Staff Augmentation vs. Project Outsourcing: Which is Best for Your Organization?
In this article, we'll discuss advantages and disadvantages of both staff augmentation and project outsourcing.
At the end of the article, you'll find tips to decide which outsourcing model suits your company.
Let's dive in!
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Any modern business must meet the growing number of IT needs to ensure its successful development and high competition in the market. To efficiently handle all IT activities and stay focused on delivering their core service or product, companies often turn to professional software development companies.
Software outsourcing enables enterprises to optimize their IT service costs, professionally perform their day-to-day tasks, and increase their operational efficiency. There are two main models of outsourcing that companies can choose from staff augmentation and project outsourcing.
Staff augmentation is when a company hires an external contractor to fill in for current employees who are on leave or need assistance with special projects. Project outsourcing is when the company outsources its entire product development to an outside firm. There are pros and cons of each model, so businesses need to assess their needs before making a final decision.
Both staff augmentation and project outsourcing have advantages and disadvantages, but which one is best? We’ll explore all of it in this article. So, keep reading!
Staff Augmentation – What is it?
Staff augmentation is a type of software outsourcing service where a company hires specialists temporarily to improve their in-house team productivity through a software development service provider. Typically, software development companies offer staff augmentation on time and materials contracts, where their clients pay for the resource on an hourly basis and for materials needed to complete a project.
Staff augmentation is a time-tested strategy that has been used by many businesses to fill gaps in their workforce when the demand exceeds supply. Staff augmentation can be an economical and easy solution for companies who temporarily need additional personnel such as during seasonal surges, periods of high activity or growth, etc.
Let’s take a closer look at IT staff augmentation, its obvious advantages and hidden disadvantages.
Four Key Benefits of Staff Augmentation
- Cost-Effectiveness: Resource augmentation helps reduce recruitment and onboarding costs, as well as salaries and full-time benefits that are inevitable when working in-house. As a result, you pay only for the time spent on the project, reducing both short-term and long-term costs.
- Quickly Hiring the Specialists: In a survey by KPMG, CIO Harvey Nash says “the IT industry is experiencing a shortage of skilled and dedicated IT professionals. Therefore, finding the right specialist in your field can be a daunting task.” Staff augmentation allows your business to leverage a pool of experienced and trained software engineers and find the people most suited to your IT projects.
- Seasonal Employment: Staff augmentation provides flexible interaction with external teams. It means you can add professionals when you need them and cut them when their support is no longer needed. For example, you can hire a UI/UX designer to complete a specific project and let him go once the project is completed or you can also hire resources to support your internal team with additional staff when the workload is high. Moreover, it is much easier to end a recruiting contract than to lay off full-time employees.
- Internal Management: Choosing to hire resources from a software development company means that the external resources will work directly with your internal team. They will follow internal work rules and report directly to your managers. This means your managers and team leaders will consider when and where they need to fill skill gaps with the right resource.
Disadvantages of Staff Augmentation
- Management Capabilities: When hiring an external resource, your company managers need to be prepared to manage more people, provide additional guidance, and more.
- Additional Training and Integration: While the external resource will have the necessary skills, your managers will still need to explain your company’s internal processes and internal policies. Moreover, when you add new professionals to an existing team, you need to set aside time for the newcomers to learn about the company’s procedures and rules.
What is project outsourcing and why choose it?
Project outsourcing is a model where a business hands overall project development to a Software development company. This means that outsourcing clients do not need to worry about managing a team or preparing an office for hiring new employees. Instead, they can focus on their core competencies while the software development company works on the project.
The outsourcing of software projects involves a team of experts who are ready to take on project management tasks as well as overall software development processes. The project team will work separately from your internal team and will not be involved in any internal business operations.
What can you get from project outsourcing services? Let’s take a look at its key benefits.
Key benefits of Project outsourcing
- Reduced costs: When you outsource your software development projects, as in the case of staff augmentation, you do not need to invest in recruiting, onboarding and training staff, as well as worrying about their salaries or bonuses. This allows you to significantly reduce the costs when hiring in-house employees.
- Quick start of the project: For internal teams, it can take a long time before the project gets off the ground. A team may need additional training, hiring specialists, or purchasing special equipment to launch a project. On the other hand, when you outsource, the hired team is engaged in the full cycle of project development, from producing documentation to the release of the product and its support.
- Technical and management organization: When outsourcing projects, you do not need to worry about finding additional space to organize jobs for new employees or buying licensed software or equipment. Additionally, software development companies take over the selection of employees and their training. As a result, you get a full-fledged team for a fixed price.
- Reduced risks: Software development companies have highly qualified specialists who take responsibility for the results of the project. As a result, they take on the risks associated with developing your digital solution.
- Unloading the internal team: By outsourcing software development, you can focus on your core business goals and offload the workforce by focusing on more important business tasks. This way, your managers can get more flexibility and work on projects related to your company’s specific area of expertise.
Disadvantages of Project Outsourcing
- Coordination breakdowns: Coordinating with teams from other organizations can be difficult, especially if you’re working on a project that requires close collaboration and mutual adjustment. Breakdowns are worsened by physical separation, when people work in different buildings, cities, or even countries.
- Chances of Conflict: Projects are more prone to interpersonal conflict since the different participants do not share the same values, priorities, and culture. Trust, which is essential to project success, and can be difficult to forge when interactions are limited and people come from different organizations.
- Security issues. Depending on the project, trade, and business secrets may be revealed. This can be problematic if the contractor also works for your competitor. Confidentiality is another concern and companies have to be very careful when outsourcing processes like payroll, medical transcriptions, and insurance information.
Luckily enough, by working with seasoned software development service providers, these outsourcing risks can be mitigated easily.
Staff Augmentation vs Outsourcing complete project – Which one to choose?
Choosing the right technology delivery model is not an easy task. In this case, the “one size fits all” concept does not work and you will have to consider many variations. They include:
- the budget that your business is willing to invest in software development;
- project requirements and technical skills of employees;
- technical capabilities and availability of your internal team;
- the timing of the project and the speed of bringing the product to market;
- the position of your competitors in the market and many other aspects.
If you have a team of experts with years of experience, then it may make more sense to use staff augmentation and hire an expert who can provide expertise in one particular area that benefits your organization. On the other hand, if you’re looking for help designing or completing a project from start to finish, outsourcing might be right up your alley!
Let us know how we can best serve you by contacting us today. Our consultants will walk through all options available so that together, we can find the solution perfect for your needs and budget.