Understand the distinctions between staff augmentation and managed services to determine which approach best suits your business needs, offering insights on flexibility, control, and cost management.

Staff Augmentation

Staff Augmentation evolved when short-term resource constraints and budgetary pressures were necessary to address these issues. When there is a requirement for short-term and immediate engagement, many organizations use staff augmentation to get the best skills and talents. To fill the internal resource gaps, most organizations use external sources by recruiting for the short term. After completing that project, the external source would no longer be on the budget. However, this remains a short-term solution; if this situation occurs again, the same process should be executed again. However, staff augmentation provided a long-term solution for such cases; even after completing the project, the contract would not be terminated. Since the employee will get a good understanding of the internal systems and processes of the organization, they become a valuable resource. When one project is completed, the same resource can be redeployed to any other project and continue as a contractor with the organization.

Managed Services

Like a telescope that helps to see any object from a distance with clarity, managed services help organizations make large-scale decisions that can lead them to long-term goals. The clients who use the managed services look beyond traditional outsourcing; they focus on getting long-term benefits from a solutions partner. A standard managed Service allows an organization to outsource the operations, management, and delivery process very effectively to a lower business cost.

With the help of managed services, organizations can focus on the right people and resources on the right things, saving time and money. This strategic initiative will help you increase efficiency and productivity. 

The pricing structure, based on regular monthly billing around service levels and volumes, rather than per diem fees associated with staff augmentation, ensures that costs to the business remain within the forecast. In addition, the reduced volatility in prices supports accurate and predictable budgeting.

Comparing the Models

Let us discuss some differences between these two models.

In the Managed Services model, the contractor is committed to delivering an outcome at a predefined price. At the same time, the Staff Augmentation model gives input. Input refers to the performance of the resource on the activity with no commitment that the activity will provide the desired outcome. The managed services focus on value-based performance; the organization should define the requirements of services and performance based on it.

Pricing is always related to the outcome. Based on the pricing, whether the service requirement should disappear or be minimized is decided. The flexibility in the demand is always associated with the cost, which is more so in the staff augmentation model. However, in the managed service model, the scalability to market is tied.

Let’s discuss the service commitment. Under the Staff Augmentation model, the service commitment is the number of hours they work. However, in the managed services model, the provider is supposed to take all risks to meet the service commitment. 

Staff augmentation plays a significant role in an organization’s IT department. Even in a managed services model, staff augmentation is often utilized for selected services at specific points in time. However, when staff augmentation becomes the de facto operating model for an IT organization, it constitutes an ineffective form of outsourcing that involves high cost, low commitment, and high risk. IT departments utilizing staff augmentation in this manner should recognize that they are already “sourcing externally” and should seek to adopt an accurate managed services model to maximize value.

Are you looking for a reputed staff augmentation firm to hire remote software developers? CloudVandana provides a vast talent pool of expert software developers from which you can select the best developer or team of developers to enhance your organization and stay one step ahead of the competitors. 

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