what is the difference between staff augmentation and managed services

Staff augmentation and managed services are both outsourcing strategies used by companies to fulfill their operational needs

Created by: Daniel Ogunsemowo /

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Otse Amorighoye

what is the difference between staff augmentation and managed services

Staff augmentation and managed services are both outsourcing strategies used by companies to fulfill their operational needs, but they differ significantly in terms of scope, control, and management responsibilities. Understanding the key distinctions between these two approaches can help businesses choose the most suitable model for their specific requirements.

Staff Augmentation

Definition: Staff augmentation is a flexible outsourcing strategy that involves hiring external staff on a temporary basis to augment the capacity of the existing workforce. These staff members are typically sourced from a third-party provider and work under the direct supervision of the hiring company’s management, usually to address short-term project needs or specific skill gaps.

Key Features:

  • Control and Oversight: In staff augmentation, the augmented staff integrate into the client’s existing team and follow its policies and directives. The client retains full control over the project and the work performed by the augmented personnel.

  • Flexibility: This model offers high flexibility, allowing companies to scale their workforce up or down quickly based on project demands or seasonal fluctuations.

  • Skill-Specific Hiring: It is typically used to address specific skill shortages or to add expertise to a team that is not needed on a permanent basis.

Managed Services

Definition: Managed services involve outsourcing entire business processes or specific IT functions to a third-party provider who manages the services and assumes responsibility for the functionality of the IT service or business process. Managed services are typically ongoing and involve a longer-term contract.

Key Features:

  • Management and Responsibility: The managed service provider (MSP) takes full responsibility for the services provided, including management of all aspects of the service, such as staffing, performance, and compliance with service level agreements (SLAs).

  • Strategic Outsourcing: Managed services are often used for strategic outsourcing where the goal is not just to supplement the workforce but to improve operations and reduce overhead.

  • Comprehensive Solutions: Unlike staff augmentation, which is generally more tactical, managed services provide a comprehensive solution that includes planning, implementation, and maintenance of systems or processes.

Comparing Staff Augmentation and Managed Services

1. Scope of Control:

  • Staff Augmentation: The client maintains control over the project and its execution, including making strategic and operational decisions.

  • Managed Services: The provider has control over the execution of services and makes decisions about how to best deliver the specified service.

2. Purpose and Duration:

  • Staff Augmentation: Typically used for short-term needs, project-based work, or to fill specific skill gaps temporarily.

  • Managed Services: Used for ongoing, long-term outsourcing of services where the client wants to offload certain business functions to focus on core business areas.

3. Cost Implications:

  • Staff Augmentation: Can be more cost-effective in the short term for specific projects or temporary needs.

  • Managed Services: Although potentially more costly upfront, managed services can offer cost savings over the long term through efficiencies and economies of scale.

4. Expertise and Resources:

  • Staff Augmentation: Provides access to specific expertise for a limited period without a commitment to long-term employment.

  • Managed Services: Ensures access to a team of experts who manage the entire function and continuously update their skills to keep up with technological advancements.

Conclusion

Choosing between staff augmentation and managed services depends largely on the company's specific needs, the nature of the project or function to be outsourced, and the desired level of control over the processes. Staff augmentation is best suited for companies that need additional resources temporarily without wanting to relinquish control of their projects. Managed services, on the other hand, are suitable for companies looking to fully outsource a particular function to improve efficiency and reduce operational complexities.