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Staff Augmentation VS Managed Services: What to Choose?

Arpatech Jun 27, 2019
Staff Augmentation VS Managed Services

IT outsourcing is a procedure involving the delegation of components of a web-based application development process. Many outsourced services such as testing, coding, and design can be used in production, although outsourcing entails risks triggered by the client’s low degree of control.

That’s why a business decides on staff augmentation vs. managed services. Departments of information technology that need to introduce new projects will need to outsource them to fulfill their objectives as planned. IT outsourcing can be used to supplement the skills of permanent employees.

The two models used to strengthen the workforce include IT-managed services vs staff augmentation. They are two trusted alternatives that should be thoroughly evaluated and understood before selecting one that works well with the chosen projects to meet the goals.

First, we’ll give you a brief comparison like the description of both the models:

What does Staff Augmentation offer?

Staff augmentation developed from a need to tackle short-term resource constraints, budgetary pressures, and headcount requirements. This method served the organization greatest when skills were needed for immediate and short-term commitments. IT and operating executives used external resources to fill inner resource gaps while avoiding recruiting individuals in fixed roles. When the project was finished, the external resource would no longer be on the budget of the manager. Most of the short-term experts work remotely or from the augmentation Company’s premises, thus also reducing infrastructure expenses. In addition to being cost-effective, it prevents the undue burden and time wastage of going through a strict recruitment drive. Rapid growth in staff augmentation (ten billion of dollars worldwide) is due to various market factors, such as profusion of experts preferring to work as independents, continuously decreasing rates, seemingly never-ending marginal pressure facing most companies, and hiring-restricting corporate policies. However, staff augmentation, from a budgetary view, only works when the contract for an external resource runs for a brief period of time. The best feature of staff augmentation is the retention of the management of the additional staff by the parent company. This makes the temporarily employed professionals accountable to the parent company.

What does Managed Service Provider offer?

Managed service customers look far beyond traditional outsourcing criteria or hiring short-term contract staff to get the long-term advantages they expect from a solution partner. The idea is to look beyond the initial saving plan and ask “what’s next.” A traditional managed services model enables an organization to outsource process management, activities, and delivery efficiently to reduce the complete expense of a business. Managed services are the additional assistance that saves your day. With managed services, you will be free from the necessary but time-consuming activities. You will be able to focus on the right people and resources on the right stuff. Your strategic measures will all take place while improving effectiveness and productivity. That makes the model an interesting long-term strategy. The pricing structure, based on regular monthly billing across service levels and volumes, rather than per diem charges connected with staff augmentation, guarantees that company expenses stay within the forecast. Reduced cost volatility encourages accurate and predictable budgeting. MSPs cope autonomously with projects and do not consult with the parent business on any decision. Both parties agree to formal commitments prior to collaboration. Following such agreements, MSPs function to perform their commitment according to their procedures.

Staff Augmentation VS Managed Services in Focus

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Here is an in-depth view of the Staff Augmentation VS Managed Service Provider

  • Cost-Effectiveness vs Objective Oriented Results

One of the major distinctions between staff augmentation services and managed services is the parent company’s objective. Companies have different targets to select one of the two outsourcing models over the other. Staff augmentation is ideal for SMEs looking to expand operations while ensuring cost-effectiveness. Here staff augmentation offers a capital-efficient model of staffing, considerably reducing operational costs. On the other side, businesses with specific outcome requirements prefer managed services. These companies are partnering with MSPs and directing them towards a set of goals. MSPs then have discretion over the process to be followed to accomplish the specific outcomes. Staff augmentation, therefore, meets the cost reduction goal, whereas managed services encourage the fulfillment of desired results.

  • Authority Transfer vs Retained Discretion

The second difference refers to the level of authority and discretion over the parent company’s project management and execution. By appearing predominantly as a staffing model, staff augmentation guarantees that the parent company maintains a great deal of power in the management and direction of processes. Hence, the final call continues to remain with the parent company. But on the other side, the implementation of managed services includes the transfer of discretionary authority. Partnership with MSP signals a shift of project autonomy from the parent business to the MSP. Management under staff augmentation is thus the responsibility of the parent business, while managed services transfer this duty to the MSP.

