IT is an ever-evolving field with the frequency of changes being almost every day. If you think you know the IT industry in and out after working here for some time, it is time to stop and give it a second thought. Significant changes have occurred in the industry, its structure, and working styles since the COVID-19 pandemic. 

While every company enforced working from the office at all times and employees being able to work in such situations only, when the sudden shift of working from home took place, many companies took a hit. Their productivity dropped, and so their revenues and profits. Only a few companies found their way early on. And those were the ones that were utilizing staff augmentation and outsourcing techniques for their software teams. 

Staff augmentation vs. project outsourcing

 

Outsourcing vs staff augmentation is a much-debated topic. If you are new to hiring remotely, you might be confused between the two. But don’t worry, here we will cover everything from the basics. In the end, you’ll have a head-to-head staff augmentation vs project outsourcing comparison to help you understand what is better for your business. So let’s get started by understanding the basics of each of these models. 

Staff Augmentation: Overview, Advantages, Disadvantages

Overview

Staff augmentation is a method of hiring and working with remote workers with complete control of your projects. It is used to fill short-term and contractual positions, and developers are assigned work that can be completed remotely. 

Staff augmentation provides companies with highly-skilled IT workers from other regions of the world. These workers work with their on-site teams and help the business achieve its objectives sooner. 

Having known about staff augmentation, it is the right time to understand its competitor, the outsourcing model

Advantages of Staff Augmentation

To get a better idea of staff augmentation vs outsourcing, let us see the benefits of both the models, one by one. 

Advantages of Staff Augmentation

Increased Capacity

When your business is growing, you’ll surely need more competent developers to take up the development work. In such times, you can benefit from staff augmentation by hiring more developers and getting the work done. 

They work parallel to your on-site teams and increase the collective capacity of your business without incurring much cost. Many companies utilize staff augmentation to increase their headcount during critical periods like peak seasons and get their work done without diving deeper into the hiring and retention processes. 

No Commitments

This is anothe benefits to watch when comparing staff augmentation vs outsourcing. Staff augmentation is good as it does not require commitments. You can hire developers from multiple such service providers when your requirements are high. And you can release them when you are done. 

In staff augmentation, you don’t need to worry about long-term commitments. This model came into existence to support shorter periods of requirements. Staff augmentation provides you with an option to get the work done without doing much paperwork and commitments. 

This is done to utilize the resources for a more extended period. You can reach out to any company for staff augmentation services, and in a few hours, you’ll have a developer that can work with your on-site team.

Complete Control

Unlike outsourcing, staff augmentation provides business owners complete control over their resources. Even though they are hired to meet ad-hoc requirements, developers in such a model are considered your employees. Because of this, they are bound to follow your instructions. 

Staff augmentation services can provide you control over the project’s progress. You won’t feel left out even though the team works on your idea. With complete control over resources, you can ask them to follow the coding standards of your business and even the working hours that help you work alongside them. 

Experienced Resources

If you’ve chosen to go for staff augmentation, you’ll indeed have more experienced resources to work with. Employees under this model have to work remotely, collaborate with an on-site team and also accommodate time zone differences. All these things are not found in freshers, and very few are able to master them even after having experience. 

Developers who choose to work under this model are pretty flexible and have the best technical knowledge paired with superb communication and collaboration skills. They have had exciting on-site careers, and they tend to shift to staff augmentation after having the confidence to work single-handedly. 

Flexibility

Staff augmentation provides you with the highest levels of flexibility. Whether it is in terms of working hours, technology, or even payment terms, this model is known for the increased flexibility that it provides. 

As the developers are your remote employees, you can ask them to work beside your on-site team on your time. They can easily accommodate such changes. Moreover, they also have a zeal to learn new technologies whenever required. And they can quickly adapt to new technologies as and when needed. 

Furthermore, they also provide flexibility in terms of payments, they can get paid a fixed salary, or even an hourly rate works for them. Such developers offer you the option to choose the payment terms that suit your business’s needs. 

