Since the COVID-19 pandemic, there have been a lot of changes in every aspect of businesses such as operation, working culture and strategy. As a result of remote working due to the lockdown restrictions, employees are now wanting higher pay and more flexibility – to have a better work-life balance. Besides, the demand for IT services continues to rise sharply, which puts external hiring and outsourcing at an all-time high. Many businesses today confuse IT staff augmentation and project outsourcing. Both methods allow you to temporarily hire professionals to complete the projects. Although they are similar in some ways, there are certain things that differentiate one from the other.
IT staff augmentation vs project outsourcing: which to choose? Remember that different methods will produce different results. Therefore, it is necessary to consider carefully before making a strategic decision for your business. The below blog will help to clarify the confusion.
IT Staff Augmentation
Staff augmentation is an IT outsourcing strategy in which organizations employ professionals to fill skill gaps and supplement their in-house team – on a temporary basis. Instead of sending tasks outside of the company or even outside of the country for completion, they bring people in to work on tasks they require.
Normally, an IT staffing company will provide candidates to handle your project needs. In the management process, they will be under control of the technical leader of the client company (not vendor or service provider).
There is a large pool of IT talents and developers with low cost and high quality in Asia, especially Vietnam. For instance, a report puts the number of IT engineers in Vietnam at 400,000 in 2021. Every year, approximately 80,000 IT students graduate. Vietnam is one of the leading destinations in the fields of IT staffing and outsourcing. This is not surprising as the country has invested in its infrastructure and training of IT professionals.
With staff augmentation, companies can target specific skills they need as well as easily scale their team up or down depending on their project. This method offers them much more flexibility and competitive advantage of accessing the talent pool on demand.
It promotes collaboration and better teamwork. When an IT staff is outsourced, the service provider typically is not involved in the environment and work culture of the client company. However, the outsourced staff can interact directly with company employees under the same conditions.
This solution is cost effective. First, the client company only pays for staff for the period they work. Second, the client company does not have to spend money on hiring, taxes, social insurance and employee benefits. Finally, no training cost and effort needed.
Vendors work independently while the client company has greater control over their project and supplementary staff.
Staff augmentation has some disadvantages such as lack of internal knowledge, added processes and higher cost in the long term. Sometimes, time zone differences can be a challenge. Language differences can also lead to huge misunderstandings. Therefore, it is important to hire talents that speak your language very well.
IT Project Outsourcing
Unlike staff augmentation, IT project outsourcing means hiring a third-party team to handle the entire project. The outsourced team works independently rather than joining as official staff. Also, they are responsible for the final result and quality of the project. When outsourcing an IT project, it is important that both companies work toward a common goal with trust and communication. The better the service provider understands the client, the more effective the project will be.
Because the outsourcing provider works independently, without participating in the in-house organization, there will be less management overhead. IT project outsourcing can help the client company save time to focus on their core competencies. They examine the final result of the project (instead of focusing on tiny details).
The outsourced team is responsible for the whole process from start to finish.
There are a number of resources available to help you complete your project successfully. India, Vietnam and Ukraine are some examples. Outsourcing to such foreign countries is easier and more cost effective as compared to other outsourcing markets.
In project outsourcing, the outsourcing firm has to give up a lot of control over their own project. Without adequate communication, the ability to deliver quality projects is hampered severely.
Starting an outsourcing project sometimes can take a really long way. Every aspect of the project must be completed during planning, and all necessary legal paperwork must be finished.
The high level of responsibility also means needing more skills and budget. That is what makes project outsourcing more costly than a supplementary staff.
It can be quite difficult to find a suitable partner that meets exactly your objectives and budget. Furthermore, without selecting carefully, you may put your business data at risk of falling into the wrong hands.
Should I Choose IT Staff Augmentation or Project Outsourcing?
As mentioned above, IT staff augmentation vs project outsourcing both have different pros and cons. Which option to choose depends on the goals and specifics of your business.
Staff augmentation is helpful when there is an unexpected talent gap that needs to be filled right away or when there is a shortage of resources on the local market. It is a great and flexible way to supplement your team in time of need.
Otherwise, if you need a team to carry out a full project, project outsourcing will be the best choice for you. Instead of managing a team or individual employees conforming to a schedule or budget, partnering with a project outsourcing vendor will ensure to deliver the project on time, quality and budget.
To determine whether project outsourcing or staff augmentation is right for you, let’s answer a few questions below:
- Is the project core to your business strategy and mission?
- Do you already have an existing team with skills in place?
- Do you want to retain control over your project and team?
If your answers are “YES”, staff augmentation is the best option for you. Otherwise, think about project outsourcing.
And, if you still feel stuck between two options, contact us right away. Our company – EXE Corp offers consulting and implementation for IT services including IT staffing, IT solution and software development. Build the future and power your company with EXE!