For a business to run smoothly and achieve its goals, various teams with their respective know-how must work together to form one well-oiled machine. One of the most essential teams is the IT department. They are responsible for maintaining a company’s technology infrastructure, troubleshooting issues, and ensuring cybersecurity. However, IT teams are crucial for more than just these tasks; they are especially important for businesses in tech-driven industries that need software development.
The reality is, that not all companies have the resources to handle the complexities of both front-end and back-end development. Fortunately, they can resort to two prominent business models in enterprise software development: staff augmentation and managed services.
This comparative piece aims to provide an in-depth analysis of the two business models. Let’s learn how each works and highlight their pros and cons so you can make a more informed decision on how to best structure your teams.
Understanding the Models
Businesses may need to outsource software development to access specialized skills and expertise not available in-house. It allows companies to scale their teams quickly based on project demands and goals. Additionally, outsourcing enables businesses to focus on core competencies while external teams manage the technical side. This strategic approach helps businesses remain competitive and adapt to the rapidly changing technological landscape without compromising their existing internal resources.
The two main models in outsourcing software development—staff augmentation and managed services—cater to different factors like project scope, budget, control requirements, and long-term objectives. Both have their unique advantages and drawbacks.
Staff Augmentation
Staff augmentation involves hiring temporary or contract professionals from a third-party provider. You entrust an external organization with certain aspects of the business, and in this case, software development. In this arrangement, internal staff works with individual developers, designers, testers, or entire teams through outsourcing firms.
Pros of Staff Augmentation
1. Scalability
Businesses can rapidly scale their teams up or down based on current project needs. This flexibility is crucial in dynamic environments where project requirements can change unexpectedly. For example, if a client has a sudden request, companies can quickly add developers to deal with the changes.
2. Level of Control
Companies retain direct oversight of the augmented staff. This means that businesses can manage the outsourced team as part of their existing workforce to maintain quality and consistency in projects.
3. Cost-Effectiveness
Companies can reduce costs associated with benefits, training, and infrastructure. Since augmented staff are typically hired on a contract basis, companies avoid the long-term financial commitments of permanent hires.
4. Urgency
Enterprise software development staff augmentation is ideal for meeting specific project deadlines. When there are tight timelines, bringing in external reinforcements helps ensure that projects are completed according to schedule. This can be critical in competitive markets where time-to-market is imperative.
Cons of Staff Augmentation
1. Team and Workflow Mismatch
Businesses may experience challenges in integrating temporary staff into existing teams and workflows. Mismatches in work styles and team dynamics can hinder collaboration and reduce productivity.
2. Unfamiliarity with Culture and Context
New temporary staff may lack familiarity with the company’s history and specific project nuances. This unfamiliarity can lead to misunderstandings or misalignment with the company’s objectives.
3. Management Challenges
Coordinating between in-house and augmented staff can create additional management challenges. Ensuring effective communication and collaboration between external hires and permanent employees can require extra effort and resources. If roles and responsibilities are not clearly defined, it can negatively impact project management processes.
4. Commitment
Augmented staff might not have long-term commitment or loyalty to your company. Since their contract is temporary, they might prioritize short-term personal goals over urgent, business-related ones.
How to Know If Staff Augmentation is Right for You?
Given its pros and cons, how do you know if software development staff augmentation is the best option for your situation? Hiring augmented staff might be necessary for several scenarios, including:
1. Project-Based Development
In situations where a company has a specific software project with a defined scope and timeline but lacks the necessary resources or expertise, staff augmentation can be highly effective. For example, if a company plans to launch a new mobile app but only has web developers, they can hire mobile app specialists. Staff augmentation allows companies to source specialized expertise that their current team lacks.
2. Seasonal Workload Fluctuations
Many businesses experience seasonal spikes in demand, which can lead to understaffing during peak periods. Staff augmentation allows companies to keep up with high-volume market seasons or surges in customer activity without incurring the costs of permanent hires.
