Staff Augmentation vs. Outsourcing: What You Must Know Before Choosing One

Staff Augmentation vs. Outsourcing: What You Must Know Before Choosing One
Article by DesignRush DesignRush
Last Updated: October 13, 2022

It is predicted that the global outsourcing market value could hit $731 billion in 2023.

There's a lot of talk these days about the merits of staff augmentation vs. outsourcing. Essentially, staff augmentation and outsourcing are two different ways to obtain third-party help for your business, either temporarily, on a project basis or sometimes permanently. 

Although staff augmentation is technically a type of outsourcing service, there are some differences between the two. In this post, we'll define and compare staff augmentation and IT outsourcing so you can make an informed decision about which is right for you. 

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What is Staff Augmentation & Its Pros and Cons? 

Staff augmentation is the process of bringing third-party workforce to boost operational capacity or output. It can be used to address a variety of needs, including project-based work, peaks in customer demand, or special initiatives. 

Augmenting your staff can be a great way to fill in the gaps in your company's skillset without breaking the bank. By bringing in temporary or contract workers with the specific expertise you need, you can avoid the cost and commitment of hiring full-time employees. 

Staff augmentation can also give you access to a larger pool of talent and allow you to scale up or down quickly to meet changing demands.

Perhaps most importantly, it can help you keep your core team focused on your company's bottom line by taking on additional tasks that might otherwise fall to them. 

It’s no wonder that the staffing industry generated nearly $500 billion of revenue globally in 2018.

Staff Augmentation Pros 

Regardless of business size, if you're looking to supplement your in-house team or build an entire department from scratch, staff augmentation can significantly improve your workflow by offering many benefits. 

Increased Flexibility

With staff augmentation, you can quickly scale up or down your workforce as needed in order to respond to changes in demand. This flexibility can be particularly beneficial for businesses that experience seasonal demand fluctuations.

Access to Skilled Resources

When you augment your staff, you will have access to skilled resources that may not be available internally. This proves invaluable when you are looking to fill a niche role or if you require specialized skills that your existing employees don’t have.

By working with a staffing agency, you can ensure that you find the right person for the job.

Cost-Effectiveness

By augmenting your existing staff with additional resources, you can avoid the costs associated with hiring new full-time employees. Not to mention that it can help you save on training and onboarding.

Improved Productivity

When your employees are supported by additional resources, they can work more efficiently and effectively. This can free up time for your employees to focus on higher-level tasks, ultimately leading to improved business outcomes.

Reduced Turnover

Another benefit of staff augmentation is that it can help reduce turnover within your company. When employees feel supported by adequate resources, they are less likely to experience burnout or become disengaged with their work.

This can lead to improved retention rates and decreased turnover, saving your business money in the long run.

Staff Augmentation Cons 

While staff augmentation can be a great way to supplement your workforce with highly-skilled professionals, there are some potential disadvantages to consider.

These are the most common concerns:

  • Contractors may not be fully invested in your company's success and may be more likely to move on to other opportunities when they arise.
  • It can add complexity to your workplace, as you now have to manage both full-time employees and contractors.
  • There’s a potential for miscommunication and misunderstanding, as contractors may not be familiar with your company's culture and values. 

What Is Outsourcing & Its Pros and Cons?

The global market size of outsourced IT services was valued at $520.74 billion in 2019 and is expected to grow at a CAGR of 7.7% from 2020 to 2027.

What makes it so popular? 

IT outsourcing entails contracting out IT functions and processes to a third-party provider. Companies do this to focus on their core business, reduce costs, or gain access to specialized expertise. 

There are many outsourcing strategies. From hiring a managed service provider to handle specific tasks to entering a long-term contract with an offshore provider for more comprehensive services, IT outsourcing can take many forms.

Note that although outsourced IT for small businesses was once the most popular outsourcing engagement model, nowadays businesses of all sizes embrace outsourcing as a unique strategy to boost their efficiency. 

IT Outsourcing Pros 

Outsourcing can help businesses improve their operational efficiency and focus on their core competencies. When done right, it can be a superb way to steer your company towards success as it brings many advantages. 

Cost Savings

When you outsource IT functions, you can take advantage of economies of scale and get access to world-class resources at a fraction of the cost of building them in-house.

Additionally, IT outsourcing can help you avoid the high costs associated with training and hiring in-house staff.

Improved Efficiency

Outsourcing IT functions entails access to a team of experts who are dedicated to providing quality services. This can free up your company’s internal resources so that they can be focused on other areas of the business. 

