Staff Augmentation, Software Outsourcing Or Managed Services, Which One Is Right For You?
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Staff Augmentation, Software Outsourcing Or Managed Services, Which One Is Right For You?

Jason Neale
Lead Generation Specialist
  • New hires typically take 8 months to reach full productivity.
  • The IT outsourcing market was valued at over $500 billion in 2021.
  • Recruitment, equipment, and training included in the hidden costs of hiring in-house IT talent.
  • Slack, GitHub, WhatsApp, and others have benefited from third-party software development.
  • Extended Delivery Centers provide you with quality Managed IT services.
  • Identify your core business needs to help make the right decision for your desired goals.

Businesses today are under constant pressure to do more with less. As a result, they are increasingly turning to outside resources to help them meet their goals.  

Glassdoor’s 2017 study revealed that the average interview process lasts 23.7 days. If you include that it can typically take anywhere from 3 to 8 months for a newly hired employee to reach full productivity, resulting in a significant amount of time for a company to get a project up and running with new talent.

The competition for talent in the IT sector is fierce, compounding the hiring challenges. Any advantage you can get in working with high-quality talent is invaluable.

When it comes to acquiring experienced software developers quickly, there are three main options for achieving this: staff augmentation, outsourcing, or managed IT services. Each has its advantages and disadvantages, so it is essential to understand which one is right for your organization.

What Is Staff Augmentation?

IT staff augmentation, also known as extended software development, is a staffing strategy that quickly expands your team with quality software engineers. One key benefit is you do not have to recruit or hire extra staff to bring them onto a project, drastically lowering expenses connected to expanding your team.

Developers are often brought in to complement your existing in-house staff while you still maintain control of the project.  

What Are The Benefits Of Staff Augmentation?

Staff augmentation has many benefits, including convenience, affordability, and efficiency. Augmented staff can be used on a per-project basis, making it easy to focus on the big picture and your business goals.  

Here are some important benefits of switching to an augmented staffing model:

Adapting To Changing Needs And Demands

One of the wonderful things about staff augmentation is its flexibility. If you need more staff for a specific project, you can easily find and hire them on a short-term basis and receive experienced talent for the required time.

Prepared For The Remote-First Economy

Software engineers worked remotely for years before we all got used to the term remote as something unrelated to the television. Their experience in this work environment should not cause any organisational problems, well, almost none.

Control And Reduced Risk

Whether it is one or a team of developers, staff augmentation allows you to maintain operational control over a project and its results. Your project manager will still prioritise tasks and ensure the result is to the standard expected of your team.

Cost-Effectiveness

Businesses do not have to worry about the cost of recruiting and training new employees, nor are they locked into long-term contracts and wages. There are also savings related to office space, work furniture, and various other depreciating items needed to accommodate a new employee.

To recruit in-house, you will require at least one HR team member to seriously find the talent you need. The median salary for an HR specialist in the U.S. is $62,700/yr. With all the associated tools for recruiting tech, job boards, marketing, job sourcing, background checks, and any referral awards, Glassdoor estimated the average cost of hiring a new employee is $4000 per hire.

Training is another cost you need to factor into the equation, which accounted for $92.3 billion in spending by American companies in 2020-2021. On average, the cost per employee was $1,071.

When Should You Augment Your It Staff?

There are a few scenarios when IT staff augmentation would be best suited:

  • There is a need for extra labor to help with a temporary increase in workload.
  • You need specialized skills that your in-house team cannot fulfil.  
  • Due to business circumstances, you need a temporary team to continue operations until you create a permanent team.  
  • The skill sets you need are not available or attainable from local talent.

What Is Software Outsourcing?

The global IT outsourcing market was valued at $526 billion in 2021 and is expected to rise to $682 billion by 2027. Companies such as Slack, GitHub, and WhatsApp, have used software outsourcing to keep their costs low and used the cost-effectiveness of working with remote teams in the CEE.

Outsourcing for software development involves contracting with a software agency to handle all or part of your organization's IT requirements. The key difference is in who will be managing the work, your company or someone else.

