Navigating IT Staff Augmentation and Outsourcing: A Strategic Guide

In today’s dynamic technology landscape, IT leaders often face skill gaps and resource constraints. While hiring additional full-time staff may seem like the obvious solution, it comes with long-term overhead and lacks flexibility. That’s where staff augmentation services from an IT staff augmentation firm can become strategic tools to extend IT capabilities.

But how do you know which approach is right for your needs? In this comprehensive guide, we’ll explore the key differences between staff augmentation and outsourcing, when to use each, and how to execute both strategies successfully.

Defining Staff Augmentation and Outsourcing

Staff augmentation involves temporarily bringing in contractors to supplement gaps in your existing IT team. These consultants function as integrated members of your staff, taking day-to-day direction from your managers. You maintain control over their work but avoid long-term overhead like benefits and severance costs.

Engagements are typically short-term and flexible. You can quickly scale up or down based on project needs. With staff augmentation, success depends on finding the right individual consultants who best match your skills requirements.

Outsourcing, on the other hand, focuses on entire services rather than specific people. You turn over end-to-end management and execution of a function like data center operations or help desk support to an external provider.

The outsourcing firm takes full responsibility for staffing, processes, and performance based on mutually agreed upon service level agreements (SLAs). Engagements are longer-term, from two to five years. Outcomes are measured at the service level rather than individual tasks.

With outsourcing, you relinquish day-to-day control in exchange for leveraging the provider’s efficiencies and expertise. Transition time is slower, but costs may be lower.

Key Differences Between Staff Augmentation and Outsourcing

Staff Augmentation Outsourcing
Contract Formality Often low or no contract Long formal contract
Length of Engagement Short-term Multi-year
Time to Start/End Days Months
Number of Suppliers Multiple One or two
Management Your IT team Outsourcing provider
Staff Location On-site Can be on-site or remote
Success Measurement Individual tasks SLAs
Flexibility High Low
Overall Strategy Tactical Strategic

When to Choose Staff Augmentation

Staff augmentation delivers maximum flexibility. It works best in these situations:

Filling skills gaps

Bring in niche experts like cloud architects or AI programmers to temporarily round out your team.

Handling spikes in workload

Scale up for short-term projects without permanent headcount growth.

Gaining knowledge transfer

Have contractors work alongside staff to impart new skills and experience.

Providing staffing flexibility

Adjust team size quickly rather than hiring and firing. Useful for industries with frequent cycles.

Accessing specialized skills

Get proficiency in new technologies like IoT or blockchain without fully building competency.

Retaining control

Supplement teams while keeping management authority and oversight.

Software development projects

Leverage custom software development company to quickly ramp up software development teams with specialized skills like mobile app developers, DevOps engineers, UI/UX designers etc. This allows accelerating delivery without long-term commitments.

Executing a Successful Staff Augmentation Strategy

Follow these best practices when leveraging staff augmentation:

Define clear roles and outcomes for each contractor to integrate them into your workstreams. Avoid vague or open-ended commitments.

Interview multiple providers to find the best fit for your needs based on technical capabilities, industry experience, and culture fit.

Start with short-term contracts to evaluate performance before extending augmentees’ assignments.

Encourage knowledge sharing through documentation, cross-training, and direct skill transfer to maximize value.

Set expectations upfront around security, company policies, tools, and code standards augmentees must follow.

Treat as full team members by including in meetings, communications, and events to aid collaboration.

Watch co-employment risk for long-term assignments by limiting consecutive tenure or structuring as separate contracts.

When to Opt for Outsourcing

Outsourcing can be a strategic move when:

The function is not a core competency for your IT group. For example, outsourcing legacy system maintenance to focus on new initiatives.

There are proven outsourcers who can provide the service as a commodity. Mainframe operations or help desk support are common examples.

You want to reduce costs by leveraging an outsourcer’s economies of scale.

Volatile workload or frequent reorganizations make maintaining the function in-house impractical.

You want to transfer risk associated with retaining specialized skills and institutional knowledge.

Legal or HR issues make long-term use of contractors problematic. Outsourcing avoids co-employment risks.

You seek to drive organizational change by having an external party handle transitional functions.

Best Practices for Outsourcing Success

Applying these best practices can lead to effective outsourcing engagements:

Focus on strategic outcomes rather than tactical tasks when defining the scope of work.

Standardize processes before outsourcing to enable accurate SLAs.

Conduct due diligence on potential providers to assess their capability to deliver.

Start with non-critical functions to gain experience before outsourcing mission-critical work.

Phase in outsourcing gradually over time rather than a wholesale immediate transition.

Assign internal oversight to manage relationships, monitor SLAs, and drive continuous improvement.

Build in flexibility to adjust SLAs and scope as needs evolve over the long term.

Watch for loss leader bids that seem unrealistically low in order to win business.

Staff Augmentation vs. Outsourcing by Function

The optimal strategy depends on the specific IT function being augmented or outsourced:

Data center operations are commonly outsourced given commodity skills and standardized workloads. Staff augmentation provides temporary skills but less cost reduction.

With LAN/desktop support, staff augmentation can enhance skills and processes prior to outsourcing for maximum efficiency. Outsourcing without that groundwork risks subpar results.

For legacy system maintenance, outsourcing enables transferring responsibility entirely off internal teams. Staff augmentation leaves you managing contractors.

New system development is risky to outsource entirely. A mixed approach allows augmenting skills while retaining oversight and involvement.

Final Thoughts

By leveraging both staff augmentation and outsourcing judiciously, IT leaders can achieve flexibility, access specialized skills, reduce costs, and focus on delivering strategic value. The keys are understanding when to use each strategy and implementing them thoughtfully.

With the right approach, staff augmentation and outsourcing become force multipliers for your IT group rather than unwanted burdens. This allows your team to operate as a responsive, high-performing extension of the broader business.


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