Increased Flexibility

With outsourcing, you will have the ability to scale up or down as needed, which can improve your company’s agility in response to changing market conditions.

Additionally, IT outsourcing can help you avoid the inflexibility often associated with in-house staff.

Risk Management

IT outsourcing can help your company manage risks better as you will have access to a team of experts who can help you identify and mitigate risks associated with your company’s operations. 

Access to New Technologies

Choosing to outsource can also give you access to new technologies that might not be available to your company if you maintain an in-house IT staff. This can give your company a competitive edge in today’s ever-changing business landscape. 

IT Outsourcing Cons 

There are many potential benefits to outsourcing IT services, but there are also a number of potential drawbacks that businesses should be aware of.

Among the biggest risks of outsourcing IT is that it can:

  • lead to a loss of control over critical parts of the business as you’ll be handing over control of key systems and data to an external provider;
  • be disruptive to the business, as it can require significant changes to business processes and internal structures;
  • be expensive, as businesses may need to pay for service contracts and ongoing support fees. 

Staff Augmentation vs. Outsourcing: The Similarities 

Staff augmentation and IT outsourcing are two popular business models for obtaining the skilled labor needed to complete a project or goal.

You can’t help but notice the similarities between them, such as: 

  • Both staff augmentation and IT outsourcing involve bringing in skilled workers from outside the company. This can be beneficial for companies that don't have the internal resources to complete a project. 
  • Both models allow companies to save on costs by only paying for the labor they need. This can be a great way to stay within budget on a large project. 
  • Both staff augmentation and IT outsourcing provide flexibility when it comes to staffing. Companies can scale up or down as needed, making it easy to adjust to changing business needs. 

Staff Augmentation vs. Outsourcing: The Differences 

While they may appear very similar at first glance, there are several key differences between staff augmentation and outsourcing. Take a look at the table below. 

Difference in:  

Staff Augmentation 

Outsourcing  

Responsibility  

The organization retains responsibility for the work being done and the workers who are doing it 

The external provider is responsible for both the work and the worker  

Quality of work 

Since the organization remains in charge, augmented staff is less likely to deliver low-quality results 

Since the third-party provider is in control, it can lead to issues with the quality of work or the workers themselves  

Control 

Organizations have more control over staff-augmented projects  

(can lead to problems if there’s miscommunication or miscoordination)  

The external provider has control over the whole project 

(can lead to problems as the organization’s IT needs may not be met as expected)  

Scope of work  

Usually, augmented staff is hired for a required skill and for a specific time 

Usually, IT services are outsourced for a required task, and the organization hires a whole team or company 

Staff Augmentation vs. Outsourcing: Which One Is Better for You?

Determining whether you can benefit more from staff augmentation or outsourcing should ultimately be based on a careful evaluation of your needs and objectives.

Staff augmentation can be a viable option if you: 

  • Need to meet a sudden rise in demand
  • Lack specialized expertise you don’t have in-house
  • Want to feel more in control even though you’re outsourcing your work 
  • Wish to complement your team with additional resources 
  • Have thought about boosting your overall performance and efficiency 

IT outsourcing can be a good model for your needs if you: 

  • Have a large project that your team can’t handle 
  • Want your company to be up-to-date with the latest IT trends
  • Need access to new technologies you don’t have in-house
  • Wish to cut your spending on often expensive IT equipment 
  • Want to focus on your core business and are open to handing control to a third-party provider to handle your IT needs 

Top Staffing and Outsourcing Agencies

1. Blue Coding LLC

  • Location: 2250 NW 114th Ave, Ste 1A, Miami, Florida 33192, United States
  • Average Hourly Rate: Inquire
  • Expertise: Staff Augmentation, Outsourcing Software Development, Software Development

Blue Coding is one of the top nearshore software development agencies connecting North American companies with the best engineers and developers from Latin America.

The agency provides staff augmentation solutions with a rigorous vetting process customized for individual project requirements, which ensures the best technical and cultural fit for every client. They also deliver a full lifecycle software development process via software outsourcing.

If you need urgent staffing or project support, Blue Coding can help you complete your team even on short notice.

2. City Personnel

  • Location: 235 Promenade Street, Suite 401, Providence, Rhode Island 02908, United States
  • Average Hourly Rate: Inquire
  • Expertise: HR Outsourcing, Staffing, Recruiting

City Personnel is a Rhode Island-based boutique staffing agency catering to Southern New England with world-class staffing solutions. The agency boasts two decades of industry experience and extensive knowledge of the local job market.