The risk is that you are handing over control of essential management functions to an external party and will also be relying on another organization to complete the work. You can alleviate some of these worries by working with a trusted agency.  

What Are The Reasons To Outsource Software For An Organization?

Even if you have a team of talented developers, this does not mean you need to assign every single task to them. Outsourcing software development can help free up resources for more essential tasks critical to your business goals.

Reduced Time To Market

Companies lose money if there is a delay in a project; this is well known. McKinsey & Co found that 33% of after-tax profits are lost over five years for a product released six months late. This decades-old study also added that even if the project was 50% over budget, it would only cut profits by about 4%.  

Optimizing your development process with a ready-made tech team will improve your product's time to market, allowing you to gain critical market share.

Work With A Managed Team

Sometimes you need more than just talent. Management is just as much the key to success as is the developers handling the project. Effective project management will ensure your project hits its targets. Outsourcing software development will give you more time to focus on the overall direction of your business goals instead of searching for the next progress update from your team.

Resource Availability

You can focus on your core competencies. By outsourcing non-core functions like software development, you can free up your internal resources to focus on what you do best. When a respectable software development agency hires staff, they will focus on creating a team with a wide range of skills, supplying a pool of experience to work on your project.

When Should You Outsource Software Development?

  • There is a requirement to focus resources on business-critical tasks.
  • The company lacks a software development team to complete desired goals.
  • Desire to decrease the project’s time to market.

Managed It Services With Extended Delivery Center

Managed IT Services, or as we call it, Extended Delivery Center (EDC), is a long-term dedicated team of engineers, management team and advisors, which work as an integral part of your company. Agencies become an extension of your in-house development team by supplying many services that cover the entire software development life cycle (SDLC).

Self-sufficient teams handle everything from backend and front-end development, QA, DevOps, business analytics, and project management. Companies such as BNP and Skanska have benefited from these long-term partnerships.

What Are Some Of The Benefits?

Rapid Scaling

Mid-term and long-term strategies are essential to any company, especially one with a rapid growth rate. Agencies will supply vetted talent and experience while building teams that meet your company’s desired tech stack while allowing companies to focus on their own business roadmap.  

Knowledge

Typically, agencies supplying IT management services have vast amounts of experience from different projects and industries. This experience provides them with insight into the best processes and management practices. The agencies also handle HR and the development of staff, which offers significant cost savings compared to hiring in-house.

Agile Practices

Agile methods of handling projects are something you should also expect. Sprints to track progress and receive feedback, stakeholder meetings with updated progress reports and SCRUM principles to adapt to changes quickly.

Partnership

When working with a partner, you are allowing yourself to focus on core business goals. Managing and maintaining complex IT systems can be challenging for even the most seasoned company. They take responsibility for their part of the project and provide you with a full-time consultant, allowing you to scale whenever the situation demands.  

When Should You Use Managed IT Services?

  • If your company needs to scale quickly and needs the expertise to meet the desired objectives.
  • You require a team within a team. You need to know a project is managed from top to bottom.  
  • When you lack the resources to fulfil all the requirements of putting together a full team to manage and complete a project but still need to have a hands-on relationship.  

So, Which Is Your Right For You?

When making this choice, we have included a few points to help you decide which is right for you:

  • Do you have the staff in-house to complete your project, and if you don't, do you have the time to recruit, hire, train, and onboard new talent?
  • Is your team already working on a project, and do you require a specialist to supply some extra resources?
  • Do you need more control of the project, or do you need an MVP (Minimum Viable Product) as quickly as possible?
  • Is there a lack of resources to create an entirely new team ranging from recruitment to management?

The decision will become clearer once you can identify your exact needs, not just for the project but for your company. When using any of these methods, the result will be services and products you can be confident is the right choice based on a clear understanding of which is best for your situation.

If you know what you need or require some guidance on the best choice for your business, please feel free to contact us and we can recommend what will be the best fit for your company.  

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