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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:

 The Orientation of Staff Augmentation

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.

 The Orientation of  Managed Service Provider

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

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

  •       Pocket Friendliness vs Targeted Results

The first and most important difference between the two is the objective of the parent company.
Businesses according to their preferences pick any of the two models. Staff augmentation facilitates offers a capital-efficient model of staffing, considerably reducing operational costs. It is the best pick for the companies who want to expand their business scope while it ensures cost friendliness.  Moreover, the business has particular requirements go for 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 vs Discretion

Though both the models weigh equally heavy yet the second main difference between staff augmentation and managed services is the autonomy and discretion on the management and execution of the project. In the case of staff augmentation, the parent company holds a great position in the management of processes. Hence, the final call continues to remain with the parent company.

But if we talk about managed services, it includes the transfer of discretionary authority. In MSP, there is 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.

  • Flexible Recruitment vs Accountability

The two IT outsourcing models have different strengths and weaknesses. Staff augmentation enables the parent company to perform hiring procedure readily, i.e. on the go, taking into account the requirements of the project.  The flexibility provided in this model is also noticeable in the parent company’s ability to hire staff for short periods of time. On the other hand, MSPs emphasize their accountability to the parent company. MSPs, while undertaking any partnership, prepare a list of goals and objectives they commit to. Therefore, MSPs are responsible for all commitments and are also accountable for the 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

Another point of distinction is the time span of their relationships with the parent company. Staff augmentation only have a short-term relationship between the service seeker and the 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 contrary, MSPs have a very 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. Hence, staff augmentation has short term service provisions while managed services build a long-term relationship.

  •   Operational Scaling vs Project Scaling

Staff augmentation and managed service both have their own pros and cons when it comes to scalability. IT staff augmentation has the capacity to provide significant choices for project scaling in terms of the enhanced need for qualified professionals. Any 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 hand, managed services have the capacity to 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 continuous operation. Thus, the two models give different scalability alternatives, meeting diverse needs.

Downsides

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 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 model is 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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