IT Staff Augmentation vs. Software Development Outsourcing: Which is best for your company in 2023?

Jun 25, 2023 |
Tech |
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Outsourcing has been there in the IT industry for many years. For instance, businesses have outsourced their advertising for almost as long as advertising has existed—a century and a half. In recent decades, tech companies have increasingly embraced this method of doing business.

In the field of software development, where technological advancements occur at a rate that exceeds the capabilities of businesses, hiring an outside team to complete specific tasks is vital.

Here are a few explanations for why software companies work with an outside vendor:

  • The internal team requires specialized knowledge or additional talents.
  • The internal staff members are overburdened with work.
  • In order to stay competitive, the business must quickly incorporate new features into the product.

The loss of control that occurs when businesses delegate control of a specific project to others is the most frequently stated drawback of traditional outsourcing. One option to have more control over offshore developers is to use a staff augmentation model that provides full-time software engineers from outsourcing companies that work under the direction of the client’s management. We’ll go over the differences between traditional outsourcing and staff augmentation and cover various aspects of each.

What is software development outsourcing?

Employing a dedicated development team including a project manager, software engineers, QA testers, and UI/UX designers is made possible by the outsourcing model.

The client organization contacts a number of agencies, goes through the project requirements, and chooses a vendor that is within budget, has the required technical know-how, and is knowledgeable about the market. After that, the vendor might ask their business analyst for more thorough documentation to confirm the software need specs.

Key benefits of software development outsourcing

Tech businesses may delegate the entire project to external vendors overseen by the CTO or a member of the internal team who is responsible for the product. As a result, project outsourcing enables businesses to cut operational expenses and avoid making equipment and training investments. Companies can thus spend less on salary, benefits, retirement contributions, and other expenses related to employing and managing a team while also worrying less about growing their firm.

Additionally, outsourcing enables businesses to access specialized information and talents that might not be accessible internally. For instance, a company can want a certain programming language or techniques, tools, and frameworks that would take a long time for an internal team to learn.

The greatest alternative for non-technical CEOs may be to outsource the complete project because they won’t have to manage the external staff and can concentrate on the important parts of the company.

Key disadvantages of software development outsourcing

The process of developing and training a new internal staff could take longer than outsourcing a project.

However, the customer will take some time to look for, evaluate, and speak with each agency. It can take weeks to find and hire additional engineers because when outsourcing companies agree to work together, they might not immediately have all the professionals needed for the project.

Like any employer, outsourcing companies run the risk of hiring the wrong individuals. However, outsourcing restricts communication between the business and outside suppliers because the customer won’t have direct control over every employee on the outsourced team. Additionally, the client can lose some administrative or creative control over the project. By selecting providers who share similar values and placing an emphasis on effective communication throughout the project, this challenge can be partially resolved.

What is staff augmentation?

Staff augmentation is a business practice of expanding an in-house team with dedicated specialists on a short-term or long-term basis. This practice uses vetted, full-time, employed software engineers from outsourcing agencies, which typically keep a database of profiles with a specific skill set.

Compared to traditional outsourcing, augmented contractors work directly with the in-house team, and the company has full control of the development process.

Here are some cases when companies decide to hire developers through staff augmentation:
A short-term or long-term expansion of an internal team with committed professionals is known as staff augmentation. This method makes use of fully vetted software engineers that are employed full-time by outsourcing companies, who often maintain a database of profiles with a certain skill set.

As opposed to conventional outsourcing, the organization has complete control over the development process when augmented contractors collaborate directly with the in-house team.

Following are some instances where businesses choose to acquire developers via staff augmentation:

  • The corporation lacks the resources to invest in a new project or pay down technical debt since the internal workforce is overworked.
  • When the project is finished, the company won’t need the specific skills that it doesn’t already have in its stack.
  • The business needs to immediately expand its staff. It chooses to collaborate with a business that offers a deep talent pool of professionals since it lacks the time to spend months looking for an experienced developer or someone with a highly sought-after skill set.
  • The business has to upgrade its outdated software. As a result, it might require skilled subcontractors who are familiar with both the older tools and languages as well as the legacy system’s code structure.

