The IT world is full of complex, ambiguous, and confusing terminology that can honestly be rather intimidating for people who didn’t choose technology as their career path. New concepts and “hot trends” appear frequently enough, and it might seem like there’s no way to keep pace with them.
One of the most common ways for a business owner to engage with IT specialists is IT Project Outsourcing—a practice of hiring a third-party contractor to implement some kind of technical task or create a digital solution. This approach has been around long enough to become popular and recognized. But what if an IT provider you’re interviewing asks you whether you require outsourcing or staff augmentation? How do you choose the right answer? What is the difference? Can you do both? Let’s settle the argument about staff augmentation vs IT outsourcing once and for all!
Differentiating the Terms
The best way to start explaining this whole staff augmentation vs outsourcing debate is to give a simple definition to both of the terms.
Outsourcing is about choosing an independent contractor and trusting them with a specific project, task or responsibility. The experts remain employed by the vendor you’ve chosen, and the project management is typically executed by the contractor as well.
Staff augmentation, on the other hand, is bringing the experts you require into your team. Usually, this approach is used when you need a subject matter specialist to consult your crew, implement a certain type of work, or enrich your team with their skill and expertise in any other way.
The “give a task out/bring the skill in” is the major difference between the concepts. Is it the only difference? Not really. Let’s examine both the similarities and the distinctions closer.
Staff Augmentation vs. Outsourcing. Key Points Comparison
To make the ultimate choice easier for you, we shall compare outsourcing and augmentation on several key points that are especially important from the business perspective.
While the actual rates may vary, an entrepreneur should remember that staff augmentation implies paying both the new team member’s salary, their training, and additional tools or resources that might be required (e.g., specific paid software or needed hardware.)
Outsourcing, in its turn, involves zero additional team-related investments except for the agreed project budget. All the software/hardware expenses, as well as possible sick leaves and/or vacations, will be covered by the IT vendor.
If the business owner decides to opt for staff augmentation and invite one or multiple experts to the team, the management process remains fully internal and is under the total control of a customer.
When it comes to outsourcing, things are different as project management is performed by the vendor’s team. And while the customer still has some control (regular reports, synch-ups, and adjustments are common), the management remains pretty much independent.
Another critical aspect to consider. If an entrepreneur has minimum time for onboarding, staff augmentation is the right pick. In this case, the whole process will take anywhere from a few hours to a few days (depending on the project’s specifics). IT outsourcing, even if you work with a trusted vendor you’ve already cooperated with in the past, requires thorough preparation. Research, business analysis, estimation creation, milestones determination, and other tasks usually held during the discovery phase will take time. Depending on the project, it may last from several weeks to several months. So the difference is drastic.
One of the greatest benefits of staff augmentation is the ability to inspect the expert(s) qualification and level of proficiency. The person specialist(s) is working with your team, and if, for whatever reason, they don’t display the desired expertise or work ethic, it becomes evident almost immediately. Keeping the same close watch on the outsourced team is nearly impossible because of multiple reasons, the main being a different location and independent management.
If we boil down the whole process to the result, which is typically some kind of project delivery, the staff augmentation approach puts the responsibility for the outcome on the business owner. That is because they’re the one who has full control over the process and the team. If IT outsourcing is chosen, the responsibility is completely on the vendor. Commonly, there’s a particular clause in the contract determining the quality penalty, so the customer is fully protected.
Which One to Choose?
If you still haven’t picked your winner in a staff augmentation vs IT outsourcing battle, we’ve prepared some practical recommendations that will streamline the decision-making process.
When to choose staff augmentation?
By all means, every business case is unique, and no one knows your circumstance better than you. However, there are some situations in which staff augmentation is typically the best choice.
- When you have an in-house team. This one is the most obvious but is often overlooked by entrepreneurs. To augment the staff, you need actually to have the staff, an in-house team that works for you. If you’re a startupper and need to assemble a team, go for outsourcing.
- For short-term projects with a predictable timeframe. If you’re not sure for how long you’re going to need a particular expert, outsourcing might be better, as the hourly rate for staff augmentation is usually higher, plus all of the expenses are on you as a business owner.
- When you know exactly which expertise gap needs to be filled. Considering the fact that the tech talent shortage is still notable in many countries, staff augmentation is a great way to make sure your team has all the specialists necessary to ensure the project’s success. Still, a business owner should be aware of which experts to hire.
- When flexibility is a priority. Staff augmentation is a more flexible approach compared to outsourcing. You can hire as many specialists as needed and change them as often as you want.
When to go for IT outsourcing?
As a cherry on top, let’s list the situations in which opting for outsourcing is a winning strategy.
- When you don’t have an established team and don’t plan on creating one. An in-house tech team is a luxury for many businesses. And if can’t afford one or just don’t need one, outsourcing is for you.
- For mid-term and long-term projects. Outsourcing is more affordable if you plan on building long-lasting business relations.
- When you’re ok with handing over control. If you just want a market-ready solution and don’t care much about the development process, choose IT outsourcing and let a professional team do the job.
- When the budget is tight. Outsourcing became so popular and sought-after because of its inexpensiveness. There are several “outsourcing power hubs” like Ukraine, Poland, China, and India where you’ll be able to hire a whole team of highly skilled experts without having to spend a fortune.
To Wrap It Up
The staff augmentation vs IT outsourcing debate isn’t an easy one. There are cases when you might want to go for one mode and then switch to another. It’s even possible to rock the hybrid model and combine both within one project. We hope that now that you know a little bit more about the differences and similarities between these two concepts, the final choice won’t be unpalatable.