Their staffing solutions give businesses the freedom and flexibility they need to scale. Temporary staffing allows you to fill a short-term gap or a seasonal demand. They also offer temp-to-perm, which lets you evaluate an employee's cultural fit before you hire them permanently.

City Personnel has worked with companies across various industries, including customer service, legal, medical, accounting and finance and more.

3. Idi Oumarou

  • Location: 522 W RIVERSIDE AVE STE N, Spokane, Washington 99201-0580, United States
  • Average Hourly Rate: $15/hr
  • Expertise: Web Design, SEO, Virtual Receptionist.

Idi Oumarou is a fully remote, limited-liability outsourcing company that helps businesses improve the world by utilizing motivation, inspiration and leadership.

Based out of Washington, Idi Oumarou handles everything from web design, coaching and SEO to French transcription, technical support and acting as a highly-skilled virtual receptionist.

Allow Idi Oumarou to take care of all the nitty-gritty facets of your business while you focus on the other, more critical areas.

4. Koala Customer Care

  • Location: 10193 152A Street, Surrey, BC, Vancouver, V3R 4H6, Canada
  • Average Hourly Rate: Inquire.
  • Expertise: Data Entry, BPO, Back Office Outsourcing, Call Centers, Answering Services for Small Businesses, Telemarketing, Appointment Setting, Inbound Call Centers, Real Estate Answering Services, Survey Companies, Phone Answering Services, Virtual Receptionist, Outbound Call Centers, Customer Service Outsourcing.

Koala Customer Care was established in 2017 and has provided businesses with affordable customer service and satisfaction.

Koala Customer Care takes care of all your client-related needs by offering a complete set of services, such as email support, phone answering, outbound sales, live chat support, social media customer handling, and data entry outsourcing. At the same time, you focus on providing them with the best possible product or services.

Some of Koala Customer Care’s most notable clients include Fur Baby Couture, Elle Yaletown and All Media Marketing.

5. Insurance Support World

  • Location: 12648 Agave Bay St,, Victorville, California 92392, United States
  • Average Hourly Rate: Inquire
  • Expertise: BPO

Founded in 2009, Insurance Support World is a leading global provider of back-office outsourcing solutions for insurance companies around the world.

Their insurance BPO services include new business servicing, claims management, commission management, customer service and claims administration. They have a team of qualified insurance specialists and an arsenal of new-age technology and software applications.

The agency caters to carriers, MGAs, wholesalers and retail brokers in countries like the US, Canada, the UK, Australia and New Zealand.

6. Zedtreeo Outsourcing

  • Location: 304 S.Jones Blvd #7072, Las Vegas NV 89107, Las Vegas, Nevada 89107, United States
  • Average Hourly Rate: $5/hr
  • Expertise: HR Outsourcing, BPO, Back Office Outsourcing

Zedtreeo is a leading outsourcing and remote staffing provider that caters to small and medium-sized companies.

They provide dedicated virtual employees that are skilled, experienced and competitively priced. Their staffing includes web developers, IT support, virtual assistants, virtual paralegals, lawyers and more. All team members are extensively interviewed and verified through reference and background checks.

Zedtreeo has over 200 global clients and more than 1,500 projects delivered.

7. Artisan Talent

  • Location: 216 S. Jefferson, Chicago, Illinois 60661, United States
  • Average Hourly Rate: $75/hr
  • Expertise: HR Outsourcing, Staffing, Recruiting, Web Design, Graphic Design...

Artisan Talent is an award-winning creative staffing agency with a vast pool of digital, marketing, and creative talent.

The agency helps businesses hire freelancers, full-time staff or temp-to-perm talents through a dedicated account manager. They also offer Artisan Pro talents, hand-picked staff with at least seven years of experience, an in-depth portfolio, and experience with the top companies.

Artisan Talent has offices all over the US, with their headquarters in Chicago. Their most prominent clients include HBO, PayPal, Estee Lauder and New York Times.

Staff Augmentation vs. Outsourcing: Key Takeaways 

The decision of whether to staff up or outsource can be a difficult one for any business. To make things even more complicated, there are different types of engagement models, each with its own benefits and drawbacks. 

But, now that we closely compared staff augmentation vs. IT outsourcing, you can clearly see which one is better for your needs. If you need more help settling on one, we also discussed staff augmentation vs. consulting and staff augmentation vs. managed services. 

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