Managed Services Model vs Staff Augmentation: Key Differences

Companies often face the challenge of choosing the right strategy to meet their evolving needs. Two popular approaches for leveraging external expertise are staff augmentation and managed services. Each model offers distinct advantages and addresses different operational requirements. This article features the core distinctions between IT managed services vs staff augmentation.

Staff Augmentation and Managed Services: General Overview

managed services vs staff augmentation

First, let`s discuss these terms to understand better the comparison of IT staff augmentation vs managed services.

Staff Augmentation Definition, Pros and Cons

Outstaffing is a model of hiring external specialists in which one company "buys" working time from another. The customer pays the third-party organization, and the organization provides employees who work for the customer and perform its tasks. In other words, outstaffing is the leasing of a team.

Even though the "rented" employees work on the customer's projects and sometimes also on the customer's territory, the customer does not employ them. Legally, outstaff specialists remain employed by the third-party company.

The company that provided the team is fully responsible for its employees and solves all administrative issues during the contract: it pays taxes, wages, and social benefits, arranges sick leave and vacations, and works with documents.

If something goes wrong, the IT staff augmentation provider can replace a specialist who has dropped out of the project or strengthen the team with additional staff. Outstaffing developers are often hired to work full-time on a specific task or a pool of tasks, but part-time work is also possible.

What Is a Managed Services Model? Advantages and Disadvantages

Managed services is an outsourcing model wherein an organization contracts with a supplier for IT services and assigns them 24/7 upkeep, surveillance, and assistance. The infrastructure can be on physical hardware or in the cloud.

Managed services can be compared to any outsourcing model: a subscription to cleaning services, gardener's services, or housing and utility services from a management company. The client uses convenient services and receives only their benefits without having to do the routine work themselves.

Main types of managed services:

  • Managed IT - comprehensive IT infrastructure maintenance with administration, 24/7 tech support, system monitoring, error correction, and backup setup.
  • Managed Cloud - management of cloud services on your own virtual infrastructure and in hyperscaler clouds.
  • Managed DevOps - automating the processes of building, testing, and delivering applications to users. The provider creates a convenient CI/CD-based pipeline environment and maintains the infrastructure.

Service requirements and the provider's responsibility are clearly regulated and spelled out in the SLA. For example, if service availability falls below 99.9% during the period, the provider will be obliged to pay monetary compensation to the client.

Comparing Staff Augmentation vs Managed Services

Here is the comparison table for the managed services model vs staff augmentation.

Criteria Staff Augmentation Model Managed Services Model
Staff Control High level of control; the client manages the staff directly. Lower level of control; the service provider manages their own staff.
Specialization of Skills and Experience Can be tailored to specific needs; clients can choose individuals with the required skills. The service provider offers specialized skills and experience as part of their package.
Economic Efficiency Cost-effective for short-term projects or fluctuating workloads. Often more cost-effective for long-term projects with steady demands.
Resource Management Managed by the client, who oversees day-to-day tasks and integration. Managed by the service provider, who handles all resource allocation and management.
Flexible Terms of Cooperation Highly flexible; staff can be added or removed as needed. Generally less flexible; contracts are more fixed and often longer-term.
Risk Management Higher risk for the client, as they are responsible for the staff and project outcomes. Lower risk for the client, as the service provider assumes more responsibility for outcomes.
Duration of Cooperation Usually short to medium-term, project-based, or as needed. Typically long-term, based on ongoing service agreements.
Measurement of the Result The client measures individual performance and project success. A service provider is accountable for delivering predefined results and SLAs (Service Level Agreements).
Integration with the Command Direct integration with the client's existing team and processes. Integration-managed by the service provider, which may require adjustments to existing processes.

Difference Between Managed Services and Staff Augmentation

managed capacity vs staff augmentation

Now, let's discuss the difference between managed services vs staff augmentation in more detail.

Purpose and Focus

Staff augmentation vs managed services are very different in this regard. Staff augmentation temporarily fills skill gaps within the client's team, whereas managed services deliver specific outcomes and manage entire functions or projects.

Staff Augmentation

Staff augmentation supplements an organization’s existing team with additional personnel. This approach is typically used to fill skill gaps or temporarily handle increased workloads. The focus is on adding a workforce to extend the internal team’s capabilities without changing the overall management structure or project goals.

