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January 09, 2024 - by Devico Team

Staff Augmentation VS Outsourcing: Finding the Perfect Fit for Your Project

The demand for high-end IT professionals has soared as many companies and whole industries strive to get fully digitalized to embrace innovation, increase efficiency, and make their clients happier. Unfortunately, there aren't enough IT experts to meet this demand.

In these conditions, a lot of organizations have realized that traditional hiring cannot cover their staffing needs in full measure and turned their attention to alternative hiring strategies that can provide them with needed talent in the blink of an eye. Staff augmentation and outsourcing are deemed to be the most popular of them. Both of these strategies grant you access to specialized skills that your in-house teams lack enabling higher flexibility and shorter time-to-market when developing software solutions. However, each strategy has its own peculiarities and addresses specific business needs.

If you find it difficult to choose between staff augmentation and project outsourcing, this article will answer your questions and help you understand what is better for your business.

What is IT Staff Augmentation?

Let’s start our journey by explaining the staff augmentation meaning. So, this is a hiring model that enables companies to quickly bring in the IT specialists they need through collaboration with third-party companies that provide these specialists for a certain period of time.

While being full-time employees of an external company and working remotely, augmented staff come under your orders and join your in-house team to help it achieve its goals.

In a nutshell, staff augmentation is similar to leasing, but instead of equipment or property, you rent staff to complete a particular set of tasks or a project.

Thanks to this approach, companies can quickly address growing workloads, tight deadlines, and a lack of expertise. Collaboration with trusted IT staff augmentation companies opens access to a global IT talent pool and gives an opportunity to adjust the size and composition of product teams almost on the fly.

Strengths of Staff Augmentation

Now, let's take a closer look at the benefits your business can gain from staff augmentation:

  • Unmatched flexibility

Nowadays, flexibility stands as an important criterion that differentiates thriving businesses from low-performers. Staff augmentation empowers your organization with exceptional flexibility when it comes to addressing urgent staffing needs and responding to ever-changing market demands. It allows you to quickly scale or downscale your workforce, all without the burdens of committing to long-lasting obligations and engagements associated with usual full-time employment. Thus, staff augmentation becomes a cornerstone of your ability to maintain a dynamic and adaptable workforce while offering you the utmost flexibility when optimizing your resources.

  • Significant cost saving

Staff augmentation also offers significant cost efficiency and substantial savings for your organization. When you opt for this hiring model, you avoid numerous expenses typically associated with full-time employment, such as fringe benefits, training programs, workspace maintenance, taxes, and more. The burden of these costs rests on your staff augmentation partner. Your financial commitment is straightforward, with a pre-determined hourly or monthly rate for each IT specialist you bring on board. What's more, the potential for even greater cost savings arises when you consider engaging offshore IT specialists, capitalizing on their lower costs.

  • Access to specialized skills

As mentioned above, the scarcity of highly qualified IT specialists is a dire challenge, especially when companies restrict themselves to the traditional hiring model focused on the local job market only. Staff augmentation, on the other hand, provides access to a wide talent pool due to which you can quickly find and bring in professionals with even the most specialized and rare skills you need on your project. Whether it's a seasoned expert in brand-new technologies or a niche programming language, staff augmentation companies ensure that you have access to the precise skills you need, even when they are in short supply in your local job market.

  • Incredible time efficiency

Procrastination and delay can cost you a lot. When you're under considerable time pressure, staff augmentation emerges as the ideal solution. The combination of an extensive talent pool and an efficient recruitment process empowers staff augmentation companies to quickly identify the perfect specialists for your project. These experts seamlessly integrate into your internal team and hit the ground running with minimal transition time. This allows you to achieve project goals, avoid delays, quickly respond to new market needs, and stay competitive in your business niche.

  • Knowledge sharing and learning opportunities

Employees of staff augmentation companies gain extensive experience working on a great variety of projects across the most diverse domains. Working closely with them, your in-house specialists can use the knowledge transfer opportunity to learn about brand-new technology, emerging trends, and best practices in software development. So, among others, staff augmentation also facilitates knowledge sharing and enhances your internal capabilities.

