Staff Augmentation Vs Managed Services: Definition, Pros, Cons, Market Trends, and Other Things You Need to Know 

Discover the differences between staff augmentation and managed services in this comprehensive blog and learn about the pros and cons of each option and how to choose the right one based on your company’s specific needs. 

In today’s competitive business landscape, companies often find themselves grappling with budget constraints and talent gaps. In order to bridge these gaps and ensure uninterrupted growth and production, many organizations resort to two primary options: IT staff augmentation both at a resource outsourcing level and process level and managed services.  

Staff augmentation and managed services are two different outsourcing models that companies can choose from when they need additional resources or expertise. While both options can help companies meet their goals, including 92% of G2000 companies using some form of IT outsourcing, they differ significantly in terms of implementation, control, and long-term outcomes. 

In this blog, we will compare staff augmentation vs managed services and discuss their pros and cons.  

What is Staff Augmentation? 

Staff augmentation is a model where a company hires additional employees to work alongside their existing staff temporarily.  

In this model, ideally, the company retains control over the work and the staff augmentation provider is responsible for finding and screening candidates. However, a few service providers, us at FlairsTech included, may go the extra mile of even handling the management and training of their resources and more; free of charge. 

When To Choose Staff Augmentation?  

Staff Augmentation is ideal when businesses require project-based support or need a specific skill set that their current in-house team does not possess, such as developing and/or testing a new software application.  

The model provides flexibility, control, and seamless integration of skills into the existing team, allowing companies to maintain a cohesive workflow and leverage the expertise of specialists without long-term commitment. 

What are the pros of staff augmentation? 

1. Cost-effective: Compared to hiring full-time employees who may not be needed once the project is complete, staff augmentation can be a cost-effective way to address short-term staffing needs without incurring the costs of hiring full-time employees e.g., recruitment costs, onboarding, training, equipment, employee benefits, and other compliance and legal requirements.  

2. Flexibility: Staff augmentation offers flexibility in scaling the workforce up or down depending on the project’s demands. Companies can hire additional staff for as long as they need them and release them once the project is complete. 

3. Control: Since the company retains control over the work, they can ensure that it is done to their standards and specifications. 

4. Access to expertise: Staff augmentation allows companies to access specialized skills and knowledge that they may not have in-house. 

What are the cons of staff augmentation? 

1. Management: In most cases, staff augmentation requires additional management resources, including training, onboarding, and oversight, yet some customer-centric service providers started to take the matter of resource management into their own hands and to different levels. 80% of the resources management in our case. 

2. Coordination: Staff augmentation can create coordination challenges, particularly if the additional staff are working remotely or located in a different time zone. However, challenges posed by opting for an offshore dedicated software development team can be easily overcome by following these five key tips. 

3. Cultural fit: Staff augmentation may not always be a good fit for the company’s culture, which can lead to communication challenges and affect productivity. 

Staff Augmentation Important Trends and Statistics: 

• A market intelligence company forecasted the global staff augmentation services market to experience a compound annual growth rate (CAGR) of 3.53% from 2021 to 2025. This growth is expected to result in a total incremental spending of $81.87 billion in the market. 
• An examination of the market between 2016 and 2019 revealed that in the United States, employers faced a shortage, being able to fill only 60% (6 out of 10) of the available tech positions. 
• 58% of companies in the EU seeking to hire ICT workers face difficulties filling their job vacancies. 

What are Managed Services? 

Managed services are a model where a company outsources certain IT operations and responsibilities to a third-party service provider. In this model, the service provider is responsible for managing and maintaining specific IT systems, infrastructure, or processes on behalf of the client organization and delivering it according to agreed-upon service levels. The client organization typically pays a fee or enters into a contractual agreement for the services provided by the managed services provider (MSP). 

On the other hand, managed services are particularly beneficial for organizations seeking comprehensive and ongoing support in specific areas. 

What are the pros of managed services? 

1. Scalability: Managed services offer scalability, allowing companies to adjust the level of service according to their needs. 

2. Cost-effective: Managed services can be a cost-effective option compared to hiring an in-house team to manage the service. 

3. Expertise: Managed services providers have specialized expertise and knowledge in the service they provide, allowing companies to access the latest technology and industry best practices. 

4. Focus: Managed services allow companies to focus on their core business activities while the provider takes care of the service. 

What are the cons of managed services? 

1. Dependency: Companies may become dependent on the managed services provider, which can create a risk if the provider ceases operations or fails to meet service levels. 

