Staff augmentation vs Managed services

Staff augmentation (also referred to as business augmentation) is the process of supplementing your existing IT staff with additional resources, while managed services involve outsourcing the management of IT operations to a third-party provider. Both of these methods can help you reduce risk, increase efficiency and enhance productivity, but each has unique advantages and disadvantages. Understanding the critical differences between the two can help you make a more educated decision when selecting the right IT solution for your business.

Frequently Asked Questions About Staff augmentation vs Managed services

What is staff augmentation?

Staff augmentation (https://sonatafy.com/staff-augmentation) occurs when an organization supplements its existing staff with additional resources to achieve optimal scalability and coverage. Staff augmentation can help organizations to achieve a sustainable and affordable staffing model that can easily be scaled up or down as needed. It is a flexible model that can be customized to suit each organization’s unique needs. Staff augmentation can include:

• Hiring a contractor or a remote employee.
• Outsourcing specific tasks to a managed service provider (MSP).
• Hiring a full-time employee (FTE).

It is essential to mention that the “augmentation” part of this term refers to adding staff members, not replacing your current employees. While staff augmentation can provide added scalability, productivity, and sustainability in your operations, it comes with greater risk. That is because you do not have control of the operations management, and you need to have a different level of visibility and insight into operations than you would with a fully managed services contract. Because of this, staff augmentation is often used as a temporary solution for growing businesses that need help scaling up quickly.

What are managed services?

Managed services are an IT outsourcing model that involves contracting an MSP to manage the day-to-day operations of your IT environment (1).

“This employment model allows you to recruit a whole team of specialists with the essential skills and knowledge, as well as all of the project’s technical tools.” 

– Distinguished

While managed services is an outsourcing model, it is designed to be a long-term partnership. You will have a clearly defined SLA and a contract outlining your and MSP’s responsibilities. This gives you greater visibility and control over your operations management while giving you access to experts who can help you optimize your IT operations. It is important to note that managed services sometimes provide a different level of scalability than staff augmentation. That is because managed services are designed with existing operations in mind, so scalability is often a limiting factor. That means your MSP will be unable to scale up operations as quickly as a contractor or remote employee.

Advantages of staff augmentation

• Scalability: Staff augmentation is a highly scalable model that allows organizations to grow on demand without having to invest in hiring additional full-time staff. Contractors, in particular, are an excellent option for growing businesses that need help scaling up quickly. Contractors can help you to reach your peak season demand without putting undue pressure on your existing staff and infrastructure.
• Visibility: Contractors typically work within the confines of your existing IT infrastructure and follow your organization’s standards and best practices. This gives you additional visibility into your operations, which can help you to identify potential issues before they become problems.
• Cost: One of the greatest advantages of staff augmentation is its cost-effectiveness. Depending on the model you choose, contractors can help your organization save thousands of dollars each month while also providing scalability comparable with FTEs.

Advantages of managed services

• Scalability: One of the most significant advantages of managed services is their scalability. Your MSP will be able to scale up operations as needed, whether to meet seasonal demand or help you with unexpected issues. This is especially important if you outsource your help desk or other critical services. If you experience a sudden spike in customer support tickets or a point in tickets that requires more advanced support, your MSP will be able to scale up operations as needed to meet the demand.
• Visibility: Many MSPs provide additional visibility into your IT operations, which can help you to identify potential issues before they become problems.
• Cost: Managed services are often more cost-effective in the long run than staff augmentation. Because your MSP will be working with your existing infrastructure, they will be able to provide a superior level of service at a lower cost.

Disadvantages of staff augmentation

• Lack of control: While contractors will work within the confines of your existing infrastructure and follow your current operational standards and best practices, you will have different control over your operations than you would with a managed services contract.
• Risk of non-scalability: Because contractors do not have a stake in your organization, there is a risk of non-scalability. If your business suddenly experiences a spike in demand, contractors may need more time to scale up as quickly as an MSP with existing operations.
• Lack of visibility: Because contractors work within your existing infrastructure, you will have a different level of visibility into your operations than you would with a managed services contract.

Disadvantages of managed services

• Lack of scalability: If your business experiences a sudden spike in demand, your MSP will not be able to scale up operations as quickly as contractors. This is often a limiting factor of managed services.
• Lack of control: While your MSP will work within your existing processes, follow your current operational standards, and best practices, you have different control over your operations than you would with contractors.

