Staff Augmentation vs. Outsourcing: What Works Best for IT Industry

Resource shortage is a grave issue for tech companies with permanent & temporary workarounds. Let's understand the difference between staff augmentation and outsourcing.

In today’s rapidly evolving technological landscape, businesses in the IT industry can face resource shortages and can raise the challenge of meeting increasing demands for specialized skills while also ensuring cost-effectiveness and efficiency. Two popular strategies have emerged as potential solutions: team augmentation and outsourcing. Both approaches aim to enhance productivity, accelerate project timelines, and access specific expertise. Most consider both to be the same and are oblivious to the fact that each has its own advantages and considerations.

This blog will explore the key differences, benefits, and drawbacks of team augmentation and outsourcing in the IT industry.

What does Staff Augmentation mean?

Team or staff augmentation refers to the practice of extending an existing in-house team by hiring external professionals on a temporary basis. This approach provides companies with access to a wider talent pool and specialized skills without the need for long-term commitments or extensive onboarding processes. Team augmentation allows businesses to fill skill gaps and enhance their internal capabilities by integrating experienced professionals who work alongside the existing team.

Benefits of Staff Augmentation

1. Scalability: With team augmentation, organizations can quickly and flexibly adjust their workforce according to project requirements. This scalability allows for greater adaptability in managing fluctuating workloads and prevents the overstaffing or understaffing that can hinder productivity. 

2. Domain Expertise: By augmenting their team, companies can tap into the knowledge and expertise of professionals with specific skill sets, such as data scientists, AI specialists, or cybersecurity experts. This access to specialized talent enables organizations to tackle complex projects that require niche skills without investing in extensive training or hiring processes. 

3. Seamless Collaboration: Hired resources for software development staff augmentation integrates seamlessly with existing in-house teams, fostering collaboration, knowledge sharing, and cross-pollination of ideas. This collaborative environment often leads to increased creativity, innovation, and improved problem-solving capabilities.

You can find more Benefits of Staff Augmentation Model

Disadvantages of Team Augmentation

1. Increased management costs: Since the project is managed internally, it is important for the entire team to be on the same page, and for someone managing the project, it translates to individually managing both teams and ensuring the projects move forward smoothly. This means project managers need to monitor more resources, tasks, and deliverables.
   
   
2. Increased training costs: While the end users don’t need to train the augmented staff on their technical capabilities, training would be needed for the hired staff to be acquainted with internal processes, tools, and other knowledge.
   
   
3. Timezone and Language barrier: While most staff augmentation companies claim to work as per the timezone of the clients, there might be a slight mismatch when working on the projects. Additionally, for companies in non-English speaking countries, the hired staff may face language barriers.

Pre-requisites for considering IT Staff Augmentation

1. Management Effort: While team augmentation offers numerous benefits, effectively managing an augmented team requires careful coordination and communication. Ensuring clear roles, responsibilities, and project objectives is essential to maintain alignment and maximize productivity. 

2. Integration Challenges: It may take time for augmented team members to adjust to the company’s culture, workflow, and processes. Organizations need to invest effort in facilitating a smooth integration and fostering a sense of belonging among augmented and in-house team members.

What is Team Outsourcing?

Outsourcing is a more permanent approach to addressing staff shortages that involves delegating specific tasks, projects, or entire processes to external service providers. In the IT industry, outsourcing can encompass a wide range of services, such as software development, application maintenance, technical support, or cloud infrastructure management. Businesses opt for outsourcing to leverage external expertise, reduce costs, and focus on core competencies.

Benefits of Project Outsourcing

1. Cost Efficiency: Outsource staffing enables companies to access a global talent pool, often at lower costs than hiring and maintaining an in-house team. Outsourcing partners often have established infrastructures, tools, and processes, allowing organizations to reduce overhead expenses associated with recruitment, training, and infrastructure setup. 

2. Time Savings: Outsourcing can accelerate project timelines by leveraging the experience and efficiency of specialized service providers. These partners are often dedicated to specific tasks or processes, enabling faster delivery and reducing time-to-market. 

3. Focus on Core Competencies: By outsourcing non-core functions, companies can focus their internal resources on strategic activities that drive their core business objectives. This allows for enhanced efficiency and competitiveness in the market.

Disadvantages of Outsourcing

1. Complete handover of responsibilities: Outsourcing requires you to give up most of the control over the workflow of the project. This can lead to serious problems, especially if communication is inadequate.
   
   
2. Expensive: When outsourcing, the outsourcing company takes responsibility for the final result and quality of a product. So, they charge white-labeling charges for hiding their involvement and representing your company. So when compared to the cost of availing staff augmentation services from a trusted staff augmentation company, outsourcing is expensive but less than hiring (and training) a resource.
   
   
3. Objective mismatch: Since outsourcing involves handing sensitive information and data to a third party, there is a risk of data mismanagement and breach if the objectives of both companies ever mismatch.

Pre-requisites for considering Outsourcing

1. Communication and Coordination: Effective communication and coordination between the outsourcing partner and the in-house team are critical for successful collaboration. Clear communication channels, regular progress updates, and well-defined project milestones are essential to maintain transparency and alignment. 

2. Quality Control: While outsourcing offers cost savings, ensuring consistent quality control can be a challenge. Companies must establish rigorous quality assurance processes and monitor the performance of the outsourcing partner to maintain high standards and avoid potential setbacks.

Staff Augmentation vs. Outsourcing: A Comparative Table

	Staff Augmentation	Outsourcing
Cost and Duties	The cost of hiring and educating the additional resources is covered by the company, which includes the cost of giving them the required tools and access.	The outsourcing provider bears the full expense of the hired employees. The supplier also completes the job with its own tools and resources.
Purpose	To temporarily assemble a team or to fill up certain gaps. Appropriate for unforeseen, long-term, and short-term projects.	To complete projects for which a business does not wish to employ engineering competence. Suitable for both short-term and long-term goals.
Work Structure and Management	Although it requires managerial work, it enhances overall team cohesiveness and eases the hiring process.	Despite the fact that management is independent, the external team does not effectively integrate with the company’s resources.
Knowledge	The client independently verifies the supplement workers’ expertise, and they speak with other staff members.	The committed outsourced team combines expertise in the outside market with particular insights into the company’s sector. The resources’ caliber cannot be evaluated by the client.
Onboarding	Since the customer has immediate, on-demand access to the resources and capabilities they need, onboarding happens quickly.	Projects cannot start until they have undergone extensive study, had their deliverables outlined, and had milestones established. Additionally, both parties must complete formal agreements before the project may move forward.

Wrapping Up

When it comes to team augmentation vs. outsourcing in the IT industry, there is no one-size-fits-all approach. The decision between the two strategies depends on various factors, including project complexity, budget, timeline, and internal capabilities. Team augmentation provides businesses with flexibility, scalability, and access to specialized skills within their existing infrastructure. On the other hand, outsourcing offers cost savings, faster project delivery, and the ability to focus on core competencies. Vindaloo Softtech is a trusted software outsourcing company that also offers staff augmentation services. Get in touch.