2. Loss of control: Companies may lose control over the service, which can affect the quality and timeliness of the delivery. 

3. Integration challenges: Managed services may not integrate easily with the company’s existing systems and processes, which can create additional challenges and costs. 

Managed Services World Statistics and Trends: 
 

• In 2022, the global managed services market size was valued at USD 267.3 billion and is expected to grow at a compound annual growth rate (CAGR) of 13.6% from 2023 to 2030. 
• Business Process Outsourcing (BPO) represents the largest market share exceeding 40% in 2022. 
• The size of the global SaaS market reached USD 161.2 billion in 2021 and is expected to grow significantly, reaching USD 382.59 billion by 2030, with a compound annual growth rate (CAGR) of 10.08% from 2022 to 2030. 
• Over the next five years, the market for cloud managed services in the IT industry is predicted to expand by 50%, while managed service providers are expected to witness a substantial surge of 56%. 

Staff Augmentation vs Managed Services: Which is the Better Option? 

Choosing between staff augmentation and managed services depends on the company’s specific requirements and circumstances. Some factors to consider include: 

1. Project duration: Staff augmentation is a better option for short-term projects, while managed services are more suitable for ongoing functions. 
2. In-house expertise: Staff augmentation is appropriate when the company lacks specific skills, while managed services are more suitable when the company has the expertise but wants to outsource the function for other reasons. 
3. Resource availability: Staff augmentation may be necessary when the company lacks the resources to manage the project in-house, while managed services can help when the company wants to focus on its core business activities. 
4. Budget: Staff augmentation can be more cost-effective for short-term projects, while managed services can be more affordable for ongoing functions that require consistent service levels. 

Choosing between staff augmentation and managed services can significantly impact an organization’s success. Staff augmentation offers agility and control, enabling companies to fill talent gaps and execute specific projects swiftly. Managed services, on the other hand, provide a comprehensive solution that enhances operational efficiency and strategic focus by outsourcing entire functions. Ultimately, the choice depends on your business’s unique requirements, goals, and budgetary considerations. By carefully evaluating these factors, you can determine whether staff augmentation or managed services is the perfect fit for your organization’s growth and long-term success. 

How Can Flairstech Help You Achieve Continuous Growth and Productivity within Your Budget Constraints? 

Resorting to staff augmentation or managed services is an excellent way to ensure continuous productivity cost-effectively. However, for the best outcome, different projects require different approaches. Based on your business needs, choosing the right approach to fill in skill gaps and more can improve your organization’s productivity and help you gain a competitive edge in the market. Here’s how we, at FlairsTech, can help you improve the agility of your operations and gain the desired competitive advantage:  

•   We have over 1,000 available talents delivering top-notch results from three continents (North America, Europe, and Africa) covering every language and time zone on the planet.      
•   Over 100 global enterprise clients rely on our digital solutions on a day-to-day basis.     
•   Our size, however, does not affect our agile processes, as we have fast and exceptionally efficient processes when it comes to hiring and time-to-market.     

•   We guarantee the products we deliver for life.     
•   We will cut your development budget in half, increase your overall output, and achieve the desired results.      

At Flairstech, our business analysts and technology consultants work with you to scope a project that meets your expectations. Moreover, our certified software engineers, developers, and QA testers, led by an SDM to keep everyone on track, work hand in hand with your in-house team to build a high-performing software solution that meets your exact specifications. Start by analyzing your project objectives and scope, and if you need any help, you can always book a free consultation with one of our experts to discuss your goals and challenges and explore possible approaches.    

Frequently Asked Questions (FAQs): 

1. What are the types of dedicated IT outsourcing?  

The two most significant dedicated IT staff augmentation outsourcing models are Resource-level and Process-level outsourcing.   

2. What is a Dedicated Software Development Team?  

The dedicated development team business model in software development involves a long-term collaboration between a client and a service provider with highly skilled resources and technologies. 

3. Can time zone differences impact the efficiency of a dedicated software development team?  

Time zone differences is one of the key factors that significantly impact a dedicated software development team’s efficiency, however, with these 5 key tips to manage time zone differences seamless collaboration and maximum productivity can still be achieved.  

4. What are MPS?  

MSP stands for Managed Service Provider. An MSP is a company or organization that provides a range of proactive IT services, support, and management to clients.  

These services can include network monitoring, software development and testing, infrastructure management, security solutions, data backup and recovery, help desk support, and more.