What is the Difference Between Staff Augmentation and Outsourcing?

Recruiting talented employees can be time-consuming and expensive.

It is also challenging to keep organizational flexibility in a fast-paced environment characterized by ever-changing deadlines for deliverables. This is particularly experienced when a business takes on a new project or expands its horizons.

This is where staffing models such as augmentation and outsourcing come in handy.

Both strategies allow you to temporarily hire new staff to perform a specific function within a stipulated timeframe.

Although the two approaches may have similar outcomes and characteristics, they have several factors that differentiate them from each other.

More particularly, staff augmentation involves the hiring of specialists to deliver additional expertise in order to guarantee a project’s success, while outsourcing is the process of subcontracting professionals to help with specific business processes because an organization lacks the in-house resources to complete such tasks.

This article discusses the two strategies in detail, highlighting their benefits and key differences.

It also helps you realize the best approach to use in your business or company.

 

What is staff augmentation?

Staff augmentation is an outsourcing strategy that enables organizations to improve efficiency by ‘augmenting’ various projects or processes.

Augmenting, in this case, refers to providing more value or improving efficiencies. As a result, it entails the use of outside personnel to ‘augment’ certain aspects of an organization.

Augmentation is usually achieved by employing professionals with knowledge and skills – based on the business requirements – on a temporary basis.

The need for an extra individual with unique skills might arise at any stage of development in an organization.

This means that augmentation gives you a chance to boost your business or your staff abilities whenever the need arises.

 

Briefly defining staff outsourcing

Staff outsourcing is where professionals are subcontracted to help with specific business processes because an organization lacks the in-house resources to complete such tasks or wants to focus on its core business operations.

This strategy entails cooperating with specialists on board, including developers, quality assurance engineers, designers, and managers.

If a whole team is comprised of different skills and expertise, the outsourcing vendor will select specialists depending on what you require.

Examples of typically outsourced professionals include business analysts, website designers, payroll administrators, and accountants.

For more information about what staff outsourcing is, check out the hyperlinked article.

Top firms that provide staff outsourcing services such as Flexi Personnel are committed to ensuring that your business meets its target goals. But before then, a contract should be established between the outsourcer and the receiving company before the commencement of a project.

The staff outsourcing process starts with several meetings between the outsourcing service provider and the client company to determine all the details of the project, paying attention to the ultimate business goals, monetization strategy, and the target audience.

 

Key differences between staff augmentation and outsourcing

Although both staff augmentation and outsourcing produce similar results, there are some distinctions between the two approaches.

Staff augmentation means that you bring in a new staff member depending on the additional expertise required to ensure project success.

On the other hand, outsourcing entails hiring specialists armed with the resources to help deal with specific operation business operation processes such as accounting, IT, payroll, and administration.

In staff augmentation, the service provider is the one responsible for employing and recruiting staff needed for the task.

However, in the process of outsourcing, the vendor is in charge of all the expenses, including a software license, office space, employee training, hardware expenses, and the overall welfare of the developers.

 

Project management

the difference between staff augmentation and outsourcing - project management

In staff augmentation, the outsourcer manages the project internally even though it’s developed by workers from outside the organization.

On the contrary, hiring an entire team also means hiring the manager who will control all the operations.

This minimizes the responsibilities of outsourcers since the vendor takes over the project until the time of completion, as agreed in the contract.

 

Relationship with the service provider

In staff augmentation, the relationship between the service provider and the company owner is shallow and involves providing the required services needed.

Therefore, the service provider is not necessarily interested in the project’s final success.

On the flip side, the outsourcing model involves a contract that specifies the relationship between the vendor and the outsourcing company.

This promotes trust between the two parties, and the vendor has a responsibility to do everything it takes for the success of the project.

 

Knowledge and insights

the difference between staff augmentation and outsourcing - knowledge and insights

Augmented developers will not have a thorough knowledge of your organization, industry insights, products or services, and other projects due to the nature of the relationship with your company.

Conversely, the outsourcing model allows a dedicated supplier to provide your needs in a way that is specific to your company.

Therefore, the team can dig deep into your organization structure and understand your actual business needs.

 

Should I choose staff augmentation or staff outsourcing?

Staff augmentation will be an ideal choice if you:

  • Already have adequate in-house resources but are looking to guarantee success
  • Want to continue supervising your project and maintain direct communication with team members
  • Have a fixed budget that cannot accommodate a lot of additional employees
  • Possess excellent knowledge about all the project details and factors that will enhance success

 

On the other hand, staff outsourcing is suitable choice if you:

  • Lack in-house resources needed to accomplish specific business processes such as accounting, payroll, etc.
  • Want to have specialists work on non-core business activities to allow you to focus on your core business projects
  • Want high-quality services at a reasonable and affordable cost

 

Why do companies use staff augmentation?

