outsourcing is a superior strategy. Building connections in the B2B market is crucial for brand awareness. Therefore, if your budget permits, outsourcing can be a prudent choice.
4. Knowledge Sharing Aspect
IT staff augmentation is ideal for brainstorming and knowledge-sharing sessions. Since the temporary workers become part of your team, they can share ideas and valuable knowledge on both technical and non-technical topics.
Conversely, project outsourcing does not typically involve knowledge sharing. Although the outsourced IT professionals are skilled, they generally do not divulge the tips and techniques employed during the development process.
Which Model to Select?
Staff augmentation vs outsourcing: What’s preferable? If your primary objective is to augment your existing team’s knowledge, IT staff augmentation is the preferable choice. However, this decision is contingent upon factors such as the type of professional, the nature of the project, and your work culture. Creating a collaborative environment is pivotal to maximizing the benefits of team augmentation.
5. Work Culture and Compatibility
In IT staff augmentation, new hires may require time to acclimate to your organization’s setup. It’s imperative to foster a collaborative work environment, maintain employee morale, and safeguard confidential data concurrently.
In the case of IT outsourcing, there’s no need to fret over compatibility. The vendor’s professionals operate from their own location, obviating the need for interaction with every team member involved in your project.
Which Model to Select?
Staff augmentation vs outsourcing: What’s preferable? This comparison culminates in a tie. If your organization can accommodate new temporary employees, there’s no need to stress over compatibility. However, if you lack the time to onboard new members and need to complete a project expeditiously, outsourcing is the better option—albeit potentially more costly than team augmentation.
6. The Costing Factor
The key cost distinctions in staff augmentation vs outsourcing revolve around control, flexibility, and potential cost savings.
Staff augmentation tends to be more expensive. You typically pay an hourly or daily rate for the augmented staff’s time, which can be costly for long-term projects. However, it offers greater flexibility, as you only pay for the time and expertise you require. If the project scope shifts or the need for augmented staff diminishes, you can easily adjust your expenditures.
Expected cost: USD 30 – USD 100 per hour (varies depending on the augmentation company and location).
Conversely, traditional IT outsourcing can be more economical, particularly if labor costs are lower in the outsourcing destination. However, be mindful of additional fees for project management, training, communication, or unforeseen changes in scope.
Expected cost: USD 20 – USD 70 per hour (varies depending on the vendor).
Which Model to Select?
So, who prevails in this staff augmentation vs outsourcing comparison?
Staff augmentation offers more control and flexibility but at a higher cost. Conversely, traditional IT outsourcing can be more cost-effective but may involve additional management overhead.
Ultimately, the optimal choice depends on your organization’s specific requirements, budget constraints, and project complexity.
Summary Table: Staff Augmentation vs IT Software Outsourcing
| Parameter | IT Staff Augmentation | Project Outsourcing |
| Training Cost | Less, the company handles | Vendor handles |
| Level of Control | High | Low |
| Cost-Effectiveness | Flexible, but higher | Cost-effective, may have hidden costs |
| Main Purpose | Fill skill gaps | Outsource entire projects |
| Team Size | Variable | Fixed by the vendor |
Which Model is Better for Your Business?
The choice between staff augmentation and IT software outsourcing ultimately depends on your business objectives. If your priority is to fill skill gaps quickly and maintain control over the project, staff augmentation may be the better option. However, if you’re looking for cost savings and are comfortable with a third-party vendor managing the project, outsourcing could be more suitable.
It’s crucial to evaluate your specific needs, budget, and the complexity of your project before making a decision. If you’re unsure, consulting with a trusted software partner can help you choose the best approach.
