Making the Right Choice: Project Outsourcing vs Staff Augmentation
In industries all around the globe, there is a growing need for reducing expenditure while retaining operational efficiencies. The success of a business depends on being able to compete and that can only be achieved by building efficiency. Being innovative and agile also plays a massive role in determining the success of a company. To be able to do all of the above, companies need to invest in new IT needs all the time.
The problem is that such demand is sporadic in nature. Most companies do not have static IT needs. Therefore, when innovative technologies emerge, if a business is unable to keep up, it can have disastrous outcomes. In such situations, companies need to have a well-equipped and capable workforce. Developing the skills of employees in-house is quite expensive and usually considered high-risk. Fortunately, other alternatives are available in the industry.
The two most common models for outsourcing work are – project outsourcing and staff augmentation. This article will provide an in-depth understanding of these delivery models.
Project Outsourcing
IT project outsourcing allows a company to complete their projects using the resources of an external firm. In some cases, only specific components of the project may be outsourced to a sub-team while sometimes the complete product development cycle can be outsourced. In this model, the team is staffed and managed by the outsourcing service provider.
Here are some of the benefits of using a project outsourcing model
- Reduced Training Costs
The service provider is responsible for training and skill development. Therefore, the client does not have to worry about it.
- Scalability
This model makes it very easy to upscale or downscale staff resources.
- Adoption of Better Practices
The best industry practices can be adopted by outsourcing projects to a service provider that follows these practices.
- Economies of Scale
Service providers can also take advantage of their internal economies of scale within their core competencies for the client’s project work.
- Reduced Management Responsibilities
The client’s management responsibilities are now delegated to the outsourcer.
- Result Centric
Since the responsibility of delivering results lies with the service provider, the main focus of this model is achieving results. The outsourcers share both the risks and the rewards of the project.
- Focused on Core Business
Companies are no longer responsible for delivering results. Therefore, they can shift their focus to their core business.
- Variable Cost Structure
The fixed costs of employees are converted to variable project costs in this model. The costs change in proportion to the level of project activity.
- Lower Legal Risk
When projects are outsourced, the contracts are structured differently than internal projects. Usually, any project failures or liabilities that arise are the outsourcer’s risk.
The project outsourcing model provides cost-effective solutions to companies that lack the internal capabilities to complete projects. While there are many benefits to it, there are downsides as well.
Here are the disadvantages of project outsourcing
- Lack of Control
Control of all aspects of the project lies with the outsourced entity.
- Internal Resistance
Some companies may even feel threatened by an external outsourcing service provider.
- Finding the Right Outsourcer
It is often difficult for companies to assess the quality of potential outsourcing firms. Hence investing time in finding the right partners and working along side to make the partnership fruitful and engaging is recommended.
At Mindbowser, We have managed 1000+ project for various businesses across multiple industries and geographies. We come with 8+ years of experience of doing just one thing, delivering products for businesses like you and we are pretty damn good at it.
Our 100+ strong team of experts follow industry standard practices, in fact, our team has created most of the best practices out there so you can rest assured that your product will be delivered on time & in an optimal state.
Free ebook on different Outsourcing models explained
Staff Augmentation
This model of outsourcing consists of hiring developers for a specified duration of time. It allows companies to add staff to their teams based on the skill sets that they require to support their business. The augmented staff works as an extension of the existing team. They work alongside the in-house team and complement their knowledge and skills. In this model, the resources are provided by the team augmentation firm. It offers new perspectives and expertise to the company.
Here are the advantages of staff augmentation
- More Control Over Staff
Since the added staff works in-house, the client has more control over them.
- Effective Integration with Internal Processes
Augmented staff can integrate with existing processes faster than external project teams.
- Leverage Existing Resources
It allows the company to take advantage of both internal and external resources.
- Expert Specialization
This model can support a client with all their specialized needs.
- Scalable Staffing Needs
Companies can easily add or remove staff to match industry demand.
- Reduced Skill Development Costs
Client can save the cost of investing in internal skill development.
- Reduced Liabilities
It reduces the cost and liabilities of hiring permanent employees.
- Meet Deadlines
Team augmentation provides sufficient resources to complete projects on time.
- Internal Acceptance
Employees will feel less threatened by augmenting staff than by outsourcing the entire project.
It is much easier to adopt a staff augmentation model than to outsource projects. But despite its various benefits, it has a few disadvantages as well.
Here are the drawbacks of staff augmentation
- Can be Training Intensive
Augmented staff might require additional training to understand the tools and processes of the company.
- Reliance on Internal Processes
Staff augmentation resources will be affected by flaws in internal processes.
- Burden on Management
As resources grow, management will have to supervise the growing number of augmented staff.
- Resource Centric Model
The central aim of staff augmentation is to achieve goals. Therefore, companies still are responsible for managing projects and resources.
Mindbowser offers a plug and plays engagement model that enables you to take advantage of talented experts without having the need to train or orient them. We provide a ready-to-deploy team of global experts that you can use whenever and however you want.
Team augmentation is ideal for technology teams looking to extend their capabilities for a period of time to tackle a particular problem. It enables businesses to take advantage of offshore plug and play talent.
Read about how a clinical trial platform built their team with Mindbowser
So how to decide which model suits you best. Here is a quick table to help you decide.
| Requirement | Staff Augmentation | Hybrid Model | Project Outsourcing |
|---|---|---|---|
| Maintaining tight control | Yes | - | - |
| Integration with the internal processes | Yes | - | - |
| Infusing new skill while still leveraging existing capabilities | Yes | Yes | - |
| Filling project team gaps which mainly consist of specialized skills | Yes | Yes | - |
| Acquiring more resources to complete an active project | Yes | Yes | - |
| Cost-effectively managing IT staffing needs which change frequently | Yes | Yes | - |
| Achieving Breakthrough gains in productivity and efficiency | - | Yes | Yes |
| Going beyond core competencies and overcoming lack of internal capabilities | - | Yes | Yes |
| Implementing best practices & guideline for a project | - | Yes | Yes |
| Placing the responsibility for management results and risk outside the company | - | - | Yes |
| Staying focused on result & the core business | - | - | Yes |
| The large scale of outsourcing which delivers both increased productivity & cost benefits | - | - | Yes |
| Companies with No IT department or No Development Staff | - | - | Yes |
To choose the right delivery model, you will have to consider many of the above factors. You can even decide to go with a hybrid approach. At the end of the day, the right choice is the one that suits your organizational needs.
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