Which Is Better: The Managed Services Model or Staff Augmentation?
Everywhere you look these days, there are staff shortages. Companies are struggling more than ever to find, attract and retain good people. The higher the skill level required, the more difficult it is to fill a position.
But we still need people with the right skills to get the job done.
The solution might lie in nontraditional options like outsourcing, and there are several options here. You could hire freelancers or subcontractors, or you could explore options like a managed services model or staff augmentation, which might be easier to integrate into your team. Here’s more about what staff augmentation and managed services are, and what each one offers.
What Is Staff Augmentation?
Staff augmentation is a lot more like traditional hiring, in that you are simply hiring contract workers for the duration of a specific project. They work for you, like a traditional employee, in that you give them orders and instructions, have meetings with them, and so on, but they usually work remotely. So, you don’t have to worry about benefits, finding a cubicle, or any other administrative and practical problems.
Those things can all take time and cost money. So, the staff augmentation model helps you to cut the red tape and hit the ground running faster.
Since you are hiring for a specific project, for a particular role, you can also focus only on the skills you really need. You don’t need to worry about culture fit either, since the person or people you choose won’t be a permanent part of your team. So technical competency can be the primary factor in every decision.
Staff Augmentation Pros
Faster hiring time – since you are not hiring for the long term, you can focus only on the skills and experience you need for the project you are working on
Hire the skills you need right now – if you are working on a project that needs a specific skill set now and different ones later, you can hire the people you need when you need them
No long term commitments – you don’t need to hire people for the long term, so you don’t need to deal with long term contract will commitments
Cost benefits – as you aren’t hiring permanent employees, even if their salary is higher than what you would normally spend, you would any spend for a short amount of time, and this can save cost
Easy to manage – structure your team exactly as you want them to work, and have them report directly to the supervisor in charge of their role
Negotiate rates and terms of employment directly with the people you
No office politics – stop augmentation keeps office politics out of the way, since your short term employees have no vested interest in the day to day operations of your business
Staff Augmentation Cons
Monitoring is a priority – not only do you need to set tasks and expectations, but you will also need to follow up to ensure that they are all met, unlike full-time employees, your short-term workers have no long-term incentive to perform.
You still have to manage the process – managing people takes time and effort, and when you go with self-managed staff augmentation, there’s no one else to do that for you – so you will have to be quite hands-on.
Adjust the process as you go – it is unlikely that you will find the perfect way to manage an augmented team the first time you try it, so be sure to review and adjust from time to time.
More Control, More Responsibility
Staff augmentation gives you a level of control similar to having employees on-site in your office, with cost and administration benefits. However, you still have full responsibility for giving those temporary workers tasks and projects to work on, and for measuring productivity and quality of work.
So, while you will save some longer-term administration time and hassle, you still have a fair amount of day-to-day hands-on management to do.
What Are Managed Services?
Managed services are much more like what you would normally expect when hiring a subcontractor or service vendor. You provide them with an outline of what you need to be done, and they use their own resources and employees to get it done.
You don’t control the hiring process, or how and when tasks get assigned or completed. You simply get the results you need when you need them.
Pros of Managed Services
Time-saving – you won’t have to spend time managing employees, making sure that they get the job done, or following up on tasks – all of those things are done by the managed service provider
Overall control – even though you are outsourcing management and production to someone, you still have overall control, and the final say about the quality of work you receive
No day to day management concerns – you don’t have to deal with employee problems, days off, team conflict, or any of the other day to day things that can slow life down when you’re managing a team
Growth and access to skills – instead of having to grow your own team with highly skilled (and expensive) employees, you can get access to all the skills you need to make your vision reality – but only when you need them!
Cons of Managed Services
It’s up to you to find the right vendor – not all vendors offer the same level of service, or are as reliable – so you will have to read reviews, ask for references and do your due diligence before you sign any deals
Additional costs – you are paying for convenience when you use managed services instead of staff augmentation, so you can expect to pay higher rates
Less control – you might be able to set the final deliverables and project deadline, but much of the control of how the project is done is out of your hands
Fewer Headaches, Less Control
Managed services can give you access to all the skills you need quickly and easily, but you will have less control over how and when things get done. You probably won’t work directly with the technical people doing the work either, so you will need to work through the vendor’s management team to get things done.
It can also take longer to do things this way, as managed services vendors will have other clients that they will need to assign resources to, so your project might not get their full attention.
Should You Choose Managed Services or Staff Augmentation?
That depends entirely on what your expectations and capabilities are.
If you have sufficient technical people who can set clear tasks and goals for employees hired for staff augmentation, then this could be a good way to get your project done cost-effectively. You will need to set up and run your own project update meetings and manage your remote team the same way you would employees in your office.
If you lack the skills or time to do those kinds of hands-on management, then managed services from a good vendor are probably a better idea.
If you still aren’t sure, explore both possibilities. Find out what kind of freelancers and contract employees there are out there, what they charge, and what you would need to do to facilitate their work. At the same time, get prices on your project from managed services companies.
Remember that in both cases, pricing and information will be based on the brief you provide, so if the scope of the project changes over time, so would the costs and project timeline.