Staff Augmentation vs Managed Services Model


The way some companies manage their internal and client service requirements is getting a transition from staff augmentation model to managed service model. But still some firms stick to the traditional staff augmentation process. They feel that offshore staff augmentation is cost effective and better meet their requirements.
If a company decides to undergo transition, it has to keenly analyze the merits and demerits of each of the two models, the possibility of combining the two service models and the recommended approach to making the transition effectively. The pros and cons of each model are highlighted here.

Staff Augmentation Model

Staff augmentation is the traditional way of managing the growth of a business by employing more staffs. It is believed to be the best way to mutually share the existing and outsourced resources for the firm’s benefit. Several IT staff augmentation companies exist across the globe that could help a firm with a team of employees, professionally trained to meet the specific requirements of the client.
Merits: A company can seek the help of staff augmentation services when it feels that the number of IT resources is not high enough to meet the business needs. Offshore staff augmentation is considered to be an economical way of utilizing skilled labor. As the outsourced team always contain experienced employees, there is no need of wasting money on training.
As it is the staff augmentation services that provide you with the skilled staff, they are also the ones that bear the responsibility in case of failures, if any. There is no overhead cost involved in granting the contractual employee a permanent designation with the company. It is the ideal model for a company that desire to monetize more and spend less.
Demerits: Sometimes it may result in big issues related to change in the geographic location. It is impossible to address any issues immediately. It is the company’s responsibility to bear the risk of replacing staff. There are also chances for unpredictable, disruptive personalities to get into the process.

Managed Services Model

Managed services model is a very recently evolved approach. With this model, it is possible to grow business without hiring employees and contractors by making use of the managed services. This approach is considered to be suitable for technology outsourcing with a long term outlook. Find below the merits and demerits of the managed services model.
Merits: The vendor takes over the responsibility of delivery and management of stakeholder expectations so that the client gets enough time to fully concentrate on core strategic initiatives. The vendors are able to work independently and mange the project effectively, without any interruption. They also get into devising key process plans and long term strategic investments in order to bring the best practices into the project. More focused and sustainable knowledge retention is possible with this model.
Demerits: Not all the vendors will accept to take over the entire management responsibilities. Variation in the business models can have a negative impact on the deliverables, provided the client and vendor organizations are located at different geographical locations. A great setback occurs in case of the vendor not understanding the client requirements properly. The vendors don’t take the responsibility for failures, if they are more than one. In case of any serious issues, if the client wants to change the vendor, it is extremely difficult for them to do the transition.
Staff augmentation is the conventional way of growing the business by increasing the number of staff or outsourcing the work to new set of employees provided by staff augmentation services. It is believed to be cost effective and provides good results too. Managed services reduce the need of hiring new staff. It proves good for companies working with a long term outlook. While selecting a process model or deciding to make a transition, it is mandatory to analyze the pros and cons of each model based on the specific company requirements.