Comparing staff augmentation and managed services

Staff augmentation and managed services each come with their own set of advantages and disadvantages. Depending on your organization’s current situation, one of these methods might be more beneficial than the other. That is because each has different strengths and weaknesses that make them more appropriate for specific organizations. Managed services are ideal for organizations with more control over their IT budget and a higher risk appetite. It is a long-term investment, but it can help you to achieve a higher level of visibility and control over your operations. Managed services are an excellent option for organizations that want to outsource their operational management but still want to retain control over their IT infrastructure.

The best IT solutions for businesses

The best IT solutions for your business will largely depend on your current business operations and long-term business goals. That said, there are some general guidelines you can follow to help you select the best solution for your business. Managed services are an ideal option for organizations that want to outsource their operational management but still want to retain control over their IT infrastructure. Managed services are an excellent option for businesses with a higher risk appetite and the budget to invest in a long-term partnership with an MSP.

Finding the right IT solutions provider

No matter which model you choose, finding the right IT solutions provider is crucial. If you are outsourcing your operations management, you want to be sure that your MSP is a good fit for your business. To find the right MSP, you will need to do more than request a few quotes. It is important to vet potential MSPs to discover the one that is best suited for your business (2).

“Whenever a company invests in technology, it should bring an immediate benefit to the employees and the business as a whole. “

-Forbes

For managed services, you will want to look for an MSP with a proven history of success in comparable industries and businesses. You will also want to make sure that your MSP has the scalability and the resources to meet your business needs.

For businesses looking to streamline costs and optimize their IT operations, opting for staff augmentation or managed services is often a challenge. While both methods offer distinct advantages, it is essential to understand their fundamental differences and how each can benefit your business. Staff augmentation is a temporary solution that provides businesses with access to specialized IT personnel on an as-needed basis. At the same time, managed services involve outsourcing staff, like IT operations, to a third-party provider. Each option offers a unique set of advantages and drawbacks, so it is vital to understand the pros and cons of each prior to making a decision. This section will discuss the differences between staff augmentation and managed services and provide insight into which option is best suited for your business needs.

Benefits of staff augmentation

• Flexible staffing: Staff augmentation allows businesses to choose from a pool of skilled IT professionals so that organizations can scale their IT teams, as necessary. This will enable enterprises to scale up during peak times and down during slow periods, which can help reduce costs and improve efficiency.
• Low upfront costs: Staff augmentation contracts do not require businesses to make a significant upfront investment so that organizations can get started quickly and without a substantial financial commitment.
• High employee retention rates: Due to the flexibility of staff augmentation, workers are often less likely to leave their jobs. This can be a significant advantage for businesses with high employee turnover rates.
• Retain control of your company culture: With staff augmentation, businesses can retain control over their company culture and hiring process. This can be especially important for organizations that want to maintain their corporate culture.

Benefits of managed services

• Access to specialized talent: One of the most significant benefits of outsourcing to an MSP is accessing technical talent that may need help finding in-house. This can be especially helpful for businesses in the IT sector.
• Scale your operations: Another key benefit of outsourcing to an MSP is the ability to scale your operations, as necessary. This can be beneficial for companies that often experience fluctuating business needs.
• Lower costs: Outsource your IT operations, and you can reduce your costs by up to 30%, making it an excellent choice for companies looking to cut costs.
• Manage your team: While some managed services providers may hire employees to work for your team, others allow you to control your employees and your work culture. This can be a huge advantage for organizations that want to retain control over their teams and culture.

Challenges of staff augmentation

• High employee turnover rates: While staff augmentation does provide some advantages, it can also come with a few challenges. One of the biggest challenges of staff augmentation is the high employee turnover rates. As businesses are constantly hiring new people, there is a high chance that the team composition will shift from one week to the next. This can make it difficult for staff to build and retain strong company culture.
• Limited specialized expertise: Another challenge of staff augmentation is that it is difficult to find IT providers that can handle all aspects of the business. Businesses are often forced to hire specialists for each area, which can be costly and challenging to manage.
• High upfront costs: One of the biggest challenges of staff augmentation is the high upfront costs. Businesses needing to hire a new team can often incur high charges and financial commitments. This can be difficult for smaller firms to manage.

Challenges of managed services

Leveraging the services of a Managed Service Provider (MSP) can be a game changer for businesses of all sizes with projects, IT infrastructure, and applications (3).

“…managing complex IT Enviornments is very difficult, and challenges can occur. Since not all MSPs are created equal, it’s important to recognize typical IT managed services challenges that companies can have.”