Cost Effective

Staff augmentation provides immense cost benefits, and it is a cost-effective solution. Suppose you hire a full-time developer in your region; you’ll have to pay a very high salary and provide many different benefits to keep them happy. Compared to this, staff augmentation services can be availed at one-fifth of on-site costs, and there are no other demands. 

Such cost savings are superb when you have long-term requirements, and it can indeed be a cost-effective solution. 

After knowing the benefits of staff augmentation, you should also have a look at the benefits of outsourcing so that you can have a better idea of staff augmentation vs project outsourcing. 

Disadvantages of Staff Augmentation

Just like the benefits, both the models have some demerits too. It is essential to know about their drawbacks while checking the comparison between staff augmentation vs outsourcing. It is important to know about the demerits as this lets you prepare to face the demerits. 

Selecting the Right Vendor 

In the case of Staff augmentation, it is essential you connect to the right vendor. Usually, businesses fall prey to false testimonials and false experiences shown by the vendor and strike a deal with them. 

The problem in such a case is that you won’t get the quality of work as desired. The benefits of cost-effectiveness are challenged in such instances. You may have to incur losses and hire another vendor. 

Load on Top Management

If you are lucky and get a reliable vendor for adding additional staff, you must prepare your top-level management to manage the team. As the number of staff grows, the load on management increases. 

You will have to provide everything to the augmented staff in your company. From a safe and healthy work environment, a better office space, and guidance, to additional perks, everything needs to be provided to the team. 

Training Expenses 

Though it may sound like the augmented staff is part of your team, there are differences between the internal team and an augmented team. You need to first orient them to your business goals and objectives, mission and vision. 

Once they are oriented with this, you need to provide training to the team to make them work in tandem with your goals. This is necessary to understand and adapt to the company’s workflow and tools used for work. 

Outsourcing: Overview, Advantages, Disadvantages

Overview

Outsourcing is the most common term in the IT industry. It is an engagement model where you delegate your entire projects and business functions to third-party businesses and companies. 

Under this model, the company or individuals you hire are responsible for everything in your project, right from planning to execution and delivery. It is a model that can be related chiefly to the fixed price engagement model. In this model, the third party takes care of everything, and you just have to give them a fixed rate. 

Outsourcing has many benefits, and as we advance, we will have a look at a few of them. But before that, it is time to understand the benefits of staff augmentation. 

Advantages of Outsourcing

Just like Staff Augmentation, Outsourcing too has its share of benefits which are essential while looking at the comparison between staff augmentation vs software outsourcing. 

Advantages of Outsourcing

Higher Savings

Just as in the case of IT Staff augmentation, Software outsourcing also benefits companies by saving huge bucks of money. When done right, you can save the entire cost spent on recruiting, onboarding, training, retaining, etc. 

A survey revealed that 44% of American companies opted for Outsourcing just because it offers higher savings. This is because once the deal is signed off the responsibility of arranging the required hardware and software falls on the vendor. 

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Focus on Core Business

By outsourcing, businesses can delegate their IT-related tasks to a team sitting in a remote setup. By doing this, the internal team is offloaded of these tasks and they can focus on the core aims and objectives of the business.

Software development is usually regarded as a tedious process. The team of software developers includes the following:

  • Developers,
  • Designers, 
  • QAs, and 
  • PMs. 

Once the job is outsourced, one may free up an entire tech team that can be used somewhere else. 

Access to Global Talent Pool

When outsourcing IT services to offshore countries, you get to connect with the best available talents across the globe. This method helps you reach and access global talent, which otherwise would not have been possible in an office setup.

The dedicated team you outsource may be dispersed all over the globe and located remotely. This is one of the greatest benefits of outsourcing your IT services to an external team. When hiring from a local place, you may not get a skilled employee having expertise in your choice of technology. 

However, businesses prefer to hire Indian programmers as you will get better options in India at lesser price.

Enhanced Software Security

With the world counting the benefits of digitalization and enhanced IT services, the malicious attacks and vulnerabilities have also increased. There are a number of instances of data leaks and virus attacks. 

