Comparing Staff Augmentation and Project Outsourcing in IT: Pros and Cons

In the modern business landscape, many companies seek to reduce costs while efficiently completing their work. Industries such as software development, gaming, and IT departments often explore avenues to minimize expenses and expedite project timelines. To surpass the limitations of their on-site resources, these companies frequently turn to technical staffing services, such as staff augmentation and project outsourcing.

IT service providers offer various outsourcing employment models, including staff augmentation, project outsourcing, and managed assistance, to secure external talent. While these options can provide skilled engineers or developers to support a development team focused on meeting project deadlines, it is crucial to understand the key differences between these approaches.

Let’s begin by discussing IT staff augmentation and project outsourcing.

Staff augmentation involves outsourcing to IT resources to fulfill specific projects and staffing requirements within a company. It focuses on augmenting the in-house team by outsourcing necessary talent, allowing the company to remain agile and avoid the challenges of recruiting internal experts, especially for specialized roles.

To illustrate this concept, let’s imagine your company has a FinTech application to build and requires eight developers. However, you currently have only six employees with expertise in building similar applications. To bridge the gap and ensure your project launches on schedule without hindering projected earnings, you can hire talented developers through staff augmentation.

Staff augmentation involves temporarily bolstering your software engineering team by hiring professionals from other companies to accomplish specific tasks. It is a delivery approach facilitated by IT staffing agencies that helps you maintain a competitive advantage. Staff augmentation has become an integral practice in today’s business landscape, with a significant increase in the utilization of contingent employees across organizations worldwide.

The concept is not entirely new, as borrowing administrators across different departments or organizations to fill temporary roles during vacations or illnesses has existed for some time. Today, contingent positions manifest in various working models, with staff augmentation being the most common approach in many parts of the world such as the US market.

Pros of using Staff Augmentation:

1. Improved project control and integration with internal systems: By relying on staff augmentation, you gain more authority over the project and seamless integration with internal processes.
2. Flexible deadlines: Staff augmentation allows for more adaptable deadlines. If the project timeline needs acceleration on short notice, it is often easier to adjust with an internal team compared to an outsourced approach.
3. Better integration with internal procedures: Since staff augmentation relies on the internal team, incorporating the new IT project with existing internal methods becomes more straightforward.

Cons of Using Staff Augmentation:

1. Increased reliance on internal resources: Staff augmentation partially depends on internal resources to complete projects, which can increase costs, workload management, and divert attention from core business needs.
2. Higher costs: Staff augmentation often incurs more expenses than outsourcing to a project-specific company, especially with extended project requirements.
3. Distraction from company objectives: Utilizing staff augmentation can divert attention from core business projects, necessitating additional hires to ensure the IT team remains focused on essential tasks. This incurs additional expenses.

What Should You Know about Project Outsourcing?

Project outsourcing differs significantly from staff augmentation in several aspects and has its own advantages and disadvantages. Let’s explore the concept of project outsourcing.
Project outsourcing allows businesses to subcontract projects, from bidding and engineering to final implementation, to external entities. By outsourcing assignments, companies aim to reduce costs and tap into specialized expertise beyond their organization.

Pros of Using IT Project Outsourcing:

1. Meeting strict deadlines and maintaining core IT management: Many companies face stringent deadlines and need to continue their daily core IT operations while completing projects. IT project outsourcing services can help achieve this.
2. Project management expertise: One advantage of outsourcing IT projects is that the outsourcing company possesses the necessary project management skills.
3. Reduced employee training costs: Unless your business relies on proprietary or legacy approaches, an outsourcing company will likely require minimal or no training to complete your assignment.
4. Increased likelihood of meeting deadlines: Outsourcing your project improves the chances of meeting deadlines since the outsourcing company’s success depends on reliably meeting them.
5. Focused on core business needs: Outsourcing essential projects ensures your company remains focused on its business requirements while the outsourcing company handles the project. Core IT needs can be fulfilled as usual.

Cons of Using IT Project Outsourcing:

1. Reduced control over project execution: Outsourcing IT projects means relinquishing some control over the project.
2. Challenges with internal integration: Integrating outsourced projects with internal processes can be more complex, requiring alignment between the business and the IT team working on the project.
3. Less favorable for smaller projects: Outsourcing companies may be less inclined to accept smaller projects or charge higher fees for them.