Managed Services

Managed services deliver a comprehensive, end-to-end solution. Providers take full responsibility for managing and operating specific IT services or functions.

Control Over Team

The client retains full control over the team members and their tasks in staff augmentation. At the same time, in managed services, the service provider manages its team to deliver agreed-upon services.

Staff Augmentation

Your company continues to monitor the staff's activities. Specialists perform the work in your office or remotely. This allows the process to be optimized and employees directed in the right direction.

Managed Services

A full-time employee is not financially liable if the infrastructure fails to cope with the load, IT services fail, and the company goes down for several days. With managed services, the provider's specialists monitor the state of the infrastructure around the clock and are ready to prevent disruptions. If an emergency situation occurs that goes beyond the SLA, the provider will compensate you.

Skill Set and Expertise

Staff augmentation provides specific skills as needed with client-selected individuals, whereas managed services offer a comprehensive skill set provided by the service provider.

Staff Augmentation

Hiring specialists and immersing them in the tasks takes about 2-4 months. If the employee is not a good fit, you must start over and spend 2-4 months again. Hiring stretches for a too long time. However, outstaffing allows you to speed it up: search and onboarding take up to a week. Employees can start work immediately. You need only to familiarize them with the regulations and give them access to internal services and information on the project.

Managed Services

The labor market struggles to find experienced IT specialists. The search can take months, and to lure an employee from another company, you have to offer him a salary above the market and attractive working conditions. As a result, businesses spend a lot of time and money on hiring employees. The provider already has an established team of qualified specialists who know how to manage various infrastructures.

Cost Structure

Staff augmentation costs are typically based on hourly or daily rates for individuals, whereas managed services costs are generally fixed or based on service-level agreements.

Staff Augmentation

Outstaffing frees the company from the administrative duties associated with formalizing labor relations. An IT outstaffing specialist can be removed anytime without risking unexpected costs. If someone is not suitable, they are quickly replaced.

Managed Services

It is expensive to maintain a staff of specialists who will manage the IT infrastructure: salaries, taxes, sick leave, and vacations. In addition to payroll, you must organize workplaces and buy furniture, equipment, and software. Managed services allow you to refuse partially or completely from full-time employees and redirect money for business development. For example, to develop a new website or web application.

Project Management and Oversight

In staff augmentation, the client is responsible for project management and oversight, whereas in managed services, the service provider takes on these responsibilities and delivers results.

Staff Augmentation

With staff augmentation, you are responsible for project management and oversight. You must allocate resources to manage the augmented staff and integrate them into existing project workflows and oversight mechanisms.

Managed Services

Business grows slower when in-house specialists are engaged in regular activities: updating software, scaling computing capacity, and launching systems. Suppose a company delegates routine tasks to a provider. In that case, its employees will have free resources to develop, test, and launch new IT projects, which, in the long run, will open up new opportunities for the business and bring profit.

Duration and Flexibility

Staff augmentation offers high flexibility with short to medium-term engagements, whereas managed services usually involve longer-term contracts with less flexibility.

Staff Augmentation

Staff Augmentation offers greater flexibility. You can scale your workforce up or down based on immediate needs, making it ideal for projects with fluctuating demands or short-term objectives. This model allows for quick adjustments without long-term commitments.

Managed Services

To maintain IT infrastructure on its own, a business borrows computing resources and hires employees with redundancy so that the team can handle management during peak times. With managed services, a business can add new services or drop services that are not relevant at the moment.

For example, use a provider's help when migrating to cloud services and then outsource system upgrade processes and application deployment. Full-time employees periodically go on vacation, take sick leave, or quit at the most inopportune moments.

The company risks unexpectedly losing a specialist with the necessary knowledge and experience to manage the IT infrastructure. Such situations are avoided when a provider with a large staff of highly qualified professionals and well-established service delivery and reporting processes is responsible for the service.

IT Managed Services Model vs Staff Augmentation: What to Choose for Your Business

staff augmentation vs managed services model

After we have discussed the difference between managed services and staff augmentation, it is time to identify situations when each option is the most beneficial.