Outsourcing a team for your required IT services lets you connect with developers who have robust experience in developing software with enhanced security systems. If needed, these teams hire a specialist for the work. 

Disadvantages of Outsourcing

In the comparison between staff augmentation vs outsourcing, it is essential to see both sides of a model – the advantages and disadvantages. Below we have discussed the disadvantages of Outsourcing. 

No Control Over the Team

When you outsource your project to a remote team in an offshore destination, you simply lose direct managerial control over the project. It simply means, if you don’t have a dedicated Project Manager looking at the team, there will be communication barriers. 

Also Read : IT Staff Augmentation vs Managed Services

Time zone differences lead to inconsistent communication and you will not be able to get updates on your project regularly. Once the goal and deliverables are set, the vendor team takes care of the project and completes it on their own. 

Quality Concerns

As the direct control of your project goes to the vendor’s hand, the quality of the project is also shared. You are never guaranteed quality when outsourcing your project to an offshore vendor. 

Once there arises any issue after the project is delivered, it is quite difficult to find out the person responsible for the issue. There may be issues in coding, testing, and other technical debts.

Lack of Confidentiality 

This is one of the major things you need to consider when comparing staff augmentation vs outsourcing. When you outsource your project to an offshore vendor, all your source codes remain with them. This is because the project is developed from scratch by the outsourced team.

You never know when your data may get leaked or your codes are made open source. This can bring disaster for your company. You need to be extra careful while selecting the offshore vendor or development team and strike off an NDA deal with them. 

Staff Augmentation Vs IT Outsourcing – Head To Head Comparison 

Now we come to the most interesting part of the article Staff augmentation vs outsourcing, where we will do a head-to-head comparison between staff augmentation vs project outsourcing based on various parameters. 

Cost of Hiring and Infrastructure

In both the models, the skilled employees are recruited by an external agency that comes in contract with the company. Hence, businesses need not worry about hiring developers or software engineers or while when comparing outsourcing vs staff augmentation. 

Coming to the cost, in the case of outsourcing, the team is based remotely and works remotely. Hence no cost is incurred. But in case of staff augmentation, office space, and training costs need to be borne by the company itself. The company also need to manage the team that is hired for the short term. 

Training

Again here in the comparison between staff augmentation vs outsourcing, in both cases the skilled professionals are hired by an external agency. The external agencies make sure that they provide the best-skilled professionals to their clients. 

In the case of outsourcing, the professionals work on a project and deliver it as per the terms and conditions and NDA documents. But, in the case of staff augmentation, businesses need to orient, onboard, and if needed provide training to the employees. This is necessary to make them acquainted with the company culture, mission, vision, objectives, and goals. 

Vendor Relationship

A healthy relationship between the organization and the vendor largely affects the success of a project. In project outsourcing, there is the direct involvement of the vendor in the project lifecycle. Both the parties must come to a level of understanding where both are clear about the idea of the project. 

The terms and conditions must be clearly laid out between both parties for a better relationship. However, in staff augmentation, there is not much involvement of the vendor as businesses deal with professionals once the deal is done with the vendor. 

Communication

Communication is the key aspect in the comparison between staff augmentation vs outsourcing. Effective communication is crucial for any project’s success. Especially when you are handing over your project to an external team whether staff augmentation vs software outsourcing

In the case of staff augmentation, communication with the augmented team can be established easily. This is because the team is physically present in the office and you can directly connect to them. 

However, this is not the same in the case of outsourcing. In outsourcing, your team is scattered all over the world, sitting in different time zones. It is usually not easier to establish communication with all the team members together. 

Which One Should You Choose?

When it comes to choosing between staff augmentations vs project outsourcing, there is certainly no clear answer for this. We have discussed the pros and cons of both models in this blog. There is also a head-to-head comparison between outsourcing vs staff augmentation to  give you a clear insight into both models.

Now it depends on your organizational requirements and the particular project for which you want to hire developers on rent. According to your requirements, budget, and above-discussed factor, you can select any one between staff augmentation vs software outsourcing.