Which is better: Staff augmentation or Project outsourcing?

In a typical IT scenario, the success of a business depends on the ability to deliver projects on time, within the budget, and to the specification of the clients. Although developing in-house capabilities is a good solution, it could prove to be an expensive and risky venture, especially when the IT needs of an organization are rapidly changing. In short, when companies look for outside support in handling IT projects, they are basically considering two delivery models: Staff augmentation and Project outsourcing.

Staff Augmentation

Staff augmentation enables a company to add as many staff as required. In this method, staff augmentation firms employ the resources. A major benefit of staff augmentation services is that it allows the company to easily increase or decrease the resources to meet the changing requirements, without incurring the expenses and liabilities of full-time employees.

Pros:

• For initial deployment, staff augmentation is the easier process.
• training control over all the team members and monitoring their work daily.
• Minimal risks
• Comparatively less demanding commercial and contract requirements
• Capability to increase or decrease resources as desired based on the size of the contracting company
• Internal resistance is significantly less

Cons:

• Training is involved in aligning the resources with the company's processes, tools, and domain knowledge.
• If there are serious flaws in the internal processes of an organization, it will have a negative impact on the staff augmentation resources, just as internal employees.
• There may be an increase in the demand for resources but no corresponding significant improvement in the cost structure.
• Adding more resources through IT staff augmentation will lead to an increase in management overhead. More supervisors or managers would be required to manage the growing number of resources effectively.
• The main objective of staff augmentation is to deliver results. Although staff augmentation would help deliver the best results, the ultimate responsibility for efficiently planning and managing the project, tasks, resources and deliverables lies with the company that uses the staff augmentation model. Very often, companies purchase high-quality resources, but not the desired results.
• Companies are expected to ensure that staff augmentation resources are not considered as employees.

Project outsourcing or Managed Services model

In a managed services model, a company outsources the management, operations and process delivery to an external service provider to minimize the total cost of the business. This makes project outsourcing an attractive long-term strategy.

Pros:

• Significant reduction in training costs as training and development of skills is the outsourcer's responsibility.
• Outsourcers are responsible for adopting, maintaining, and improving best practices.
• Easy to ramp up and down the resources
• Significant leverage when large contracts are negotiated with outsourcers.
• One of the pros of consulting firms is that they can provide project outsourcing or managed services models to clients, which allows for a more efficient allocation of resources and expertise.
• Reduction in management overhead as the outsourcer is responsible for management
• The outsourcer is completely responsible for handling risks, project failures, or liabilities and ultimately delivering the results.
• Companies can stay entirely focused on the results and their business.
• Eliminates employee vs contractor issues
• Extremely cost-effective
• Improvement in operating leverage due to variable cost structure
   

Cons:

• Control over the resources and the high-level processes rests with the outsourcer and not the company.
• Resistance from internal employees as they fear that project outsourcing could lead to cutting back of internal staff.
• Assessing the quality of outsourcing firms is really difficult.
• As smaller projects are comparatively cost-effective in this model, sometimes outsourcers may be hesitant to take up such projects. They might even charge a premium for it.
• Integration with unique and complicated internal processes is difficult in this model.
   

Selecting the right delivery model

Suppose you are wondering which delivery model would be suitable for your business. In that case, the truth is that while certain requirements are best catered to through staff augmentation, project outsourcing is suited for some others. In certain cases, a hybrid approach would be best suited for your project. Selecting the right delivery model can be a tough decision. If you can't take the decision internally, it's better to seek the help of an IT consulting firm. And last but not least, find a vendor who comprehensively understands your business and delivers the best results.

Zyxware's staff augmentation services provide immediate help for short-term or long-term IT projects, outsourcing-site or off-site. Our skilled professionals work under your supervision to help you develop, manage, maintain and support applications. With our skilled engineering and project management resources, you can easily meet project timelines. For your long-term business needs, we provide you with qualified and experienced IT professionals without the cost, delay, or discomfort of lengthy recruitment processes. If you are on the lookout for a company that offers staff augmentation services for project management, contact us!