To remain competitive, increase productivity and reduce operational costs in a tough technological marketplace, any company that manages an engineering or IT department will likely have to evaluate different technology outsourcing models from time to time. Staff augmentation and managed IT services are two popular delivery approaches often employed by firms to meet the challenges of staffing up for a software development project, or when outsourcing essential but non-critical IT tasks to supplemental staff rather than hiring additional in-house employees.
One of the most important steps that executives have to address (and one that’s critical to operational efficiency) is how to appraise different technical staffing approaches, then determine which engagement model serves their company’s interests the best. For example, a technology organization might need to fill a technical gap on a tight delivery schedule by quickly finding and cooperating with an offshore engineering team, which is an approach that aligns more with the staff augmentation model. On the other hand, if a chief technology or operating officer is searching for ways to reduce the general costs associated with his or her IT department, the best solution might be taking advantage of the remote technical staffing services offered by a managed service provider (MSP).
Let’s define further and examine some of the pros and cons associated with staff augmentation and managed IT services, then try to discern which technology delivery approach works best, depending on a company’s particular outsourcing needs.
Staff augmentation is a delivery approach in which a company contracts a staffing vendor to bring in and manage temporary supplemental staff for a set time. These skilled technical contractors can be remotely-based, or based onsite, depending on a client's requirements and requests, and scaled up or down as needed. An engineering firm might look to an offshore engineering team or consider an outsourced software development approach when understaffed during a specific phase of a software development lifecycle — especially when they know they will only require the services of provisional talent for a limited time. When that specific phase is completed, the skilled workers’ contracts end as well, which eliminates or reduces the effort and cost that would have had to be put into drafting full-time employment agreements, onboarding new staff, dealing with severance packages, or handling any of the unpleasantries that come with letting permanent staff go.
The Pros and Cons of Staff Augmentation
Like any outsourcing engagement model, staff augmentation comes with both its pros and cons. Here are a few essential benefits associated with this approach that hiring executives should be aware of:
- Augmented staff, by the very nature of their limited contracts, won't threaten the positions of valued permanent staff (who might be worried about job security), because it's understood from the onset that the roles of the outsourced workers are only temporary.
- When implemented successfully, this approach can fill in-house skills gaps quickly and efficiently, which is a great option to have available when a development project requires extra hands on deck, or time is of the essence.
- Managers have more direct control over augmented staff (onsite or remotely located) compared to other models — like project outsourcing, for example, where outsourced software development tasks and responsibilities are handed over in greater part to the vendor.
- Staff augmentation allows managers to scale up or scale down teams with competent, vetted staff as required, which frees up internal resources, while simultaneously limiting the managerial burdens (staff augmentation agencies deal with the paperwork associated with their contractors) that come with full-time hires.
- The expenses associated with recruiting, onboarding, and training permanent staff are significantly reduced when working inside the staff augmentation paradigm. This point is especially relevant if a company is hiring for a technical skill they don't foresee utilizing on a long-term basis.
While staff augmentation can solve a host of staffing issues that a company may have to address to remain competitive on a regional or international scale, there are a few drawbacks connected to this delivery approach as well, which include:
- Some managerial and other internal assets will have to be set aside to deal with augmented staff. The level of company assets (managers, office space, equipment) that might need to be redirected will depend on whether personnel are based in the office or located offsite, and how much oversight or additional training supplemental personnel might require.
- A brief dip in productivity can occasionally occur as outsourced technical professionals adapt to and are assimilated into different development or IT teams. This adjustment period is typically very short. Once augmented hires are up-to-speed and have adjusted to a firm's operational procedures, they can quickly become productive team members who can contribute technical expertise and problem-solving skills to a specific phase of a project, making them a valuable temporary addition to a company's professional staff.
- Staff augmentation is designed to fill technical gaps or quickly add needed expertise for a short to mid-term duration. The value and cost-saving aspects of this approach are significantly reduced when implemented over the long-term. When recruiting for long-term technical services, it is often better to work with a managed service provider or hire full-time employees.
