Outsourcing is a business strategy in which an organization turns to an IT company to handle specific tasks or processes on a long-term basis. This approach is typically focused on reducing costs and increasing efficiency by delegating non-core activities or functions to third-party providers.
You can outsource a wide range of services, from consulting and audit to development and maintenance. An outsourcing company manages the entire process and is accountable for the results.
Staff Augmentation and Outsourcing: Common Pros
When comparing staff augmentation vs. IT outsourcing, we should first point out that they share some common advantages.
Whether you decide on staff augmentation or outsourcing, it will be more cost-effective than launching an in-house hiring process. Any IT staffing agency or software development provider has well-established HR processes and proven mentorship programs. This means that you can reduce expenses related to recruitment, onboarding, and training.
For instance, staffing agencies and outsourcing companies have fine-tuned algorithms for screening and hiring reliable professionals. You won’t need to spend a lot of time and effort advertising jobs, reviewing resumes, conducting interviews, and performing background checks.
Moreover, external service providers have reusable components and sometimes even full-fledged customizable solutions that can be shared among multiple clients, reducing costs for each client. This also includes infrastructure such as office space, equipment, software licenses, and other necessary amenities that may not be feasible for businesses to invest in for the sake of a single project.
Access to specialized expertise
By working with SA and outsourcing vendors, businesses can tap into expertise that may not be available in-house. With staff augmentation, clients can quickly and easily supplement their existing teams with experienced professionals who possess the specific skills and knowledge required for a particular project or initiative. Similarly, outsourcing can provide access to expertise in areas such as software development, quality assurance, or customer support, which may all not be core competencies of the organization.
Increased efficiency and faster time to market
Staff augmentation helps organizations quickly ramp up their capacity to meet project demands, without having to go through the time-consuming process of hiring full-time employees.
With outsourcing, you hire a dedicated team of experts who are solely focused on delivering high-quality results. Such teams are often comprised of individuals who have worked together on similar projects in the past and have a deep understanding of the requirements and challenges involved.
This results in better software quality, improved efficiency, and faster project delivery.
Advantages of Staff Augmentation over Outsourcing
Now, let’s figure out why staff augmentation can be a preferred option.
More control over the project
The entire process remains under your control when you add temporary staff to your current team. You can provide more specific guidance and make adjustments when necessary to ensure that the project is being executed according to your specifications. This aspect is crucial for companies that handle sensitive data and need to be informed of every action taken.
Opportunity for training
Staff augmentation can also be used as an opportunity to train your internal team and provide them with valuable learning resources. By bringing in experts who are ready to share their hands-on experience in specific areas, you can expose your workers to new techniques, the latest trends, and best practices.
Cons of Staff Augmentation
While staff augmentation can be beneficial in some cases, there are also hidden drawbacks:
Integration and onboarding challenges
When bringing in temporary workers, there may be challenges with integrating them into the existing team and getting them up to speed with the company’s culture, processes, and procedures. This may result in a slower ramp-up time and potentially lower productivity, which is unacceptable for businesses that need to hit the ground running.
More management and supervision required
In contrast to permanent employees, temporary staff may require more supervision and management. This can steal a considerable amount of PMs’ time and turn their attention away from other critical tasks. Additionally, it can be troublesome to maintain consistency and quality of work when interacting with external workers, as they may not have the same level of understanding of the organization’s goals and objectives.
As you can see, staff augmentation can be a useful strategy for filling temporary workforce gaps or bringing in specialized expertise. At the same time, it is important to consider the potential risks of staff augmentation and develop a plan to mitigate them.
Advantages of Outsourcing over Staff Augmentation
Just like the staff augmentation approach, outsourcing can also offer several advantages:
Ability to focus on core tasks
By delegating non-core functions to external vendors, in-house teams can concentrate on their core competencies and strategic initiatives. As they say, everyone must do their job.
Let’s assume a furniture manufacturing company needs a website or a mobile application. Under no circumstances can the company do this job well on its own: either the process will be too expensive and time-consuming or the result will be inadequate. This is the case when it’s better to outsource the task to professionals like SaM Solutions. The delivered software will meet all the requirements, while the client’s internal processes won’t be disrupted.
Liability transfer and reduced risks
When organizations outsource certain tasks, they transfer the responsibility and liability for those tasks to vendors. By doing so, they significantly reduce potential risks related to software compliance, data security, or legal liabilities. Any company can benefit from this transfer, provided that the vendor has a strong reputation and a lengthy track record of implementing similar projects.
Furthermore, outsourcing can help companies reduce risks associated with staffing, including turnover and training costs. Vendors guarantee the availability of all necessary staff and resources to complete tasks. It allows clients to repurpose their time and money to accomplish other business goals.
Cons of Outsourcing
Loss of control over the project
Outsourcing implies handing over the control over a task or a project to an external provider. This means you may have less visibility into the team’s day-to-day activities. For some companies this is not critical, while for others this can become a significant drawback. Some vendors may even have their own approaches to completing tasks, which may differ from what their clients would have preferred or expected.
At SaM Solutions, however, we always discuss cooperation processes with our clients and make sure we have a shared vision before launching a project. We also make sure to set up transparent progress tracking and ensure frequent communication
Data security risks
Outsourcing carries another notable drawback, which involves exposing sensitive information to a third-party vendor. Some team members may require access to confidential data such as customer details, financial records, or intellectual property. However, if the vendor’s data protection measures and protocols are not on par with those of the company, the chances of security breaches are elevated. Additionally, the vendor’s contractors may also have access to the client’s sensitive information, leading to further security risks.
To mitigate these risks, companies need to carefully vet their partners before sharing any critical data with them. This includes conducting background checks, reviewing security protocols and compliance measures, and having clear contractual agreements that outline the party’s responsibilities. Additionally, companies should also have a detailed strategy for monitoring and managing any potential security breaches or incidents that may occur.
Staff Augmentation vs. Project Outsourcing: How to Choose
1. Estimate the situation in-house
Before making a decision between staff augmentation vs. software outsourcing, it’s important to evaluate your current situation. If your company lacks experts in the required field, is already overwhelmed with existing tasks, or doesn’t have a tech team at all, outsourcing may be the better option. Staff augmentation is typically more suitable when there is a need to expand or improve an existing team’s capacity and skills.
2. Assess the scale and duration of your project
Staff augmentation can be a good choice for small projects with a short timeframe, as it can quickly provide additional team members with the required skills.
For larger projects with a long-term scope, outsourcing may be a more practical solution. Outsourcing offers a larger pool of resources and expertise, as well as management capabilities that can help ensure the timely and efficient completion of the project.
3. Consider the level of control you need over the project
The level of management required can also help determine whether staff augmentation or outsourcing is the best fit. Staff augmentation provides more control and flexibility, as team members are integrated into the existing team structure and can be managed directly. In contrast, outsourcing requires less control, as the vendor typically manages the project and oversees the team independently.
If you have the capacity to provide more management, staff augmentation may be the better option. However, if your primary focus is solely on the end result, outsourcing would be a more appropriate choice.
4. Review data security risks
Outsourcing can pose a significant risk as sensitive information is shared beyond your organization. Therefore, it’s essential to evaluate the vendor’s security policies before choosing to outsource.
Staff augmentation, on the other hand, provides more control over data security as temporary team members are integrated into the company’s existing security protocols. If data security is a primary concern, SA would be the more suitable option.