When Staff Augmentation or Project Outsourcing, Which is Better?

ALEX MELNICHUK

Published: 03 Feb 2020

Building Virtual Teams

In today’s globalized economy, it has become normal for companies to outsource jobs to other places where the quality of the work is the same but the costs are lower. However, this has also caused a dilemma in many industrialized countries in which their local workforces are sacrificed for cheap labor alternatives. This is why the question of whether companies should do staff augmentation or project outsourcing has come about.

The main point that needs to be established is which of these two options is actually good for your company. Both come with pros and cons, never mind the moral implications of the choices. The goal now is to determine which would produce the best results for a given case.

What is a Staff Augmentation?

Staff Augmentation is exactly what it sounds in that it is the process by which you are improving the overall quality of your workforce through the addition of skilled workers or increasing the quality of your staff. However, this is only on a temporary basis, which is basically where you are bringing contractors or agents for particular jobs.

The main thing about this particular approach is that you are in control for pretty much most of the process. The temps will be working by following your lead and your roadmap exactly as it is laid out, and they will be reporting directly to the people that are answering to the company. This allows for a more homogenous work environment for such arrangements as IT staff augmentation.

What is Project Outsourcing

Moving on from there, we have project outsourcing, which is an arrangement where you are basically entrusting jobs to other firms or freelancers that are outside of your direct sphere of influence. These can be developers, coders, or freelancers that work from home. They can also be entire agencies overseas that specialize in offering such services to bigger tech firms.

As you might expect, though, your control over how the project is handled will be significantly diminished with this option. You won’t be there to directly supervise the process and regardless of how easy the internet has made global communication, there is still a huge difference in the dynamics when you are not there in person.

Read also: Salaries for Ukrainian Developers: Java, JS, Python, Data Science.

Pros and Cons of Staff Augmentation

Pros and Cons of Staff Augmentation

As with anything, there are pros and cons to staff augmentation that gives staff augmentation meaning. Among the clearest of them are the following:

Pros

  • Complete control – In staff augmentation, you are the employer instead of a client. This means that you are the one who is in complete control of pretty much every facet of a project and the contractors simply take their cues from you. You can delegate but you can still oversee their work to make sure that everything is being done as needed.
  • Smoother integration – Training personnel on the spot who already have the necessary skills and experience will make it much easier to integrate them into the company’s existing system. Processes are easier to adopt and changes are easier to make.
  • Easier Filling of Specialist and Expertise Gaps – One of the biggest advantages of staff augmentation is how many specialists and experts in any given field you can find to fill the roles that lack personnel. If there are workers with particular skills that you need to obtain, you can easily do so from staff augmentation companies and the like, thus plugging any weak points in any team.
  • More Flexibility – It can be quite easy to change things up in any division through staff augmentation because you can easily add or subtract individuals as needed. This is particularly useful in industries like video game development, which are often constantly in flux.
  • Cost Reduction – It’s simply a fact that staff augmentation is cheaper than hiring full-time employees with all of the requisite papers and benefits. This then reduces the overhead costs.
  • Faster Progression – More personnel does not necessarily mean you can finish a project faster but it can if you fill the necessary roles with the right people.
  • Workload Reduction – There is less work for everyone to do if there are more people working on the project and fulfilling their roles, which benefits all workers across the board.
  • More Workplace Harmony - Employees feel less threatened by contractors and temps, which allows them to accept the new additions with fewer issues. This could then promote a smoother, more harmonious workflow that does not add to the competition that is common in office workplaces. It can even help make the proposal system less contentious.

Cons

  • Training Requirement – Regardless of how skilled the temps you get are, they will still need training. Depending on how complicated the company’s internal systems are, the required training might be extensive.
  • Vulnerability to Internal Flaws – No company is perfect and these imperfections can translate to issues in the contractors’ outputs. The more they adhere to company processes, the more mistakes they might make.
  • Additional Executive Load – With more people naturally comes more responsibility on the managers, supervisors, and other executives since contractors are not often entrusted with such responsibilities.
  • Burden of Success Rests on Company – No matter how skilled the workers might be, if the company’s processes and internal systems are flawed, a good output is never guaranteed.
  • Employee/Contractor Division – There will always be a class division between contractors and employees in a staff augmentation arrangement, either explicit or implicit.

Read also: Getting Virtual Teams Right: 6-Step Guide.

Pros and Cons of Project Outsourcing

Pros and Cons of Project Outsourcing

As with staff augmentation services, project outsourcing comes with its own share of benefits and issues. For the most common pros and cons in this arrangement, check out the following:

Pros

  • Less Training Requirement – When you outsource your project to another firm, you typically get skilled personnel who already know what they are doing and thus require less training.
  • Ease of Scaling – Multiple projects can be assigned to multiple groups for a cheaper price, thus making the scaling prospects much better.
  • Fewer Management Responsibilities – Project outsourcing typically involves outside teams with their own supervisors and project managers, which eases the burden of responsibility of company executives.
  • Quality Output Only – The main conditions for outsourcing assignments will always hinge on the quality of output and if this is diminished, the contract can always be terminated.
  • Fewer Legal Liabilities – Project outsourcing involves fewer legal responsibilities to the workers, with the option of also having limited liabilities with clients.
  • Filling Departmental Gaps – Companies lacking specific departments like tech support or IT workers can fill those by outsourcing to an outside firm.
  • Flexibility of Cost – Since costs often depend on the projects, it is always possible to change the firms you will outsource to, for cheaper labor. Expense variability is high.

Cons

  • Limited Control – Unfortunately, project outsourcing affords very limited control on a practical basis due to the remote nature of the arrangement.
  • Restless Workforce – Company employees are typically not very fond of the idea that their jobs can be outsourced to cheaper, more dispensable people.
  • Quality and Reliability – It can be difficult to be sure about the quality of the output of any given firm without trying them first and to be able to rely on the to keep producing that level of quality.
  • Size Reliance – Outsourcing smaller projects are often impractical when taking costs into consideration, which can limit your options on which jobs can be assigned.
  • Poor Integration – Integrating third-party firms and company systems can be quite challenging due to massive differences in practices, often making the attempt moot.

Read also: What to Expect When You Hire a Ukrainian Developer?

Staff Augmentation Vs Staff Outsourcing

So, with the pros and cons of both staff augmentation and project outsourcing all laid out, the question now is which one to choose. This really comes down to the needs of the company or the project. Staff augmentation is suitable for cases where there is a need to:

  • Maintain absolute control
  • Hire workers on an individual basis
  • Fill specific skill gaps
  • Maintain a harmonious workplace
  • Increase the speed of the output
  • Keep the quality of results high

As for project outsourcing, this path is more suitable for companies that:

  • Are lacking in certain departments
  • Want to scale quickly and cheaply
  • Would rather avoid further executive responsibilities
  • Would prefer to limit liabilities
  • Operate only in big projects

Suffice it to say, you can reasonably make your choices of whether you go with project outsourcing or staff augmentation by taking these conditions into consideration. As long as you know exactly what your company or business needs, it should not pose too much of an issue when you are shopping around for options.

A Mix of Both

It is actually possible for you to combine both staff augmentation and project outsourcing by taking parts of certain projects and distributing them as necessary. It is even possible for third-party firms to be under the temporary management of the company for the duration of the job.

There is basically a multitude of ways in which a hybrid version of these two options can come about. You can take parts of the main benefits of each arrangement and highlight them or diminish them as you need. Just take the bits that work for the particular project you are working on and discard what you don’t.

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