Contact us anytime to know more — Amit A., Founder & COO CISIN
CISIN, as a provider of both types of services, will take this opportunity to discuss the differences between these models and help your business choose one which works best.
Outsourcing And Staff Augmentation
Let's first define both terms. Staff augmentation can be seen as a form of outsourcing; as the saying goes, however, the devil lies in the details.
Outsourcing is an increasingly common practice in IT. Outsourcing involves hiring an external team to develop your product.
You can negotiate control of this team and set deadlines; while they may discuss everything with you - they remain, ultimately, vendors.
Staff augmentation occurs when an in-house team of developers works on a product but is missing key specialists; you then hire third-party providers as temporary hires who will work closely alongside the in-house team, often remotely.
CISIN stands apart by offering both staff augmentation and full-scale outsourcing solutions for collaboration. Our IT experts will discuss software outsourcing vs IT Staff Augmentation to help you decide whether either is necessary.
Software Outsourcing Vs IT Staff Augmentation: Flexibility
Both staff augmentation and outsourcing offer great flexibility, which is one of the primary advantages of outsourcing for any business considering hiring temporary remote staff without being limited by borders (i.e.
Offshore Hiring).
Remote outsourcing and staff augmentation both offer you access to highly qualified employees with specific skills from any location worldwide, yet these two models of cooperation offer different perspectives on business practices.
IT staffing augmentation generally provides more hiring flexibility than outsourcing since you or a trusted employee will select candidates yourself to fill specific roles.
When making this choice, take into account not just technical expertise and knowledge but also communication abilities and work processes familiarity of potential hires - much like when hiring employees from within your own organization! Furthermore, newcomers will work closely alongside existing team members from day one.
Outsourcing can only meet your product-related needs when working with an outsourcing firm; when doing so, they will usually assign specialists who specialize in that particular field.
Provided you are free from other projects and have enough time, you are ready to undertake a new one. Trusting the vendor instead is often more beneficial since they know which team members work well together.
Software Outsourcing Vs IT Staff Augmentation: Control
Outsourcing can reduce your control over development due to company processes, while IT Staff Augmentation gives you more options.
Both models of collaboration provide solutions for: Establish the requirements for the product; determine its acceptance criteria; establish frequency and scope for team reports; ensure regular communication within your team since some internal processes will likely remain out of your hands.
Ultimately, the former option allows more control as you will have direct oversight of any temporary talent hired as employees within your internal team.
You and your team can closely oversee their work; in contrast to a full-time employee, you or your tech lead will need to become more involved with project management duties.
Software Outsourcing Vs IT Staff Augmentation: Quality And Expertise
Staff augmentation may be considered a variation of outsourcing; however, their quality differences cannot be overstated.
In reality, neither model is superior. All this boils down to how much control a product owner has over the development process.
Choose the ideal members for your team by hand-picking them yourself. By carefully monitoring the process, as a product owner, you'll be able to influence it as you see fit - meaning the final product will reflect your vision!
Working with experienced and responsive outsourcing professionals, you can also get exactly the product that you imagined - however, this requires greater communication and commitment on both ends.
One reason business owners outsource software development is so they can focus on other tasks more efficiently.
Software Outsourcing Vs IT Staff Augmentation: Cost-Effectiveness
Experience has taught us that comparing staff augmentation and IT outsourcing on cost alone is not appropriate; each type of staffing can be used effectively in different circumstances.
Outsourcing is often employed to produce larger, more complex products. Of the various forms of cooperation within outsourcing, Fixed Price contracts are the most frequently chosen model.
IT staff augmentation can be cost-cutting when paying only for their hours worked on your product, which allows you to control employee involvement - for instance, by hiring them for longer but offering them lower pay.
Staff augmentation can be used for smaller products or when your in-house team requires help completing routine tasks or implementing specific features.
Although an entire team of augmented employees could be hired, doing so would cost considerably and defeat the purpose of saving money; IT staff augmentation differs from outsourcing in that you only pay for their time instead.
Different Types Of Staff Augmentation
Based on your project's specific needs, there may be different models of staff augmentation. There are three categories of staff augmentation: commodity, highly skilled and skilled.