  • Flexibility vs Liability

The two IT outsourcing models have different selling points and strengths that distinguish them. Staff augmentation sees its USP as the flexibility it endows that parent company with. It enables the parent company to undertake flexible recruitment, i.e. on the go, taking into account the requirements of the project. The flexibility is also noticeable in the parent company’s ability to hire staff for shorter durations. Managed services, on the other hand, emphasize their accountability to the parent company. MSPs, while undertaking any partnership, write down a list of the goals and objectives they commit to. Therefore, MSPs are responsible for all commitments and are also accountable for timely delivery. Thus, these two outsourcing models meet distinct sets of demands. While staff augmentation provides a flexible model of supplementation with qualified experts, managed services guarantee accountability and are accountable to parent companies.

  • Short-term Relationship vs Long-term Relationship

Staff augmentation service providers and MSPs also vary from each other in terms of their relationship with the parent company. Staff augmentation usually involves a short-term relationship between the service seeker and the service provider. Most of this connection is transactional and short-lived. Once the parent company drills staffing assistance from staff augmentation companies the relationship reaches a hibernation period. The relationship is often resurrected when a new need for staffing occurs.

On the other side, MSPs share a close bond with the parent company. This relationship is based on mutual trust and sharing of information. The parent company is then reliant on the MSP for technical expertise and dissemination of information. The relationship between an MSP and the parent company for both partners is long-term and mutually reinforcing. Therefore, while staff augmentation involves short-term service provision, managed services build a sustainable partnership.

  • Workers Scalability vs Processes Scalability

Finally, the last difference speaks with the two outsourcing options about the ease of scaling a project. Each has its own pros and cons when it comes to scalability. IT staff augmentation provides significant choices for project scaling in terms of the enhanced need for qualified professionals. Additions to the present workforce are considerably convenient to meet the scalability requirements and demands. It does not, however, give any feasible solutions for scaling operations and sharing knowledge. On the other side, managed services provide full consultation when it comes to scaling operations. In fact, adding duties to an existing project is simpler than incorporating a new task force. Despite the flexibility, the latter may be time-consuming in the event of continuing operation. Thus, the two models give different scalability alternatives, meeting diverse needs.


The perfection of any model is accompanied by the disadvantages as well so let’s have a look at the downsides of both the models:

Staff Augmentation:

  • You may never find the ‘all-knowing’ team for a fair price, so it can happen that the augmented staff may need some extra expertise to accomplish any given task. And that needs education, which implies extra time and financing costs.
  • The businesses that use the staff augmentation are only getting the resources. Preferably, the company gets resources of the top quality, but not the outcome. The company that uses the staff augmentation business modelis fully liable for the development process and quality control, so the outcome is also the responsibility of the company.
  • If there are some weaknesses in the internal business procedures, the additional staff augmentation costs may damage each of the in-house team and the general workflow of the company.

Managed Services:

The downsides of managed services are somehow comparable to those associated with staff augmentation.

  • The vendor reliability is the first and primary risk in the managed services. Like outsourcing, the client puts his resources at stake, having no significant impact on the workflow. Recommendations and remarks from prior customers are the most secure fact that helps to prevent such risk.
  • Despite the inquiry for the complete execution of the work, responsibility for the result lies with the client-company. This means that compensation outgoings are also the responsibility of the client in the case of a shortcoming. In turn, expenses may exceed the cost of the contract.
  • The benefit of the managed service provider is the availability of rare abilities and/or technical facilities. Not all of these tools are so simple, inexpensive, and easy to get. The services of the skilled and experienced vendor will demand substantial costs. Of course, it’s comparatively cheaper and significantly quicker than if you’re doing this on your own, but the cost is still high, making it a major disadvantage when comparing staff augmentation vs. managed services.
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