Managed Services Vs Staff Augmentation – What To Choose
More and more, businesses are looking to move away from the full-time employment model for certain jobs or projects. Are you one of them? If so, you should understand the concept of managed services vs staff augmentation.
They’re both methods with which you’re going to take pressure off of your in-house team, but the execution differs.
In short, managed services are nothing else than outsourcing. You have a project, a lengthy task, a need for a procedures overhaul, etc. So, you hire another organization to sort it out for you. You give the service provider complete management and ownership of the process.
On the flipside, staff augmentation brings experienced personnel within your own organization, but only for specific tasks. You need a line of code written, you need your team trained in a certain skill, your administrative team temporarily needs another expert, etc.
Now, let’s explore what’s better for your organization. Do you need flexibility? Do you need peace of mind about a project? Do you prefer managing the work that’s being done? Both options have advantages and disadvantages to think about.
What are Managed Services?
Hiring and keeping experts in-house isn’t an easy task. Turnover rates tend to be problematic, if you even manage to find the specialists you’re looking for in the first place. The more complex the job, the harder it is to find qualified personnel too.
What’s more, if you happen to be in a digital-centric branch, you also have to deal with staying up to date with new technologies and compliances.
These reasons and more are why MSPs (managed service providers) are on the market. Instead of having to sort out all of your strategies and technologies with an in-house team, you shift those responsibilities to an MSP.
This outsourcing model allows you to rid yourself of burdens such as:
- IT development, maintenance, and support
- Finding experienced personnel for a project
- Worrying about turnover rates
- Creating strategic marketing plans for significant ROI
- Generating your own leads
- Having a proactive and ever-growing in-house sales team
- And more!
Of course, not all MSPs do everything. Some will do just PPC, or just SEO, or just cold email lead generation. For example, at Five Pack, we’re experts at custom mobile app development.
If you’re worrying that an MSP is too costly, no need! Long-term deals are more cost effective than having your in-house specialists. How? You’re cutting all recruiting and onboarding costs to begin with. Additionally, you’re not paying any salaries or 401ks for the outsourced staff either.
You can also completely forget about downtime, as the whole management of the project and the team is now the MSP’s responsibility.
Managed services work by paying an hourly fee to the vendor, which is agreed upon from the beginning. The price doesn’t change unless you want additional services. This guarantees predictable budget use, and allows you to focus on whatever you want: scalability, operations, marketing, sales, development; whatever the MSP isn’t doing.
What is Staff Augmentation?
Staff augmentation is a newer practice that’s aimed at solving budgetary constraints for both long-term and short-term projects. If your business is experiencing an increased amount of workload, or if a project is particularly complicated, you’d normally look for a specialist to hire.
However, hiring might not be the best option. If the need for extra help will likely be just temporary, your profit margin will take a hit in the long run with another full time employee.
In such cases, it’s optimal to use external personnel to fill in gaps in your internal human resources. That’s what staff augmentation is, in essence. You find a business that’s going to give you provisional specialists. They’ll bring the knowledge you need, but you’ll also have complete oversight over them.
Depending on the way your company operates, this can be either an advantage or a disadvantage. Direct management allows you to use a contingent workforce as you see fit, but their performance will also depend on your ability to integrate them with an in-house team.
Of course, you can also bring in extra staff to do just 1 or 2 tasks. They can write code for a particular part of your app, improve problematic procedures, create content for your website, etc. And then, that’s it. After they do exactly those tasks, they’re reallocated to other businesses, other projects.
No paperwork on your end, no need to pay insurance; just the agreed upon hourly rate.
Another great thing about staff augmentation is that it works for all company sizes. Why? Because you can never say that there’s no more room for improvement. With the right people in the right places (even if temporarily), you gain productivity boosts and increase time efficiency.
At Five Pack, we’ve worked with small and large businesses over 10+ years. We’ve always successfully added value to all of them. It’s all about knowing what specialists you need and for how long.
Long-term projects aren’t a “no go” either, as outside personnel that integrate well with your employees are great to keep around.
Managed Services Benefits
Sometimes, you just don’t have the managerial resources or the proper procedures to optimally use the additional workforce brought by staff augmentation. In those scenarios, it’s recommended you outsource the needed work. It’ll be better than bringing in hourly paid specialists who might find it complicated to understand what’s required of them.
MSPs offer their services day in and day out to dozens of clients, so they know how to do what you ask of them, without needing your involvement.
Additionally, by working with outsourcing pros, you’ll have the following benefits too:
Your involvement is minimal
MSPs have their own management, operations, procedures, the whole package really. You only need to explain the scope of the project, your end goal, and settle the price. Let’s say you’re interested in a software product for your business.
While it’s being developed by the outsourcing provider, you can keep focusing on internal matters. Developing marketing for the product, improving your services in the meantime, training in-house staff for future projects, you name it.
You’ll have a few calls with your outsource vendor about the state of the project, but other than that, no worries whatsoever.
You don’t have to invest in management
Even if you have a solid development team that can deliver an outstanding project, they still need direction. For you, as a business owner, that translates directly into costs. Good project managers don’t come cheap, and every hiccup that happens along the way will be yours to deal with.
Instead, let a managed services provider do that for you. Do you need marketing, sales, development? There are companies out there with technical expertises in all of them (and more). It’s a practical solution that will save you valuable time and money.