Commodity
This model does not necessitate specific skills as its primary concern lies with responding quickly to urgent situations with commodities rather than on specific skills required for handling them.
Manual labor or lower-level jobs such as factory work and retailing could be utilized here.
Skill-Based Staff Enhancement
This form of staff enhancement requires skill. However, the level of expertise does not need to be high-level or specialized - entry-level or clerical roles may still benefit.
Highly Skilled
Staff augmentation with highly-specialized skills is often utilized when undertaking high-powered projects, making this staff augmentation model the go-to approach in developer, IT, software and technology fields.
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There Are Many Types Of Staff Augmentation Providers
Staff augmentation services come in many varieties and forms; it is an expansive industry with numerous providers.
Some common examples are:
Traditional Staffing Providers
A traditional staffing provider (also referred to as a commercial/generalist staffing provider) acts as an agency which supplies expertise for noncritical projects without providing employees with specific skills - this might be used by CEOs of IT companies looking for data entry specialists for instance.
Boutique Staffing Firms
Boutique staffing firms (or "boutique staffing") refer to staffing agencies which specialize in filling difficult roles within your company, such as Senior Architect.
Such vendors typically offer highly tailored and custom services focusing on quality over quantity - though you may pay an exorbitant sum for their assistance.
Staffing Platforms
Staffing platforms (also referred to as "human clouds") offer staff augmentation services by connecting potential employees with employers.
There are two categories of staffing platforms - on-demand and gig. On-demand platforms have talent vetted through interviews, while gig platforms don't guarantee professional employees.
Recruitment Agencies
An IT recruitment staffing agency specializes in IT staffing services to find suitable candidates for both critical and noncritical projects.
If successful in finding such candidates, a fee is awarded, and the client can manage development teams without third-party intervention while receiving dedicated teams. Partnering with such an IT recruitment service provider also opens doors to many other advantages, such as enhanced employer branding, protected IP rights and control over expenses etc.
The Advantages Of Hiring IT Staff
Hiring IT staffing or outsourcing can have many advantages over traditional staffing solutions, including access to more talent, increased productivity and cost-cutting on employee acquisition and retention costs.
Let's examine both models side-by-side to identify potential advantages and disadvantages.
A Higher Level Of Control
Staff augmentation offers several distinct advantages, the first being increased control. You are in complete charge when hiring staff and can exercise full oversight over both their process and final product.
Furthermore, at any point during their employment, you can visit and see what problems may have arisen, as well as assess overall team-building situations.
Training Of Current Team
Enhance the team's scalability and improve your project by hiring outside specialists with the experience to work alongside your existing internal team.
Your employees will also benefit from closer communication and collaboration, bringing new expertise and knowledge into your group.
Deeper Involvement With Your Business
Temporary employees working directly for you and the team in-house will become acquainted with your team's culture and processes more quickly than an outsourcing team would.
Augmented employees can also easily understand and meet your goals more readily than outsourcing teams can.
The Disadvantages of Hiring IT Staff
Staff Augmentation Comes With Its Own Set Of Drawbacks
You must exert control in the form of onboarding and guidance of any employees added through IT Staff Augmentation Services, including your tech lead or business owner, if your company doesn't already employ one in-house project manager.
Your time would otherwise have been used on business tasks rather than monitoring and helping a new individual to be productive in your role as manager or tech leader.
It should go without saying, but any additional staff you hire remains your responsibility, as product decisions must still be made by you alone.
Software Outsourcing: Pros
Focus On Business Growth
Outsourcing product development allows you to free up time for other tasks, like project management or exercising control.
Simply set requirements, acceptance criteria and deadlines with your team working on it and receive updates according to a schedule that works for you until accepting and accepting the finished product - leaving more time for other areas of business like raising investors or expanding operations.
Reduced Responsibility And Risk
Another advantage of outsourcing lies in its reduced responsibility and risk.
As long as your acceptance criteria have been set forth, all responsibility for the product lies with the team responsible for outsourcing. They must abide by your criteria as set out, which could involve research, implementation and testing features.
Your risks will also decrease significantly as your responsibilities will decrease. Your agreement with an outsourcing partner should include safeguards that minimize risk - for instance, payment will be made for delays caused by team errors.
