What works best – Staff Augmentation or Project Outsourcing?

staff augmentation or project outsourcing
Businesses need to complete projects as per the specifications, on time and within the budget. It is well established that the technology requirements of businesses are dynamic and keep changing.
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Businesses need to complete projects as per the specifications, on time and within the budget. It is well established that the technology requirements of businesses are dynamic and keep changing. Considering this, employing IT resources in-house for projects can be a very expensive proposition. When businesses look for external help, they can select either staff augmentation or project outsourcing.

What is staff augmentation? Why does it make good business sense?

IT staff augmentation or IT resource augmentation typically means adding staff as per the required skill sets. The resources are hired by the staff augmentation companies and therefore the businesses can easily scale up or scale down depending on the dynamic demand patterns without bearing the cost and associated liabilities of hiring full-time staff on their payrolls. 

Closer integration and control: Businesses already have the experience of hiring full-time employees and therefore staff augmentation comes easy to them. It is just a shade different from what they have been already doing and therefore are in greater control when it comes to managing the resources. Aligning the augmented staff is easier than aligning a project outsourcing team with existing business processes. 

Flexibility: Instead of hiring full-time employees or opting for project outsourcing, it is easier to ramp up or down using staff augmentation.

Cost advantage and limited liability: Staff augmentation is more cost effective and has lesser liabilities as compared to project outsourcing or hiring full-time employees. 

Helps business meet the deadline: More often than not, businesses go in for resource augmentation to complete their projects by the target date rather than hiring project outsourcing teams or full-time employees. 

Less threatening to the internal teams: Internal teams cooperate with augmented staff better than with project outsourcing teams. They perceive project outsourcing as a direct competition to their jobs. 

Project Outsourcing

Project outsourcing essentially means contracting the project work to the resources of another firm. It is the discretion of the businesses to outsource the entire project or only some specific task(s) of the project i.e. out-tasking instead of outsourcing to a sub team managed by the outsourcer.

Why should businesses outsource IT projects?

No training costs and time: It is the outsourcers who are responsible for the training of the external team and therefore the businesses do not have to shoulder the training costs and time involved. Businesses need to select outsourcers who follow the best practices. 

Flexibility: Project outsourcing also allows the flexibility of scaling up and scaling down as per the demand pattern.

Low supervision overheads: It is the responsibility of the outsourcers to manage and supervise the external team and not that of the businesses. The businesses can define specific results while signing up with the outsourcers and outsourcers share the associated risks, including legal, and rewards of completing the projects successfully. 

Cost advantage: Project outsourcing also offers cost advantage over hiring full-time employees. This cost advantage is more pronounced in case of one-time need, intermittent needs or when the businesses have no internal IT team. 

Focus on core business: As the responsibility of the results is that of the outsourcers, the internal teams can focus on core business.

Economies of scale: Economies of scale can be negotiated with the outsourcer especially when the IT projects are large. 

What are the possible disadvantages of project outsourcing?

Resistance from internal teams: The internal teams see project outsourcing as a direct threat that may lead to businesses laying off jobs partially or completely, and therefore resist it.   

Difficulties associated with control and integration: It is the outsourcers who control everything from processes to resources and businesses have low or no control.

Assessment of the outsourcer: Businesses may not be able to assess whether or not the outsourcer will be able to deliver on what it is ready to sign up on. 

Works well for large projects, not the small ones: Cost advantage for smaller projects is better achieved through staff augmentation as compared to project outsourcing. Besides, the outsourcers are not interested in taking up smaller projects or may charge a premium for them. 

Going Hybrid

As the IT demands are dynamic, there are times when businesses have to go in for a hybrid between staff augmentation and project outsourcing. For example, if a business is embarking on two projects – one that is related to its core competencies and requires more staff to complete it in time, and the other which is beyond the purview of its core competencies. It is obvious that the business will go in for staff augmentation for the first project and outsourcing for the second project. 

Making the right selection can be daunting at times and this is where they can think of seeking professional help from one of the leading staff augmentation and software solutions partner like 3dotDigital

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Do read our other blogs on staff augmentation:

(1) Hiring a data architect through staff augmentation? Here’s your ask list for the service provider
(2) Advantages of hiring a full stack developer
(3) Planning to hire a software engineer with deep expertise? Staff augmentation can help!
(4) Making staff augmentation work for your business
(5) Integrating QA testing with Agile development 
(6) Agile development: Reducing friction between startup founders and software engineers


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