  • Direct control

Augmented specialists work remotely, and this is the only aspect that can differentiate them from your in-house staff. All the rest is the same. You manage them, assign tasks, and monitor their work progress. They are at your service and you control their work without any mediator to be sure that they are on the right track and do what you anticipate from them. So, if it is important for you to be the one who calls the tune, staff augmentation provides you with this opportunity.

Weaknesses of Staff Augmentation

While boasting a multitude of merits, staff augmentation also has certain weaknesses about which it is essential to know.

  • Increased management complexity

Any team expansion requires additional managerial efforts. If your all staff work together under the same roof, engagement of remote workers can make your leads reconsider and readjust their management strategy to ensure smooth cooperation and communication between both the in-house team and augmented staff. More emphasis should be also placed on work planning and task coordination.

  • Communication challenges

There is also a risk of facing communication challenges related to cultural differences, time differences, and language barriers, which can impact teamwork. So by extending your team through staff augmentation, pay attention to all of these aspects in order not to get your finger burnt.

  • Security concerns

It is not surprising that businesses are unwilling to share their sensitive data with external staff because it may expose them to potential security risks. While data security measures and legal agreements are always put in place when collaborating with staff augmentation companies, businesses handling top-secret projects still prefer to rely solely on in-house hiring to maintain greater control over data security.

  • Dependency on external talent

Staff augmentation helps quickly fill in knowledge and skill gaps. On the other hand, overreliance on this hiring model might discourage the development of in-house expertise and reduce your self-sufficiency, making you highly dependent on a staff augmentation partner.

  • Low morale

Working remotely, your augmented staff miss out on a lot of in-person team interactions. The absence of office catchups, water cooler chats, and shared moments may affect their sense of belonging. To counter this, it is highly recommended to treat augmented and eternal staff equally. In case of a long-term engagement, invite your remote staff to join your key in-site events and team-building activities to foster inclusivity and maintain high morale.

What is Project Outsourcing?

Outsourcing became integral to business practices in the 1990s. This business strategy suggests delegating specific tasks, typically non-core ones, to third-party vendors with specialized expertise. These days outsourcing is particularly widely used in the IT industry helping businesses to implement one-time or ongoing IT projects, such as software development, software testing, database administration, technical support, infrastructure management, and others.

The essence of project outsourcing lies in its ability to help organizations efficiently manage their resources. By partnering with external service providers that excel in these specialized areas, businesses can divert their focus toward their core, mission-critical projects. This approach allows them to leverage the extensive knowledge and proficiency of these specialized external partners, ensuring the successful execution of the delegated tasks or projects.

Strengths of Project Outsourcing

While we briefly discussed the advantages of project outsourcing when defining it above, it's crucial to delve deeper into this topic and explore its specific strengths.

  • Great opportunities for cost-saving

As a rule, project outsourcing is a more cost-effective strategy than having in-house staff. Organizations can leverage the expertise of external providers to avoid numerous costs associated with full-time employment and have the job done at affordable rates.

  • Access to specialized skills

Outsourcing provides access to a wide range of specialized skills that may not be available in-house and in a local job market. So, this strategy lets you quickly find highly skilled professionals to entrust some of your tasks to them.

  • Transfer of responsibility

At a certain point in time, you may find yourself overloaded with multiple responsibilities and unable to manage all of them efficiently due to a lack of time or expertise. By outsourcing some of your projects or tasks to a reliable service provider you can relieve your own burden and unload internal staff while letting real experts act and bring desired results.

  • Ability to focus on core competencies

Outsourcing allows you to delegate your non-core tasks to external experts who can complete them better as your in-house team focuses on the core competencies and strategic goals.

  • Efficiency combined with speed

Professional outsourcing partners quickly get up to speed on the current state of affairs and business needs and complete tasks efficiently and quickly, helping businesses meet tight deadlines and deliver software solutions to market faster. This efficiency-speed combination is a significant advantage in today's fast-paced business environment.

  • Flexibility

Project outsourcing comes with incredible flexibility, enabling companies to adjust their resources with regard to project demands which is beneficial for handling both small-scale and large-scale projects in the rapidly changing IT landscape.

  • Encouragement of innovativeness

Collaboration with IT outsourcing companies can introduce fresh ideas and open a door for new opportunities. These companies often have a global outlook and can provide innovative solutions and novel visions that might not be obvious to an internal team. This diversity in thinking can be a catalyst for developing groundbreaking solutions.