Outsourcing Can Reduce Overhead Costs
Your vendor will take responsibility for setting your team up for development. No money or time will need to be spent interviewing new employees; instead, their partner will replace any employees that become unavailable (illness, accident or vacation leave).
Reduced Risk Of Cost Overruns
Cost overruns may be reduced when working with an outsourcer on a fixed-price model because project progress is evaluated early.
Your agreement may include clauses to manage any possible overruns.
Read More: Preparing Your Company for IT Staff Augmentation Model
Software Outsourcing: Cons
Outsourcing Has Higher Costs
A team that outsources often incurs overhead expenses as part of their responsibility (for instance, replacing someone quickly or purchasing equipment).
Outsourcing typically costs more than hiring staff directly; however, cost efficiency should always be taken into consideration when considering either option.
Outsourcing Has A Slow Start
Outsourcing is a complex process that requires much preparation before development can commence. Both you and the vendor must discuss in great detail your budget, requirements and definition of completed work, as well as agree on an implementation timeline.
Less Control
When outsourcing, your control of the development process may be limited due to pre scheduled reports/syncs between team members and acceptance of the final product.
Furthermore, you have limited power over who works on your project, their processes of working or their performance metrics.
Outsourcing Vs Staff Augmentation: Which Should Be Preferred?
Now let's review everything we discussed above before outlining some factors that should help guide your choice between staff augmentation or outsourcing:
1. What Your Business Needs
Before making any decisions, it's essential to first assess what your business requires: rapid scalability, improved resource allocation within your team or producing products to a particular standard within an agreed-upon timeline.
For the former purpose, additional staff might be necessary, while outsourcing may provide a viable solution. Staff addition can help prevent technical debt.
In addition, fixing non-urgent issues before they become urgent is another effective strategy to minimize technical debt.
2. Your Own Team's Experience
In most instances, staff augmentation may be sufficient if your in-house team already possesses expertise. There may be exceptions; please get an IT consulting before making a decision.
3. Your Budget
Outsourcing can be more costly than employing staff in terms of cost. But its expenses are set from the outset and rarely go over budget when executed according to plan.
When outsourcing development is reduced or postponed altogether, certain features or functions might have to be compromised in order for costs to stay under budget.
Staff augmentation may be less costly overall but can become quite pricey if product development takes an extended amount of time - this model is, therefore, often employed when dealing with smaller-scale projects.
4. You Can Set A Completion Date
Outsourcing teams typically sign agreements requiring them to deliver by an agreed-upon date; provided no major changes occur mid-project, your product should arrive by then, and compensation is provided should they miss their deadlines.
Staff augmentation doesn't require the same time commitment from its employees as your internal team; temporary workers can be dismissed if they perform inadequately, while permanent augmented employees don't bear responsibility for producing final products.
Outsourcing can be beneficial when faced with tight deadlines for product launches, while staff augmentation might provide greater flexibility if your project needs to be put on pause for any reason.
5. How Will You Trust Your Partner?
Software outsourcing and IT staff augmentation both pose control issues, with outsourcing demanding an additional level of trust from you since your project will essentially be given over to a third party to build.
Once complete, however, you will possess all of the intellectual property rights of its creation; however, you cannot influence how the team operates; staff augmentation may be more suitable if you prefer being the project manager.
Trends In IT Staff Augmentation
Advanced IT Skills
Tech companies must hire IT staff in order to access the best engineers. Today, tech firms are seeking to integrate cutting-edge technologies such as Artificial Intelligence (AI), Machine Learning (ML), Blockchain technology, cybersecurity measures and cloud computing into their offerings - these fields will become even more in demand and change how clients request staffing solutions.
Staffing Automation
Since the lockdown, remote work and automation have seen an exponential surge. IT staffing providers must offer fast, convenient solutions to clients.
Therefore, investing in video conferencing tools, tracking and message systems, as well as skill testing tools, is worthwhile in order to identify top software engineers.
Global Market Accessibility
Regional Partners May Not Always Provide Talent IT staffing trends include an increasingly global workforce. Since the pandemic, companies have learned how to manage remote teams effectively; now, they're tapping a global talent pool for scarce and suitable programmers.
