What are the Differences Between Managed Services and Staff Augmentation?

Managed Services and Staff Augmentation are often used interchangeably, and that’s understandable considering that they both have their roots in IT outsourcing. In reality, comparing managed services and staff augmentation is like comparing a telescope to a microscope; despite a couple of basic similarities, the two are entirely different in both form and function.

Find Opportunities to Improve with Managed Services 

Much like a telescope helps you see the big picture and observe objects in the distance, Managed Services help companies make large-scale personnel decisions to guide them toward their long-term goals.

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Following a Managed Services model, management responsibilities and strategic functions are outsourced to a Managed Services Provider (MSP) under a pre-determined contract:

  1. Services and prices are defined and negotiated between the client and the provider
  2. The services provided are considered “managed” because the MSP is responsible not only for the work, but also for the delivery model, people, training, processes, and tools used to complete the work

When an MSP offers a service, it establishes a series of formal commitments to the client:

  • The MSP and the client use key performance indicators (KPIs) to measure the provider’s performance against the Service Level Agreements (SLAs) tied to those commitments
  • This not only creates an important level of accountability for the MSP, but a sense of ownership for the employees who represent the provider

MSPs play a proactive role, focusing on finding opportunities for ongoing improvement. As a result, they consider the existing situation as well as the business’s future goals, which often lead to a strong partnership between the MSP and the client.

Staff Augmentation Focuses on Your Immediate Challenges

Staff Augmentation behaves more like a microscope; rather than scanning the horizon for areas of improvement, staff augmentation narrows in on one identified focus area to solve a problem.

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Staff Augmentation firms provide personnel based on their clients’ needs and focuses on:

  • Closing skills gaps
    Staff Augmentation adds staff to a client’s existing employees for a specific project
  • Controlling costs
    Because Staff Augmentation sells time-in-seats rather than services, costs are often assessed incrementally—either per resource or per hour worked
  • Greater sense of ownership for client
    Typically, resources are managed by the client—not by the firm—which can sometimes provide a greater sense of control for the customer

If a business is struggling to meet looming project deadlines, Staff Augmentation can be a quick and effective source of momentum. Extra resources help complete projects without incurring many of the additional costs and risks associated with hiring internally.

By nature, Staff Augmentation is more reactive than Managed Services. The narrow focus on projects and shorter engagements do not allow time for personnel to help shape the client’s larger business goals.

Unmasking the Hidden Cost of Staff Augmentation

Some IT leaders may be concerned about the potential loss of control often associated with adopting an MSP; others may worry about transitional disruptions or resistance from their internal IT teams.

These businesses often prefer Staff Augmentation because of perceived cost savings and notions of greater control. And, for businesses who only need help with one or two quick projects, working with an MSP may not be the right option.

While there are some benefits to Staff Augmentation in the short term, Staff Augmentation over an extended period of time—or across multiple projects—has several hidden costs compared to Managed Services. For example:

  • Lost time, resources with client-specific training
    Staff Augmentation resources need to be trained in client-specific process and tools. Once an MSP understands your environment, they train their resources.
  • Increased management overhead
    Even though you may save money associated with hiring internal employees, Staff Augmentation increases management overhead. MSPs manage their own resources, which reduces both of these cost areas.
  • Increased costs with additional staff member
    If you need more Staff Augmentation resources, your rates increase significantly because you pay roughly the same price for each additional resource. With an MSP you’re paying for a committed service at a set price.

Managed Services are also a more attractive option for IT leaders looking to receive improved results over time across all IT projects. Staff Augmentation is about getting projects done, but it can be difficult for a Staff Augmentation resource to produce results using the same, flawed internal processes that prevented internal employees from solving the problem on their own.

MSPs offer not only people to solve problems, but also people who understand why the problems are occurring.  As a result, IT projects get done and clients proactively improve the way they work through careful guidance related to industry best practices—all under a predictable cost structure.

Learn more about how working with an MSP can help businesses solve their IT problems when you download “Why Work with a Manage Service Provider“.

What’s the Difference Between Managed Services and Staff Augmentation?