Staff Augmentation vs Managed Services: A Complete Guide

When companies start finding capable individuals or teams to outsource, two popular methods, staff augmentation, and managed services, show higher results. These both show immense benefits like scalability, affordability,  and access to expertise.

However, these features put them as a similar method but there is a thin line between them keeping them apart. Knowing it allows better decision-making and matching project needs. Hence, this blog prepared and disclosed the differences between these two methods to help businesses make informed decisions.

So, let’s begin.

Staff Augmentation vs Managed Services: An Overview

Here’s the meaning of both heads shedding light on what they include:

Staff Augmentation: A course of action initiated by the company after a thorough analysis of its expertise and experience required in a project to deliver the expected result successfully.

Managed Services: A strategy devised by the company to delegate specific IT tasks and functions to a third-party organization after thoroughly analyzing the overall priorities and requirements.

Staff Augmentation vs Managed Services: Basic Differences

Below is the detailed staff augmentation vs managed services difference:

Employment Duration

Both staff augmentation and managed services operate on a legal agreement.

In staff augmentation, the augmenting company and temporary hired staff form a contractual understanding defining the conditions they both agreed on. Also, the agreement discloses the duration of their employment and the project’s course.

Staff augmentation is mostly suited for short-term projects as it offers flexibility that allows companies to hire staff temporarily to meet specific needs. However, the company can frame full-time or part-time contracts with hired staff augmentation per the project’s needs and requirements.

On the contrary, managed services usually agree on long-term contracts because of their work rate and responsibilities. The company can hire a specific service provider to perform different functions in the same project. 

Also, the company does not have to look elsewhere to perform the same function again if necessary. The long-term contracts ensure the service provider company performs the specific tasks agreed in the contract for the specified time and provides extensive support to the company. 

Pricing Advantage

Staff augmentation and managed services both take required fees or charge costs.

In staff augmentation, companies pay for the duration of their project. Since it is based on short-term agreements, the chargeable expense becomes affordable. Moreover, the project becomes the key factor in deciding the pricing range.

For instance, a company hired a developer for an app production. The project duration is 1600 hours and the charge is $150/hour. The price calculated would be based on the time taken in the project which, in this case, is $240,000.

The managed services have a different philosophy when deciding the price. Since the project run is of longer duration, the pricing cannot be fixed by hours like in staff augmentation. Instead, both parties (company + service provider) agree to pay a fixed price depending on the agreed terms.

For instance, a company hired a service provider to perform a specific task for a 3-year contract. Depending upon the work title, duration, and complexity, both parties will agree and finalize the pricing, to be paid by the service provider’s client.

Work Location

In staff augmentation, the hired staff works for a shorter duration, signifying the employees could work from a remote location. That is because the personnel can be from afar, making it difficult for them to be present at the premises.

Also, in other cases, the augmented staff can work from the hiring company’s premises if they are available at the location and the contract specifies the same. The externally hired staff must ask the augmenting company to provide them with the required infrastructure and equipment.

While, in managed services, the responsibilities of the project are delegated to a third-party organization. Hence, the hiring staff remains on the same premises and the service provider arranges the overall infrastructure for them.

Shared Responsibility

In staff augmentation, the chance of failure is very low since a thorough analysis is conducted to finalize the requirements. Though the chances are very few, any uncertain situation is faced by the client being the head of the project. However, with effective inspection of the situation, the problem is fixed with proper replacements.

Companies that provide IT Staff Augmentation Services take necessary steps to minimize the chances of failure and ensure seamless project execution.

Whereas, in managed services, the responsibilities of the project bring the bearing of any risk that may appear due to any issue. Since the service provider is the one who is the supervisor, the bearer’s responsibility also falls to the same person. However, being in charge of the project gives him an idea of how to deal with such a situation due to the gained experience.

IT Managed Services vs Staff Augmentation: Additional Differences

Let’s elaborate on them:

Project Initiation

Groundwork lays a strong foundation that helps define further steps in the project. In staff augmentation, the client conducts the initial groundwork or planning. They are the brains behind making the beginning steps with knowledgeable briefings about the overall project.

This early information transfer is crucial for the team to know the objectives before working. It helps them to integrate external and internal resources by aligning them with singular goals rather than separate ones.

In managed services, the client company delegates the responsibility of the project to the service provider. They become the central unit to take steps and initiatives for the project’s success but share progress reports & logs with their clients.

The project briefing is significant in managed services but is conducted moderately. That is because both companies share most information while signing the corporate agreement. The required details are shared under briefing which helps the service provider devise the initiatives and actions.

Chain of Command

In staff augmentation, the client has governing powers in the project which puts them at the top of the chain of command. From strategy building to determining objectives alongside setting the course or duration of the project, the client works on these parameters.

Also, being at the top ranks in the chain of command, the clients are responsible for resource handling. They oversee, utilize, and allocate resources based on the requirements, allowing them to meet the expected results.

However, in managed services, the control and authorization of the project stay with the service provider. Once the responsibilities are transferred, the service providers take the initiative to bring in the resources, provide necessary technical support, offer a workplace, etc.

With that, the service provider also supervises the allotment of resources. By analyzing the given requirements of the project, the available resources are delegated to ensure meeting the aligned objectives. Also, if needed, the service provider brings in new resources to deliver projects efficiently.

Work Responsibilities

In staff augmentation, the external staff is hired to deliver the project. Though the client executes the initial planning, the hired team performs the practical implementation of the theoretical idea. It signifies that the work responsibilities are shared between the client and the staff.

This shared responsibility function between the client and the staff forms a coordinated bonding that improves communication. This calls for an active contribution between the client and the staff effectively taking over their work responsibilities.

On the contrary, in managed services, the service provider is deemed responsible for ensuring the project’s success. Unlike staff augmentation where the client and staff are sharers, the service providers perform different tasks, from initial planning to resource division.

The service providers are the active authority over a project, which makes them responsible for the work. However, there is an involvement from the client side to collect the duly reports but the service provider takes the greater responsibility to ensure the project’s success.

Flexible Approach

In Staff Augmentation, the client has more flexibility to adapt to changes due to any issue or problem. Since the hired staff works temporarily, any change in the requirements can be easily inflicted.

The client works with a flexible approach against the drastic or sudden changes that appear in the project requirements. It is easy to scale the staff up or down to meet the new conditions as the client freely operates to ensure meeting the project objectives.

On the other hand, in managed services, the contract limits the flexible approach as the service provider has to work per the agreed pointers. This includes staff count, or infrastructure, which makes the adaptation difficult.

With the contractual agreement in place, the service provider has to face a lot of restrictions to match the project requirement changes. The process offers less flexibility as the client must agree to the proposed changes to implement them successfully.

Final Statement

With the increase in project numbers, companies have a different method to deal with it: outsourcing, which includes two heads, staff augmentation, and managed services.

However, deciding between staff augmentation vs managed services model must be based on a researched bias. You must assess project necessities, team requirements, and various other aspects. This comparative information helps determine the specific approach that compels more with your project conditions.

Doubting while outsourcing the projects is natural as you do not want to under perform and affect your efficiency. So, if you have second thoughts about which one to pick, let Cyntexa be the guiding torch on this unknown path. The experts will inform you thoroughly about the best conditions to select each of them to make your decision more precise.

So, what’s taking you so long?