Different companies and organizations choose to augment for different reasons.

For example, a company may decide to put in extra effort or knowledge or utilize specific skillsets during a project.

By contrast, others may exercise it at the end to review it and ensure that everything is on track before launch.

If any mistakes or flaws are discovered, they will make the necessary corrections within the time limit before finalizing.

Since the process entails bringing in extra energy and expertise, an ideal person in the augmentation process should be flexible and work under pressure in a dynamic environment.

Also, the person should conform to the new position as fast as possible and master their responsibilities quickly in order for the process to be highly effective.

So, staff augmentation brings businesses a number of distinct benefits.

 

1. Flexibility

One of the first benefits that companies enjoy when using staff augmentation is flexibility.

By hiring freelancers temporarily, your company will have more room to operate in a flexible capacity without the need to incur additional costs that come with hiring permanently.

Also, the continuing task can be reassigned at any time in the development or improvement process after the worker consents to that.

Since the process involves employing an extra person with specialized skills, managers don’t need to be part of the project at all times.

Therefore, they can take advantage of this and use it as an opportunity to focus on other activities or projects.

At the same time, the assigned worker finishes the task at hand within the shortest time possible.

 

2. Cost reduction

Depending on the model of staff augmentation you choose, you can minimize costs compared to employing in-house developers.

The additional cost is only what the new employee or expert charges.

Now, this will highly depend on the region.

Nonetheless, staff augmentation is cheaper as it involves hiring temporary staff as opposed to permanent employees who require additional overheads such as health benefits, taxes, and other administration costs.

 

3. Full control

As a business you will still have full control over the improvement process.

This is because you will still be able to manage the work of a new employer brought to the team and determine whether they are performing to your expectations or not.

Meaning that you don’t have to compromise your company’s security because you can track everything happening during the improvement process.

 

4. Smooth integration

The process of staff augmentation enables smoother integration in the sense that you hire a person who is already an expert in the field.

Since the person has all the knowledge necessary for the improvement and development process, it becomes easier to assimilate them into the company’s workflow.

 

5. Access to expert manpower

Augmentation allows you to supplement your existing workforce with an individual that brings in extra knowledge and skills. It enables operations to remain in-house under your control.

 

6. Counteracting attrition

As the business environment continues to change over time, most employers are likely to change employees.

This is because attrition is a side effect of the growth of the economy.

Therefore, staff augmentation can be utilized as a way of solidifying the needs of staffing.

 

Why do companies use staff outsourcing?

Now, here are some reasons why companies opt for staff outsourcing.

 

1. Increased efficiency

Outsourcing allows organizations to focus on their core business operations.

In fact, very few businesses have administrative functions such as payroll and accounting as part of their core business functions.

By allowing professionals to handle such tasks, organizations give themselves room to focus on their business operations, increasing productivity and efficiency in the process.

 

2. Client organization retains control

The vendor is the one who bears the task of ensuring that the project is done excellently and finished on time.

The incoming team also has a manager who supervises the process. This creates a stress-free and relaxing environment for your in-house workers, making it easy for them to transition into the new process seamlessly.

They have all the time they need to learn about the new procedures, management approaches, and technologies that come with the new project.

 

3. Easy to scale the team

With outsourcing, it is easy to scale the team depending on the size of the project.

You can increase the number of team members if the project is complex and reduce them if it is simple enough to do so.

 

4. It is a cost-effective business strategy

It is no secret that businesses across the world seek to reduce their operational costs.

In fact, a study by Deloitte found that many executives, especially those affected by COVID-19, sought to reduce business expenses indefinitely.

Outsourcing is cost-effective because you will only need to pay the members up to the end of the contract instead of hiring them permanently.

Although, the overall cost does depend on the outsourcing region.

 

Wrap up

Staff augmentation and staff outsourcing are two brilliant business strategies that are gaining traction in today’s marketplace.

They both entail using specialists to help client companies with their projects and business processes.

Furthermore, they help save on time and costs, all while increasing operational efficiencies.

But, however similar these two concepts may be, they have splitting differences.

Staff augmentation involves using experts to ‘augment’ or increase value to guarantee the success of a project or a specific business process. Staff outsourcing, on the other hand, is a process where a client company delegates non-core business operations to third-party firms/ freelancers who have specialized in that field of operation, i.e., accounting, payroll, tax, and HR. 

Both these strategies are different, meaning a keen evaluation of your organization’s requirements will help you decide which option is best.

Regardless of your choice, you’ll need a staff outsourcing service provider with experience and a proven track record.

At Flexi Personnel, we have over 12 years of experience working with clients of all sizes, delivering robust HR-related solutions.

We would like to work with you on your next project.

Contact us at Flexi Personnel for this and other HR solutions.

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