Managed IT Services
The managed IT services approach is a service model where a vendor or remote contractor provides a client with information technology management services, usually from a remote location. Typically, after the terms of a managed service arrangement are agreed upon, the MSP monitors and maintains a company’s IT networks, communication equipment (computers, servers, mobile devices) on a monthly contractual basis, and addresses any IT issues should they arise. The logic behind this approach is to offload everyday IT management and maintenance responsibilities to a third-party contractor, which in turn frees up key personnel to tackle more critical operations, software development, or engineering tasks.
The Pros and Cons of Managed IT Services
The peace of mind that comes with knowing that a reputable MSP has an organization's IT maintenance concerns covered is one of the biggest pros of implementing a managed IT services approach. Here are a few more benefits associated with this increasingly prevalent delivery model (predicted to increase at a CAGR of 10.3% globally over the next few years):
- Companies that work with an MSP will benefit from having a predictable monthly IT payment, as the negotiated managed IT services contract will be for a fixed amount. This contractual relationship means that irrespective of the different kinds of IT issues that may arise — a month with relatively few problems, or a month when the communication networks go a bit haywire — managers will know exactly how much money they will have to budget for general IT expenses, which should help them control their IT expenditures.
- A managed service provider can offer different types of businesses (manufacturers, service providers, software developers) improved access to IT expertise. For example, if a company’s in-house IT staff has experience managing a local area network (LAN), but lacks the technical knowledge to work with a metropolitan area network (MAN), managers might have to pay for outside help when expanding their communication network to multiple offices in a city. An MSP, with a stable of knowledgeable and specialized IT experts, would be able to quickly assist in setting up and managing a metropolitan area network, without having to hire or fire additional staff, or tacking on extra costs.
- When an MSP takes over the day-to-day IT management of a business, that business often sees an increase in productivity. When core technical staff no longer have to contend with basic IT issues, they will have more time to focus on essential jobs vital to running a successful company. Moreover, an MSP can scale up or scale down their involvement in how they run a business’s IT networks as needed, giving managers plenty of flexibility to adjust their IT approach as the demands of the workplace dictate.
Managed IT services, while offering predictability in regards to monthly budgeting, do have a few cons linked with them as well, which include:
- Confidentiality issues for companies trying to safeguard and defend their valuable IP can be a concern when working with an MSP. While a trustworthy MSP will go to great lengths to uphold their reputation, internal control of IT operations is ceded to an MSP, which can expose weaknesses in the security protocols a business employs to protect its IP and other precious assets from theft or the prying eyes of competitors.
- When firms hire IT managed service providers, they need to be aware of the fact that in most cases, MSP professionals won't be physically located in their offices or buildings. This lack of onsite IT personnel can be a considerable drawback when a team needs an IT expert onsite to fix malfunctioning equipment or resolve connectivity issues. Furthermore, depending on the particular service agreement, onsite visits might incur additional expenses beyond the monthly contractual fee.
- While an MSP can provide a certain kind of flexibility in some areas, it can limit flexibility in other areas. An MSP might not offer service for third-party software that they haven't provided. Moreover, even though an engineering or software company can gain access to technology and equipment provided by an MSP, if additional equipment is required that isn't covered by their service agreement, that hardware or software (including increased maintenance costs) can end up adding more out-of-pocket expenses to the IT budget.
Deciding Between Staff Augmentation or Managed IT Services
Choosing the right technology partner, whether considering staff augmentation or managed IT services, is a vital first step for a company to take when looking to outsource. The best way for an organization to decide between these two delivery approaches is to consult with one or two experienced technical staffing services and assess a firm's general outsourcing needs, and the model that best fits its way of doing business. A managed IT services delivery model tends to make more sense for corporate IT departments looking for a predictable, monthly budgetary approach to managing their IT networks. For companies that require skilled technical labor on a temporary basis, working with a staff augmentation firm like BXGI that specializes in recruiting and vetting onshore, nearshore and offshore engineering teams and individual talent versed in outsourced software development would likely make the most sense.
When selecting a technology partner, pick a staffing firm that offers simple and clear explanations as to how they administer their operations and services. A reputable technical staffing agency will gladly answer any question a potential client may have, and provide prospective clients with plenty of references and customer testimonials that demonstrate the staffing agency’s technical experience and expertise.