Which is better: Staff augmentation or Project outsourcing?

By nayanathara | 26th March 2015 | 4 min read

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 intial deployment, staff augmentation is the easier process.
  • taining control over all the team members and monitoring their work on a daily basis.
  • 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 signficant 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 effectively manage the growing number of resources.
  • The main objective of staff augmentation is to deliver results. Although staff augmentation would help in delivering 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 responsibility of the outsourcer.
  • 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.
  • Reduction in management overhead as the outsourcer is responsible for management
  • The outsourcer is completely responsible for handling the risks or 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 as well as the high-level processes rests with the outsourcer and not the company.
  • Resistance from internal employees as they fear that project coutsourcing 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

If you are wondering which delivery model would be suitable for your business, 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 the least, find a vendor who has a comprehensive understanding of your business and delivers the best results.

Zyxware's staff augmentation services provides you immediate help for short-term or long-term IT projects, whether on-site or off-site. Our skilled professionals work under your supervision to help you in the development, management, maintenance and support of applications. With our skilled engineering and project management resources, you can meet project timelines with perfect ease. For your long-term business needs, we provide you qualified and experienced IT professionals without the cost, delay, or discomfort of lengthy recruitment processes. If you are on the look out for a company that offers staff augmentation services for project management, do get in touch with us!