Staff Augmentation vs. Managed Services: Which Model Fits Your Business Needs?

Staff augmentation is a common HR outsourcing model that facilitates temporary contract work for skilled offshore, onshore, or nearshore personnel. Its main purpose is to quickly increase the capacity of your company’s present team. 

According to PR Newswire, the market for staff augmentation will reach $81.87 billion by 2025, increasing at a CAGR of 3.53%. 

Source

Benefits of Staff Augmentation

Here are the two major benefits of staff augmentation:

• Flexibility in Resource Allocation: Increase or decrease the number of augmented staff as per the demand of your project. As you augment only skilled personnel with your in-house team, they become ready for the project quickly.
• No Need for Training: You do not need to put time, money, and effort into training the professionals. This is because they will be either senior-level professionals or have specialized skills.
• Access to Specialized Skills: Staff augmentation lets you choose experts as per your requirements. If you need to hire IT talents, you can go through their specialized skills, certifications, and experience.

Common Use Cases for Staff Augmentation

Following are the common staff augmentation use cases in the India hiring scenario:

• Companies that face seasonal spikes in demand go for staff augmentation to avoid overstaffing employees for a short period.
• When the in-house team lacks the required specialized skills to complete the project, it can hire remote talent with staff augmentation.
• If a new project comes up while the team is busy with other projects, a business uses this model of outsourcing.
• In the tech industry, when a company gets a temporary information technology (IT) project that needs additional manpower, it goes for IT staffing augmentation.

Potential Challenges of Staff Augmentation

• It is more suitable if you need staff on a short-term basis.
• You need to keep your internal staff to give necessary instructions to the external resources.
• To manage the operations with external staff efficiently, you need to ensure smooth communication and workflow.

Understanding Managed Services 

Source

In managed service staffing solutions, a company contracts with a third party to outsource certain projects or business requirements. The service providers complete the given task independently.

When you contact a managed service provider (MSP) to outsource your specific task, they will give you a quotation with a timeline and cost. They also maintain regular communication with the client company to give updates or ask specific questions.

You can choose a managed service model for virtually any requirement, from database administration and cybersecurity to software development.

Benefits of Managed Services

• Cost Predictability: While hiring a managed service provider, the third-party company will give you a quote with pricing details. This price remains fixed. As a result, you can predict the total cost this service will incur.
• Focus on Core Business Functions: If you outsource a certain business requirement to a reliable MSP, you do not need to spend time and effort training or guiding them. You can instead focus on other important aspects of your business.
• Efficient Project Management: After allocating the task, the managed service provider is responsible for managing the project. They usually have all the required technologies and tools to streamline task delivery.

Common Use Cases for Managed Services

• Tech companies in India usually hire managed service providers for tasks that require round-the-clock support and continuous monitoring. Cybersecurity, cloud services, big data management, etc., are some of the requirements for which managed services provide the best solutions.
• You can opt for managed services for supply chain management. They will help your business streamline the flow of goods and services.
• You can contact an MSP for continuous maintenance of your company’s technology. This may include servicing your company’s laptops and desktops, remote monitoring of your systems, etc.

Potential Challenges of Managed Services

• You need to thoroughly brief the managed service providers about your specific business needs. Any information gap can lead to unnecessary outcomes or further modifications.
• You may need to hand over some sensitive information to MSPs. If the third-party company is unreliable, there can be security issues.
• If you need to participate regularly in the project, the contract with the MSP may not be suitable.

Staff Augmentation Vs Managed Services

Source

Here are the common differences between staff augmentation and managed services:

1. Operational Control

Staff augmentation serves as an extension to your in-house team and offers a higher level of operational control. You can actively communicate or participate in project development.

You have less control over the daily operations and processes handled by the managed service provider. However, you can mostly connect with them regularly to get updates on progress.

2. Cost Structure

You only have to pay for the hours that the external staff dedicate to your project in staff augmentation.

On the other hand, businesses generally contract MSPs for continuous requirements which needs steady investment. It can be costlier than staff augmentation but will save your costs in comparison to having an in-house team.

3. Level of Involvement

In staff augmentation, the external team works alongside your internal team. They directly report to internal managers.

On the other hand, the MSP takes full responsibility for a project’s specific function. You need to be minimally involved in their daily operations.

4. Long-term vs. Short-term Engagement

Staff augmentation is one of the best HR outsourcing models for a short-term project that needs more flexibility. 

Contrarily, managed service will suit your business the best if you need a skilled team for a specific requirement for the long term. It can be cost-saving if you continue the outsourcing over a long period.

Assessing Your Business Needs

Now that you have a detailed understanding of staff augmentation vs. managed services, you can evaluate which one will meet your business needs.

When you hire remote talent, whether through staff augmentation or managed service, you need to assess your business goals and evaluate the project’s scope and duration. You also need to check how far it is possible to align the external team with your project requirements. 

Making the Right Choice 

• When to Choose Staff Augmentation: You can choose staff augmentation if your business faces a seasonal increase in workload or a temporary requirement for skilled professionals. 
• When to Choose Managed Services: If your business needs continuous monitoring or support for specific work, managed services can be the ideal option.
• Hybrid Approaches: If you need stable and continuous IT infrastructure support and see additional project demand during peak seasons, the hybrid HR outsourcing model can be viable.

Wrapping Up

Earlier, when businesses did not have remote working facilities, they had to hire employees to increase their human resource strength.

They had to invest significantly in training and upskilling. However, now, in the fast-paced business landscape, businesses have the option to stay flexible and lean by outsourcing human resources (HR).

They can choose between staff augmentation vs. managed services to meet their additional short-term or long-term human resource requirement.