Staff Augmentation

Here are three most common cases when IT staff augmentation is the best choice:

  • Companies that work on projects. Sometimes, there are a lot of orders but not enough hands. You don't want to inflate your staff; working with freelancers is unreliable. Outstaffing developers will help put out fires, and temporary employees can be abandoned when the workload drops.
  • Large enterprises. Let's say we have a large retail chain with 2,000 outlets nationwide. We need a huge staff of 40-50 personnel officers to close vacancies for all points. The labor fund + insurance premiums for such a department result in too many expenses. IT staff augmentation agencies can reduce these HR costs by four times.
  • Seasonal business. If a company doesn't make money year-round, it's costly to maintain staff when there are no sales. Through outstaffing, employees are recruited for the season, and when the downtime begins, they are parted. It can be considered an alternative to an independent search for seasonal employees.

In these cases, staff augmentation wins in the battle of staff augmentation vs managed services model.

IT managed services

Managed services solutions almost always differ depending on the objectives and needs of the business:

  • Startups. Startups usually have a limited budget to launch a project, and there are no guarantees that it will be successful or profitable. The project can either grow into a corporation or fold in a month, so hiring employees doesn't make sense. Managed services allow you to launch quickly, test ideas, and ramp up or downsize resources.
  • Medium-sized business. IT infrastructure maintenance is a routine task that consumes a lot of the company's specialists' time. Instead of developing IT products, employees update software and hardware, control processes, and monitor. Delegating service maintenance to a provider can free up team resources for developing new projects or partially abandon full-time employees.
  • Large companies. Large companies have a complex IT infrastructure comprising physical servers and cloud resources. It's hard to manage: you need a large team and “well-oiled” processes. With managed services, a business can outsource these tasks to a provider who will connect the hardware and virtual infrastructure to a single monitoring system and manage it.

These are cases when managed services win in the battle of managed capacity vs staff augmentation.

How Can MaybeWorks Help?

MaybeWorks team

MaybeWorks is a team of full-stack web developers with an eye on a React/Node.js stack. Our company's mission is to allow you to concentrate on the strategic development of your business, new product development, creativity, promotional strategy, or team motivation. And while you are conquering the world, our outstaff developers will do all the development tasks. We:

  • Provide free support to the technical lead. There will be no situation in which the task will not be performed on time or at all.
  • Provide free supervision of an outstaff manager who monitors communication, performance, etc.

You, as a customer:

  • Integrate the new developer into your workflow
  • Set your own tasks
  • Manage their fulfillment

Feel free to discuss with us our IT staff augmentation service for your project.

Conclusion

When choosing the optimal model, you need to consider the company's stage of development, tasks, and needs. It is not necessary to abandon your own IT department completely and choose only between managed services and staff augmentation. Now, you know the difference between staff augmentation and managed services. As a result, you can independently decide what option will save you budget on hiring in-house specialists, free up staff time for launching new projects, and minimize the risk of computing power failure.

FAQ

  1. When should a company consider staff augmentation over managed services?

    A company should consider staff augmentation when it needs to quickly fill short and medium-term skill gaps, maintain direct control over the team, and scale the personnel up or down based on project demands. This model is ideal for organizations with strong internal project management capabilities.

  2. How does cost comparison work between staff augmentation and managed services?

    In staff augmentation, costs are typically based on hourly or daily rates for individual team members. Managed services, on the other hand, usually have fixed or outcome-based pricing.

  3. Can staff augmentation be converted into a managed services agreement?

    Yes. As project needs evolve, you can shift from direct oversight of augmented staff to a more comprehensive, outcome-focused approach.

  4. What factors should be considered when deciding between staff augmentation and managed services?

    You must consider the level of control you wish to maintain, the duration and flexibility of the project, cost implications, the complexity of project management, and the specific expertise required.

  5. What is the impact of choosing the wrong model for a project?

    It can result in higher costs, inefficiencies, and resource misallocation. Additionally, it may cause delays, reduced control over outcomes, and decreased overall project quality.

  6. How do companies typically manage the transition from staff augmentation to managed services or vice versa?

    They assess the scope, communicate benefits to stakeholders, and align processes between parties. Continuous monitoring and adjustments are made to address issues and achieve organizational objectives.

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