IT outsourcing has become the norm of the current decade. Generally, additional human resources and expertise supplant the permanent workforce of an IT firm. Two major models of supplementing the existing personnel body are in place, namely, Staff Augmentation Services and Managed IT Services. While most firms believe the two terms to be synonymous, some stark differences exist between the two. Therefore, for any business seeking external staffing options, understanding the difference between Staff Augmentation services vs Managed IT Services. Each has its own specifications, making it suitable for specific requirements.
What is Staff Augmentation Services?
Staff augmentation services are an alternative staffing model seeking to add greater professional skills for a specific duration to a permanent team. It generally involves getting assistance from staff augmentation firms that have an extensive network of skilled professionals. Firms adopting staff augmentation seek to hire professionals with technical expertise on a project or short term basis, than investing in permanent recruitments. In addition to being cost effective, staff augmentation prevents the undue burden and time wastage of going through a rigorous recruitment drive. This is often taken care of by the service provider.
The key element of staff augmentation is the retention of the management of the additional staff by the parent company. This makes the temporarily hired professionals accountable to the parent firm. Staffing through this model is most beneficial for SMEs that do not wish to invest a lot in operational costs, especially in offshore projects. Most short term professionals work remotely, or from the confines of the augmentation firm, and therefore, reduce the infrastructural costs as well. Professional assistance can be increased or decreased based on project requirements and work burden. Advantages of staff augmentation services saves the firm salaries due to a permanent workforce, during lean periods.
What is Managed Services?
Managed Services is the other and the more popular model of outsourcing that most IT firms are adopting. It involves a transfer of the recruitment, management, as well as strategic responsibilities to external partners, i.e. Managed IT Solutions Providers. The MSPs gain absolute control of a project or projects and are responsible to deliver the pre-decided output. The entire project is ‘managed’ by these partners. Benefits of managed IT services are right from the recruitment and training of professionals to deciphering the best tools and process to achieve client satisfaction.
Answers to why choose a managed service partners are as follows. Partnering and adoption of MSPs are most common among IT firms that not only lack human resources, but also relevant expertise, domain knowledge, best delivery models, etc. Staffing, therefore, becomes a single element of the services undertaken by MSPs. It is important to understand that with the transfer of management to an external agency, the parent company also loses its discretion over the specific project. MSPs deal with such projects with autonomy and do not consult with parent company on every decision. Formal commitments prior to partnering are agreed to by both parties. Following such agreements, MSPs function according to their procedures to deliver their commitment.
Staff Augmentation vs Managed Services
Cost-Effectiveness vs Goal Oriented Outcomes
One of the major differences between staff augmentation and managed IT services is the objective of the parent company. Companies have different purposes to pick one of the two outsourcing models over the other. Staff augmentation is best for SMEs that seek to scale up the operations, while maintaining cost effectiveness. Here staff augmentation provides a capital efficient staffing model, decreasing operational costs significantly.
On the other hand, managed IT solutions are preferred by companies with specific outcome needs. Such companies partner with MSPs and direct them towards a set of goals. Thereafter, MSPs have the discretion over the path to be followed to achieve the particular outcomes. Therefore, staff augmentation fulfills the objective of cost reduction, whereas, managed services promote the meeting of desired outcomes.
Retained Discretion vs Transfer of autonomy
The second difference corresponds to the level of autonomy and discretion over project management and execution of the parent company. By predominantly appearing as a model of staffing, staff augmentation ensures that the parent company retains a high degree of autonomy in the management and direction of the operations. Therefore, the final call remains with the parent company.
On the other hand, the adoption of managed services involves a transfer of the discretionary power. Partnering with MSP signals a transfer in the project autonomy from the parent company to the MSP. Hence, management under staff augmentation is the responsibility of the parent company. Managed services relocate this responsibility to the MSP.
Flexibility vs Accountability
The two models of IT outsourcing have different selling points and strengths that differentiate them. Staff augmentation views its USP as the flexibility it endows that parent company with. It allows the parent firm to undertake flexible hiring, i.e. on the go, considering the project needs. The flexibility is also visible in the ability of the parent company to recruit staff for shorter periods.
Managed services, on the contrary, highlight their accountability to the parent company. MSPs, while undertaking any partnership, pen down a list of goals and outcomes they commit to. Consequently, MSPs are accountable for all the commitments and are also responsible for timely delivery. Therefore, these two outsourcing models cater to different sets of requirements. While staff augmentation offers a flexible model of supplementation with skilled professionals, managed services ensure accountability and are answerable to the parent companies.
Short term vs Long term
Staff augmentation service providers and MSPs also differ from each other with respect to their relationship with the parent company. Staff augmentation generally entails a short term relationship between the service seeker and the service provider. This relationship is mostly transactional and short lived. Once the parent company exercises the staffing assistance of staff augmentation providers, the relationship enters into a hibernation period. The relation is often revived when a new staffing need arises.
MSPs, on the other hand, share a close relationship with the parent company. This relationship is based on mutual trust and knowledge sharing. Subsequently, the parent company is dependent upon the MSP for technical expertise and information dissemination. The relationship between an MSP and the parent company is long term and mutually reinforcing for both the partners. Therefore, while staff augmentation entails a short term, service provision, managed services build a sustainable partnership.
Personnel Scalability vs Processes Scalability
Finally, the last difference talks about the ease of scaling a project with the two outsourcing alternatives. Each has its own merits and demerits when it comes to scalability. IT staff augmentation offers remarkable options for project scaling in terms of increased need of skilled professionals. Additions to the existing workforce are significantly convenient corresponding to the scalability needs and demands. However, it does not offer any viable solutions for scaling operations and knowledge sharing.
Managed services, on the other hand, provide complete consultation when it comes to scaling operations. Additionally, it is easier to add tasks to an existing project, rather than add a new task force. Despite the flexibility, the latter can be time-consuming in case of an ongoing operation. Therefore, the two models offer different scalability solutions, suiting diverse needs.
The above discussion leaves no doubt in our minds that these two models of outsourcing have their own strengths and weaknesses. Addressing the needs of different business objectives, both have immense potential to assist the IT industry to grow and touch new heights. Therefore, choosing the right model of outsourcing must be based on a weighing of the benefits that each provides. At the present juncture, it entirely depends on the business needs, when it comes to selecting the best outsourcing model. IT companies seeking a long- term partnership and knowledge sharing must go for managed services. Whereas, companies in the quest for a short term, unconventional staffing option must choose staff augmentation. In the end, both have a promising future and are likely to disrupt the traditional models of IT operations.