3. Rapid Growth
Companies undergoing rapid growth may struggle to hire full-time employees quickly enough to meet recruitment demands. Staff augmentation helps businesses swiftly onboard professionals without the delays of traditional hiring.
4. Innovation and Fresh Perspectives
New talent through staff augmentation brings fresh ideas onto the table. When existing employees work together for a long time, they may become accustomed to their ways of thinking. By bringing in outside experts, companies welcome new perspectives and encourage innovation and problem-solving, which leads to better project outcomes.
Managed Services
Managed services is the practice of outsourcing specific business processes or functions to a dedicated managed service provider (MSP). In this setup, such as in managed services software development, companies hire remote front-end and back-end developers from outside their organization. The provider takes full responsibility for the management, development, and delivery of the services.
Pros of Managed Services
1. End-to-End Management
Managed service providers (MSPs) handle all aspects of the project, from planning and development to maintenance and support.
2. Expertise and Specialization
MSPs often have specialized knowledge and experience in specific areas of development.
3. Fixed Cost Structure
Staff augmentation costs depend on the number of staff and the duration of the project. However, managed services often involve a fixed or predictable cost structure such as monthly or annual fees.
4. Long-Term Partnership
Managed software development services involve a longer-term commitment. Unlike staff augmentation which is generally used for short-term or project-based needs, businesses enter into extended contracts with service providers.
5. Scalability
Businesses can adjust the level of support and resources needed based on changing requirements. Managed services can adapt to these changes in terms of functions managed.
6. Risk Mitigation
MSPs assume the risks associated with the project, including compliance, security, and performance. This reduces the risk burden on your business and gives you peace of mind.
Cons of Managed Services
1. Less Control
The MSP has more autonomy and control over the functions they manage. They typically bring their own methods and tools to deliver the contracted services, so you may have to relinquish some control over the project.
2. Overdependency on Provider
In software development managed services, you rely on the provider’s skills and resources. This can create vulnerabilities and issues that you may not be able to handle without their assistance.
3. Initial Transition Costs
Transitioning to a managed service model can involve initial setup costs and time to integrate the MSP’s processes with your own.
Choosing the Right Model for Your Business
Considering these pros and cons is crucial in choosing the right model for your business. To further help you decide, here’s a more detailed breakdown of staff augmentation vs. managed services:
| Feature | Staff Augmentation | Managed Services |
| Flexibility Cost Structure Control Access to Expertise Focus Integration Risks | High Variable, can be unpredictable High Limited to available talent Short-term, primarily operational Significant Company assumes project risks | Moderate Fixed, predictable Moderate Extensive, with a dedicated team Long-term, more strategic Minimal, as the provider manages the team MSP assumes project risks |
Why Managed Services Are Optimal for Ongoing Projects
While both staff augmentation and managed services offer unique advantages, the latter emerges as a more suitable choice for businesses looking to enhance efficiency and control over ongoing projects. Here are reasons why managed services are ideal for long-term front-end and back-end development projects:
1. Consistency and Continuity
Managed services software development ensures consistent quality and performance over the long term. MSPs are responsible for maintaining and improving the project from start to finish.
2. Strategic Focus
Managed services allow the business to focus more on its strategic goals while the provider manages the development team.
3. Access to Advanced Technologies
MSPs are equipped with the latest tools and follow best practices that deliver greater efficiency and peace of mind for businesses.
Think Long-Term. Think Eastvantage
Managed services offer proactive monitoring and support that staff augmentation cannot. While both models are promising, choosing between the two will ultimately depend on your business needs and goals. But specifically for software development, you need a reliable partner who stands by your side to ensure that potential issues are identified and resolved before they impact your project.
Eastvantage specializes in providing software outsourcing solutions through the managed services model. Our team of experts are committed to managing your front-end and back-end development so you don’t have to. Contact us today for more information!