Top Five IT Outsourcing Trends Of 2023
Outsourcing services are on the rise; however, before diving in, you should take into consideration certain elements to determine if it fits with your business goals and strategies.
Outsourcing can have a substantial effect on your product. By taking advantage of new technologies, you can implement them and reap their benefits immediately. Here, we discuss some of the top IT outsourcing trends for 2023 and beyond:
Cloud Services
Cloud computing services allow businesses to outsource IT tasks like managing and storing data, applications and other related IT-related processes to third parties - saving costs while improving efficiency at work with global teams across time zones and real-time data exchange/modification capabilities.
As a result, businesses experience cost savings while improving efficiency with cloud services. Cloud services are frequently utilized for:
- Software as a Service (SaaS): Software hosted and made accessible over the internet from cloud providers.
- Platform as a Service (PaaS): Businesses can utilize PaaS to develop, manage and run apps without needing to invest in infrastructure or platform maintenance costs themselves.
- Infrastructure as a Service (IaaS): Another trend in IT infrastructure outsourcing, Infrastructure as a Service provides pay-as-you-go cloud-based internet infrastructure on demand from a third party - virtualization and storage included, but you are responsible for operating system, data, programs etc.
CyberSecurity
High-level data protection will become increasingly critical as cyber-attacks increase, making outsourcing companies ready to provide cybersecurity services essential to maintaining business operations.
Though many cloud service providers provide security solutions, they typically are insufficient to achieve enterprise-grade security.
To protect against targeted attacks and data breaches, additional third-party solutions will often be necessary.
Artificial Intelligence (AI)
Artificial intelligence is one of the fastest-growing global IT outsourcing trends. AI refers to machines and systems capable of performing tasks on their own with continuous improvements based on collected data to mimic human intelligence.
AI can manifest in various forms. The outsourcing market is taking note of AI technology's growing popularity and the increase in companies providing these services.
Machine Learning Automation
Machine learning is one of the fastest-growing trends in outsourcing, predicted to experience an estimated growth from USD 1,03 billion in 2016 to an expected USD 9.81 billion by 2023.
Machine Learning Automation, also referred to as Artificial Intelligence or AI uses data and algorithms to replicate human learning processes.
Machine learning outsourcing has quickly become one of the hottest trends in IT outsourcing in recent years due to a rapidly increasing demand for experts in this field.
By outsourcing these specialists instead of hiring them internally at a significant cost, everyone saves money while still receiving top-quality software development firms' services.
Metaverse And Blockchain Services
Blockchain technology enables software developers to develop applications that securely store data across multiple computers.
Web 3.0 is the latest Internet technology that uses artificial intelligence and machine learning alongside blockchain, while in the metaverse, users can move around virtual environments that resemble the real ones using technologies such as virtual reality (VR).
Blockchain services are becoming the next IT outsourcing trend as more businesses embrace the decentralized web.
As part of this digital transformation, more businesses will adopt blockchains resulting in increased demand for software vendors who possess relevant expertise - so we ensure we stay current on this aspect to make sure our clients don't miss anything important!
Why Businesses Should Adopt Industry Trends In IT Outsourcing In Order To Stay Ahead Of Competition?
Organizations worldwide have increasingly turned to outsourcing IT departments. Organizations from India, Eastern Europe and South America are outsourcing these departments as organizations can save time, reduce costs and gain experience without needing technical skill sets and management capabilities for themselves - so why not Outsource then? Without evolving with a wide range of newer systems and processes, your company could end up working with outdated ones that endanger its survival and lead it downhill quickly.
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Conclusion
When making decisions between IT staff augmentation and software team outsourcing for software development needs, many factors need to be taken into consideration.
Both models offer businesses excellent options to build software faster with higher quality results.
Outsourcing and augmenting services have become increasingly popular as businesses transition more toward remote work environments or combined work teams and the demand for tech talent increases.
Our knowledge on this subject should assist you in choosing which option will best serve your company. CISIN offers both staff augmentation and outsourcing services, so please do not hesitate to get in touch with us.