It isn’t necessarily more expensive
Hiring an agency to develop your products, handle your marketing, train your team or improve your internal procedures sounds costly. But, it can actually cost you less than if you’d do it yourself.
You shouldn’t look at the asking price of the agency and weigh it solely on your existing revenue. Think if you can support it long-term, and how this is an investment, not an expenditure. Everything the MSP does will come back to you as ROI.
When you hire a full time employee, you’re paying them their wage, plus insurance, plus a 401k, plus training & equipment expenses. They’re a constant, guaranteed cost, month after month. At the same time, it’s not guaranteed that your employee will bring you the same value each month.
With an MSP, it’s clear what they’re doing and what they’re trying to achieve. And, after their task is done, so are your monthly fees to them. Of course, depending on what exactly you’re outsourcing, this can mean months, years, or even more than that.
Certain services like PPC should be an ongoing activity. If you just set up an Ads account and forget about it, its performance won’t be amazing.
You don’t need to look for experts
Some niches (like IT or marketing) require a lot of specialists because the field isn’t homogenous, even if the bits and pieces work together in unison. You don’t want your SEO expert to do your email marketing. You don’t want a web developer to create a mobile game for you.
This means you’d need a diverse in-house team with wildly different expertises in order to be successful. Or, you hire an MSP which provides an “all in one” solution.
Staff Augmentation Benefits
If your internal team can’t handle all the requirements of a project, there’s no need to panic. Staff augmentation gives you the freedom to temporarily hire experts in key positions within your business, and you manage them directly too!
Have an in-depth discussion with your hiring and project managers and see what type of talent you need in your team. Then, simply reach out to a talent provider and set the hourly rates.
It’s a pretty limitless option, opportunities-wise. You can choose short term contingent employees, mid term, long term, whatever suits your needs. They can also work independently or together with your in-house department, depending on what you need them to do.
What’s more, there are even greater pros, such as:
You set the expectations
All of the project’s control is in your hands. Things are going to get done as per your specifications. The talent provider will present you candidates that fit your needs, and the final choice is up to you.
If, for some reason, the temporary staff doesn’t 100% fit your organization anymore down the road, they can also be replaced. However, rest assured that it’s very unlikely to happen.
These are experienced specialists who have already worked on many projects, and they’re ready to deliver what you need, how you need it.
The focus is solely on your company
Both your internal team and an MSP will be working on multiple projects at the same time. It’s just the nature of time sensitive niches. This can lead to inefficiencies, as effort is distributed in multiple directions, giving way to mistakes and miscommunication to creep in.
However, with staff augmentation, you get extra people that are dedicated completely to what you’re doing. As long as you still have need of their services, they’ll continue working for the established hourly rate.
No other projects, no distractions, only quality-driven results.
You eliminate recruitment costs using staff augmentation
New employees mean new overhead and time spent. Recruitment, onboarding, office space, hardware, software licenses, salaries, insurances, the list goes on. Combine that with the fact that a full-time employee won’t always deliver 100% ROI, and you’re in a tight spot.
Sure, you need at least a core team of professionals that are part of your business directly. That being said, hiring new people every time your existing team can’t handle something correctly is overkill.
Through staff augmentation, you gain access to a global pool of highly qualified and vetted personnel. You pay an hourly rate, and that’s it. What’s more, you can use your contingent staff to shift workloads from your in-house staff.
This will reduce multitasking internally and increase productivity as a result.
You reduce paperwork
While you’re paying on an hourly basis, you’re not signing contracts with each augmented staff member. Instead, you pay the talent provider, who then handles all other employee payment and benefits concerns.
This assures that your temporary staff are motivated, as they’re getting paid competitively and given benefits by their actual employer (not you). At the same time, augmented staff is obligated to strictly adhere to your corporate culture and code of conduct.
While they’re working for you, they’re to be treated and to act as members of your business.
Don’t have any legal concerns either! Your temporary staff don’t have any privileged access to sensitive information, and they’re held to the same standards of confidentiality as full time employees.
Staff Augmentation vs. Managed Service – Which One is Better?
Right, the root of the matter. Thing is, there is no definitive answer. It all depends on how your business operates, how you prefer working, and how your team would cooperate with outside staff.
There are pros to choosing either option, but cons as well.
For example, managed services automatically imply a loss of autonomy. You’re no longer making the rules of conduct yourself, ceding them instead to the vendor. But, that’s also a good thing! Less headaches for you, less need for procedures and workflows.
The biggest downside of staff augmentation is that you need managerial resources to keep everything in place. If you don’t, it kind of falls apart due to a lack of centralization. But, if your managers are top notch, make that call right now! Augmented staff are the best of the best in their niche, and they’ll outline the scalability potential of your business.
Additionally, you don’t have to pick just one. Use your internal team for one project, but improve it with staff augmenting. At the same time, give an MSP a totally different idea you have and let them make that a reality.
Mixing and matching the two options can bring you the most satisfying results, if done correctly.
Have a Great Mobile App Idea?
Do you want to launch an incredible app? Well, we do mobile! What kind? Every kind!
Healthcare, transportation, social, business, gaming, ecommerce…we could keep going. As long as it’s a mobile application, outsource its development to us today.
Would you rather keep things within your control? Sure thing! We’ll provide you with the augmented staff that’ll make your dream a reality.
Let’s connect today and create big things for small screens.