– Netsurit

• Language barriers: One of the most significant challenges of outsourcing to an MSP is the language barrier. Unlike domestic outsourcers, language barriers can be an issue with international outsourcing. This can make communication difficult and be detrimental to the relationship’s success.
• Cultural differences: Cultural differences are also another challenge of outsourcing to an MSP. Cultural differences can often present challenges in managing teams and working relationships.
• Shorter track record: While there are many advantages to outsourcing to an MSP, there are also a few challenges. One of the biggest challenges of outsourcing to an MSP is that it is difficult to get a sense of the team’s track record. This can be challenging for businesses that want to know their partners’ history and track record.

Examples of successful staff augmentation and managed services

• Staff augmentation: One of the most prominent examples of staff augmentation is Amazon. Amazon initially outsourced its IT operations but eventually transitioned to staff augmentation, choosing to bring in third-party providers as needed. This allowed the company to take advantage of the cost-savings associated with outsourcing while maintaining control over their teams.
• Managed services: One of the most prominent examples of managed services is Google. While many know Google for its innovative products, few know that the company outsources its IT operations to an MSP. This allows Google to take advantage of the cost savings and scalability of outsourcing while maintaining control over its teams.

Cost comparison between staff augmentation and managed services

When it comes to staff augmentation and managed services, it is essential to understand the cost comparison between the two. Staff augmentation is typically the more cost-effective option. It involves bringing on additional staff to help with specific tasks or projects, and it gives you the flexibility to adjust the size of your team depending on your needs. Managed services, on the other hand, are usually more expensive. This is because the provider is responsible for managing a team of specialists for you. This can be beneficial if you need more time or resources to manage your staff, but it comes at a higher cost. Ultimately, the cost comparison between staff augmentation and managed services depends on your specific needs. Staff augmentation is the way to go if you are looking for a cost-effective solution. If you need more specialized help and do not have the time to manage it, then managed services might be the right choice.

How to decide which Outsourcing option is best for your business

Staff Augmentation is an exceptional solution for businesses that require a short-term or specialized IT solution (4).

“The staff augmentation model can effectively address a company’s current demands. However, companies must first identify their immediate needs before reaping the benefits.”

-RiseIT

This approach allows the company to hire a contractor or consultant for a specific project. The contracted employee works remotely and is managed by the business’s team. Managed Services, on the other hand, is a more comprehensive approach. It involves outsourcing IT functions to a third-party provider who operates and manages the IT operations of the business, including network security, software maintenance, and customer support. This approach allows companies to maximize efficiency while minimizing costs. Ultimately, the decision between Staff Augmentation and Managed Services will depend on the business’s specific needs. However, both approaches can be valuable in helping companies manage their IT needs.

As you consider the differences between staff augmentation and managed services, keep an eye out for these factors:

• The type of work, your teams, are performing: If your teams are performing basic operations, like network administration or application support, managed services can be an excellent option for your business. If your teams are performing more complex processes, like application development or data science, staff augmentation may be the better choice.
• Skill set: Another critical consideration when deciding whether to go with staff augmentation or managed services is the skill set of your employees and potential providers. Outsourcing those areas may not be necessary if your employees have the essential skill set to execute certain operations. Outsourcing may be the best option if your team needs to gain the necessary skills to perform core operations.
• Business needs: The final consideration when deciding between staff augmentation and managed services is your business needs. What does your company need from its IT operations? What does it expect from its IT teams? These are the factors that will determine which outsourcing method.

References:

1. This employment model allows you to recruit a whole team of specialists with the essential skills and knowledge, as well as all of the project’s technical tools. – Distinguished Quote
   https://distinguished.io/blog/staff-augmentation-vs-managed-services
2. Whenever a company invests in technology, it should bring an immediate benefit to the employees and the business as a whole. – Forbes Quote
   https://www.forbes.com/sites/forbesagencycouncil/2021/02/12/11-ways-to-identify-the-best-tech-solutions-for-an-agency/?sh=5c32851aada5
3. …managing complex IT Enviornments is very difficult, and challenges can occur. Since not all MSPs are created equal, it’s important to recognize typical IT managed services challenges that companies can have. – Netsurit Quote
   https://netsurit.com/en-us/challenges-with-managed-service-providers/
4. The staff augmentation model can effectively address a company’s current demands. However, companies must first identify their immediate needs before reaping the benefits. – RiseIT Quote
   https://riseits.com/staff-augmentation-implementation-what-are-the-advantages-and-disadvantages-of-staff-augmentation/