It is predicted that the global outsourcing market value could hit $731 billion in 2023.
There’s a lot of talk these days about the merits of staff augmentation vs. outsourcing. Essentially, staff augmentation and outsourcing are two different ways to obtain third-party help for your business, either temporarily, on a project basis or sometimes permanently.
Although staff augmentation is technically a type of outsourcing service, there are some differences between the two. In this post, we’ll define and compare staff augmentation and IT outsourcing so you can make an informed decision about which is right for you.
What is Staff Augmentation & Its Pros and Cons?
Staff augmentation is the process of bringing third-party workforce to boost operational capacity or output. It can be used to address a variety of needs, including project-based work, peaks in customer demand, or special initiatives.
Augmenting your staff can be a great way to fill in the gaps in your company’s skillset without breaking the bank. By bringing in temporary or contract workers with the specific expertise you need, you can avoid the cost and commitment of hiring full-time employees.
Staff augmentation can also give you access to a larger pool of talent and allow you to scale up or down quickly to meet changing demands.
Perhaps most importantly, it can help you keep your core team focused on your company’s bottom line by taking on additional tasks that might otherwise fall to them.
It’s no wonder that the staffing industry generated nearly $500 billion of revenue globally in 2018.
Staff Augmentation Pros
Regardless of business size, if you’re looking to supplement your in-house team or build an entire department from scratch, staff augmentation can significantly improve your workflow by offering many benefits.
With staff augmentation, you can quickly scale up or down your workforce as needed in order to respond to changes in demand. This flexibility can be particularly beneficial for businesses that experience seasonal demand fluctuations.
Access to Skilled Resources
When you augment your staff, you will have access to skilled resources that may not be available internally. This proves invaluable when you are looking to fill a niche role or if you require specialized skills that your existing employees don’t have.
By working with a staffing agency, you can ensure that you find the right person for the job.
By augmenting your existing staff with additional resources, you can avoid the costs associated with hiring new full-time employees. Not to mention that it can help you save on training and onboarding.
When your employees are supported by additional resources, they can work more efficiently and effectively. This can free up time for your employees to focus on higher-level tasks, ultimately leading to improved business outcomes.
Another benefit of staff augmentation is that it can help reduce turnover within your company. When employees feel supported by adequate resources, they are less likely to experience burnout or become disengaged with their work.
This can lead to improved retention rates and decreased turnover, saving your business money in the long run.
Staff Augmentation Cons
While staff augmentation can be a great way to supplement your workforce with highly-skilled professionals, there are some potential disadvantages to consider.
These are the most common concerns:
- Contractors may not be fully invested in your company’s success and may be more likely to move on to other opportunities when they arise.
- It can add complexity to your workplace, as you now have to manage both full-time employees and contractors.
- There’s a potential for miscommunication and misunderstanding, as contractors may not be familiar with your company’s culture and values.
What Is Outsourcing & Its Pros and Cons?
The global market size of outsourced IT services was valued at $520.74 billion in 2019 and is expected to grow at a CAGR of 7.7% from 2020 to 2027.
What makes it so popular?
IT outsourcing entails contracting out IT functions and processes to a third-party provider. Companies do this to focus on their core business, reduce costs, or gain access to specialized expertise.
There are many outsourcing strategies. From hiring a managed service provider to handle specific tasks to entering a long-term contract with an offshore provider for more comprehensive services, IT outsourcing can take many forms.
Note that although outsourced IT for small businesses was once the most popular outsourcing engagement model, nowadays businesses of all sizes embrace outsourcing as a unique strategy to boost their efficiency.
IT Outsourcing Pros
Outsourcing can help businesses improve their operational efficiency and focus on their core competencies. When done right, it can be a superb way to steer your company towards success as it brings many advantages.
When you outsource IT functions, you can take advantage of economies of scale and get access to world-class resources at a fraction of the cost of building them in-house.
Additionally, IT outsourcing can help you avoid the high costs associated with training and hiring in-house staff.
Outsourcing IT functions entails access to a team of experts who are dedicated to providing quality services. This can free up your company’s internal resources so that they can be focused on other areas of the business.
With outsourcing, you will have the ability to scale up or down as needed, which can improve your company’s agility in response to changing market conditions.
Additionally, IT outsourcing can help you avoid the inflexibility often associated with in-house staff.
IT outsourcing can help your company manage risks better as you will have access to a team of experts who can help you identify and mitigate risks associated with your company’s operations.
Access to New Technologies
Choosing to outsource can also give you access to new technologies that might not be available to your company if you maintain an in-house IT staff. This can give your company a competitive edge in today’s ever-changing business landscape.
IT Outsourcing Cons
There are many potential benefits to outsourcing the services of IT service agencies, but there are also a number of potential drawbacks that businesses should be aware of.
Among the biggest risks of outsourcing IT is that it can:
- lead to a loss of control over critical parts of the business as you’ll be handing over control of key systems and data to an external provider;
- be disruptive to the business, as it can require significant changes to business processes and internal structures;
- be expensive, as businesses may need to pay for service contracts and ongoing support fees.
Staff Augmentation vs. Outsourcing: The Similarities
Staff augmentation and IT outsourcing are two popular business models for obtaining the skilled labor needed to complete a project or goal.
You can’t help but notice the similarities between them, such as:
- Both staff augmentation and IT outsourcing involve bringing in skilled workers from outside the company. This can be beneficial for companies that don’t have the internal resources to complete a project.
- Both models allow companies to save on costs by only paying for the labor they need. This can be a great way to stay within budget on a large project.
- Both staff augmentation and IT outsourcing provide flexibility when it comes to staffing. Companies can scale up or down as needed, making it easy to adjust to changing business needs.
Staff Augmentation vs. Outsourcing: The Differences
While they may appear very similar at first glance, there are several key differences between staff augmentation and outsourcing. Take a look at the table below.
|Difference in:||Staff Augmentation||Outsourcing|
|Responsibility||The organization retains responsibility for the work being done and the workers who are doing it||The external provider is responsible for both the work and the worker|
|Quality of work||Since the organization remains in charge, augmented staff is less likely to deliver low-quality results||Since the third-party provider is in control, it can lead to issues with the quality of work or the workers themselves|
|Control||Organizations have more control over staff-augmented projects (can lead to problems if there’s miscommunication or miscoordination)||The external provider has control over the whole project (can lead to problems as the organization’s IT needs may not be met as expected)|
|Scope of work||Usually, augmented staff is hired for a required skill and for a specific time||Usually, IT services are outsourced for a required task, and the organization hires a whole team or company|
Staff Augmentation vs. Outsourcing: Which One Is Better for You?
Determining whether you can benefit more from staff augmentation or outsourcing should ultimately be based on a careful evaluation of your needs and objectives.
Staff augmentation can be a viable option if you:
- Need to meet a sudden rise in demand
- Lack specialized expertise you don’t have in-house
- Want to feel more in control even though you’re outsourcing your work
- Wish to complement your team with additional resources
- Have thought about boosting your overall performance and efficiency
IT outsourcing can be a good model for your needs if you:
- Have a large project that your team can’t handle
- Want your company to be up-to-date with the latest IT trends
- Need access to new technologies you don’t have in-house
- Wish to cut your spending on often expensive IT equipment
- Want to focus on your core business and are open to handing control to a third-party provider to handle your IT needs
Staff Augmentation vs. Outsourcing: Key Takeaways
The decision of whether to staff up or outsource can be a difficult one for any business. To make things even more complicated, there are different types of engagement models, each with its own benefits and drawbacks.
But, now that we closely compared staff augmentation vs. IT outsourcing, you can clearly see which one is better for your needs.
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