Weaknesses of Project Outsourcing

Being guided by the principle of ‘forewarned is forearmed’, we would also like to discuss the drawbacks of project outsourcing.

  • Loss or lack of control

One of the primary disadvantages of this strategy is the potential loss or lack of control over your outsourced project. As your chosen outsourcing partner assumes the responsibility for managing and supervising the project, you relinquish direct influence over its day-to-day operations, decisions, and processes. This loss of control can be disturbing, especially when the project is critical to your business success. In this regard, it becomes crucial to be discerning when selecting outsourcing companies to work with. Prioritize those who offer transparency, regular communication, and close collaboration. Also establish clear project expectations, milestones, and performance metrics to maintain a certain level of control and ensure that the project meets your strategic goals.

  • Quality concerns

Delegating your tasks to an external vendor can introduce difficulties in maintaining stringent quality control. Possible quality issues can stem from various factors, including communication barriers and differences in work cultures and levels of expertise between an in-house team and an outsourced team. To mitigate these quality concerns, it's vital to set up a robust quality assurance process, define clear quality benchmarks, and establish open and regular communication with the outsourced team. Regular quality reviews and feedback loops should be integral parts of your outsourcing strategy.

  • Security risks

Again, project outsourcing usually suggests sharing your sensitive data with an external company, which can expose your business to some security risks. Data breaches, leaks, or unauthorized access can have severe consequences, including financial losses, reputation damage, and legal liabilities. To mitigate these security risks, it is essential to be proactive and diligent. Ensure that your outsourcing partner maintains the highest security standards. Verify that they have robust data protection measures in place, including encryption, access controls, firewalls, and intrusion detection systems.

  • Poor communication

Potential troubles with communication represent one more weakness of project outsourcing. They can be caused by different time zones, language barriers, and cultural nuances. When not addressed effectively, poor communication may lead to misunderstandings and delays. Therefore, it's essential to establish clear communication expectations from the outset and define the preferred communication channels, meeting schedules, and language requirements. The use of modern collaboration tools and project management software can be also helpful in bridging time zone gaps and facilitating effective communication.

  • Lack of company-specific knowledge

Your outsourcing partner might not fully understand all specific aspects of your industry and business operation, which can impact project outcomes and lead to inefficiencies and delays. If you make a bid for your outsourcing partner’s extensive technical expertise only, be ready to invest extra effort and time in filling in gaps in their domain knowledge and communicating your company's needs and expectations.

A Comparative Table: Staff Augmentation vs. Outsourcing

Now that you have a complete understanding of both strategies, let's compare them across various aspects.

Criteria
Staff Augmentation
Project Outsourcing
Business size
Suitable for businesses of all sizes.
Suitable for businesses of all sizes.
Resource flexibility
Offers high flexibility for startups and mid-size businesses. Market leaders can also benefit from specific skill augmentation.
Offers scalability for businesses of all sizes, allowing access to a broader range of expertise.
Cost efficiency
Helps industry leaders optimize costs while serving as the most budget-friendly strategy for startups and mid-size companies.
Helps industry leaders optimize costs while serving as the most budget-friendly strategy for startups and mid-size companies.
In-house control
Ensures full in-house control over resources, projects, and workflows.
Suggests turning over control of a project to an outsourcing partner.
Capabilities
Already existing capabilities are used and reinforced to complete projects better or faster by bringing in additional experts.
Internal incapabilities are addressed by delegating responsibility for the project to an external team.
Team
Augmented staff joins an in-house team and closely collaborates with it to achieve a common goal.
An outsourced team works autonomously on the project that has been delegated to it and is managed by a vendor, while still interacting sometimes with a client’s representative and some members of an in-house team.
Long-term vs. short-term
Tackles short-term needs but often results in long-term partnerships.
More suitable for long-term projects.

How to Make the Right Choice Between Staff Augmentation and Outsourcing?

Choosing between staff augmentation and project outsourcing can be pretty challenging at first, given that both strategies bring considerable benefits. To make the right decision it is highly advisable to analyze your requirements and consider the key factors listed below:

  • Project complexity and scope

Start by evaluating the complexity of your project. For small and simple tasks, staff augmentation might be more suitable. For large-scale projects or repetitive tasks, outsourcing could be a better fit.