Key benefits of staff augmentation

Hiring developers that can work remotely from anywhere in the world is known as staff augmentation. The development process can be accelerated, technical debt can be decreased, and time-to-market can be improved by hiring additional employees.

In essence, the IT staff augmentation firm serves as the client’s official employer, making local employment legal and paying less tax in the client’s nation easier. Usually, it offers streamlined billing and contracts that have been verified to be consistent with local laws.

Similar to traditional outsourcing, businesses don’t have to worry about paying for insurance, vacations, office rent, or workstations, as they would if they had in-house staff. Onboarding a new contractor, however, will take time.

Finally, it is simple to sever ties with contractors who are not a good fit for the business or find someone else to take their place. Because the business must give early notice and severance pay, internal coders, for instance, are harder to fire. In essence, staff augmentation allows an organization to swiftly scale up or down its development team, which makes it suitable for projects with varying demand.

Key disadvantages of staff augmentation

Contrary to outsourcing, engaging contractors through staff augmentation allows the business to manage them in-house. Contrarily, contractors are less assimilated into the corporate culture than in-house developers, and they frequently interact with other teams less. As a result, when using contractors, the business should develop a more thorough project description that considers internal procedures and other company efforts that contractors might not be aware of.

Staff augmentation vs. outsourcing software development: Key differences

Staff Augmentation  Outsourcing 
Hiring model Full-time software engineers who work for outsourcing companies make up staff augmentation. It enables a business to easily scale up or down its development workforce. When a project is outsourced, the CTO or a product owner from the internal team manages the entire undertaking with an external provider.
Business use Businesses use staff augmentation to shorten the development cycle, lower technical debt, and relieve internal teams of non-essential duties. Additionally, businesses use contractors when a project calls for specialized knowledge that the business doesn’t already have on staff. When an external team that offers UX research, UI/UX design, software development, project management, and quality assurance is required, businesses prefer traditional outsourcing.
Hiring process Interviewing the software engineers they provide requires calling numerous outsourcing organizations that provide staff augmentation services.

As an alternative, businesses might use a staff augmentation marketplace, which makes use of a network of agencies to offer contractors in many nations a single point of access.

Contacting various companies, going over the project specifications, and choosing a vendor that fits the budget and has the required technical know-how and sector experience are the steps involved in hiring the outsourcing provider.
Benefits package Because they already receive these advantages from their agencies, contractors from outsourcing companies are not eligible for employee perks like health insurance, bonuses, and paid time off. Companies do not have to worry about paying benefits, retirement payments, or any other expenses related to employing and managing an internal team while using traditional outsourcing.
Both versions are quite distinct and cater to various business demands, as we can see from their features. The act of turning over the entire project to a third-party team that handles UX research, UI/UX design, software development, project management, and quality assurance is known as outsourcing. Contrarily, staff augmentation is the practice of recruiting full-time contractors through outsourcing companies to carry out a set amount of work directly under the client’s control.

Where to find a software development outsourcing company

Asking for recommendations from their network or, at the very least, using review aggregators to confirm the legitimacy of the IT service provider, like Astha.IT, can help businesses choose a trustworthy outsourcing supplier.

Although agencies frequently solicit feedback from their most devoted clients, evaluations are nevertheless a positive sign, particularly in the absence of additional recommendations. A development shop has acquired at least a few clients that are prepared to spend their time working with it if an agency has received positive reviews.

Where to hire a software developer via staff augmentation

Employers can either find a talent marketplace with contractors from numerous outsourcing firms in various nations or employ an outsourced agency that provides staff augmentation services.

The second choice is a staff augmentation approach with a focus on quick hiring and broad talent choices. Astha.IT is one of the largest and first companies to provide this approach in Bangladesh. It uses a network of 50,000 software developers from hundreds of Latin American and Eastern European outsourcing companies.

A customer can locate a professional with the necessary training and expertise by using Astha.IT rather than contacting numerous agencies. An expanded talent pool increases the client’s chances of selecting a contractor who fits the corporate culture.

Conclusion

Our goal was to help clarify the intricacies of traditional outsourcing and staff augmentation. We hope you now have a holistic idea of staff augmentation and outsourcing and can find the best service for your company.

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