  • In-house expertise

It is also important to consider the skills and knowledge of your in-house team, if there is a substantial gap in a particular area or technology, outsourcing might be a better choice to fill this gap. On the other hand, if your in-house team possesses most of the required skills, staff augmentation can help you boost productivity with specific expertise when necessary.

  • Project duration

Estimate the duration of your project. Staff augmentation is generally more flexible and suitable for projects of different lengths. Outsourcing is advantageous for long-lasting projects and ongoing tasks.

  • Control preferences

Decide which level of control you would like to have over a project. Staff augmentation provides direct control over augmented staff integrated into your own team. Outsourcing comes with less control but can be a perfect suite if you opt for hands-off project management, allowing an external partner to handle most project management aspects.

  • Long-term strategy

Think about your long-term business strategy. If you aim to develop in-house capabilities, staff augmentation is the way to go. It offers close collaboration with experts, which can enhance the skills of your in-house team. In contrast, project outsourcing can be a strategic decision for specific tasks where long-term in-house development isn't feasible or cost-effective.

In summary, choosing between staff augmentation and project outsourcing depends on your unique business needs, project circumstances, and strategic priorities. Additionally, consider that a hybrid approach is also an option. Thus, you can augment your in-house team with IT specialists to complete core tasks while outsourcing non-core tasks to improve efficiency and optimize costs. Ultimately, the right choice should align with your immediate project requirements and long-term business goals.

Staff Augmentation vs. Outsourcing Software Projects: Tips on How to Find the Right Contractor

Whether you opt for staff augmentation or project outsourcing, in both cases, you collaborate with an external vendor whose choice plays an important role in the success of this endeavor. Rushing headfirst into collaboration with the first contractor you come across is a bad idea. Finding the perfect partner requires some legwork and careful consideration.

1. Comprehensive Analysis of Your Needs

Before you begin your search for the right contractor, conduct a thorough analysis of your project's requirements. Clearly define your objectives, work scope, budget, any specific skills or expertise needed, and your expectations from a contractor you’d like to work with.

2. Building a Preliminary List of Candidates

Compile a preliminary list of potential partners. You can start by seeking references from friends or existing partners who have experience in similar collaborations. Additionally, trusted platforms like Clutch or SuperbCompanies provide valuable insights and ratings for various service providers. Consider these sources to build your initial list.

3. Evaluation of Chosen Candidates

The next step is to thoroughly study each candidate on the list to decide on the winner. During this phase, consider the following aspects carefully:

  • Expertise and experience

Look for a contractor with the right and extensive expertise and experience in your domain. Direct communication as well as the company’s portfolio can provide you with insights on this.

  • Reputation

Make sure that a potential partner has a spotless reputation and their clients provide only positive feedback on their experience with the company.

  • Geographical location

Partnership with nearshore contractors might be more convenient in terms of time zones, while offshore contractors usually have just a few working hours overlapped with yours. Still, their rates are usually lower, which can compensate for inconveniences related to a significant time difference.

  • Communication

Ensure that your contractor can communicate clearly and regularly, through meetings, reports, and project management tools. Also, consider their command of English to avoid misunderstandings.

  • Cultural fit

The work culture and values of your contractor should align with yours. This can impact collaboration and successful project completion. Do not neglect this.

  • Compliance and regulations

If your project is subject to certain industry-specific regulations, ensure your partner has experience in compliance.

  • Security

It is of utter importance to check whether a contractor has solid security measures in place to guarantee robust protection of your sensitive data.

These tips can be applied whether you're considering staff augmentation or outsourcing. The key is to find a contractor that meets your project's requirements and your company’s values.

Conclusion

Both outsourcing and staff augmentation have become very popular due to the fact that traditional hiring models cannot cover all the needs of modern businesses. With either strategy, you can considerably reduce the time to market and cut down costs while tapping into the global pool of skillful IT specialists.

The decision between project outsourcing and staff augmentation hinges on your unique needs, circumstances, and priorities. However, it's crucial to ensure that your decision is well-informed. The insights presented in this article on staff augmentation vs outsourcing aim to provide you with the clarity and understanding necessary to select the option that best aligns with your objectives and set your business on the path to success.

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