Strategies such as IT outsourcing, staff augmentation, and the hybrid approach address different needs, of which companies need to be clearly aware of, before going ahead and deciding which one will shape their future. In this regard, it is not a question of which model surpasses the other, but rather which one is more suitable for the business that is looking either to delegate entire projects, tasks, fill skill gaps or augment their already existing teams’ capacity.
To make matters less complicated, we have taken all three of these business strategies, briefly reviewed their weak and strong points, and indicated which cases would represent the best application scenarios.
We’ll be breaking the ice with outsourcing, which is the practice of assigning a third party with projects and tasks that would have been performed, traditionally, by in-house teams. This strategy has caused quite a stir in the late 90s, when it started to draw the attention of a rising number of companies, in need of an extra hand. And for good reason, as this model brings various benefits to the contracting businesses.
Pros and cons of outsourcing.
First seen as mainly a way to reduce costs, outsourcing has proved that it is much more than that; it is, of course, a highly cost-efficient solution, but it is also a practice that brings added value to the hiring business. Outsourcing contributes to the optimization of internal processes and increases efficiency, much to the contracting party’s advantage. It helps accelerate time-to-market, and allows internal employees to concentrate all of their efforts towards core activities, relieving them, at the same time, of repetitive and monotonous tasks.
However, outsourcing has its downsides. When delegating projects to specialists that are located in remote corners of the world, various issues may arise. Whether it’s communication difficulties, caused by language barriers, or trouble related to time-zone differences, outsourcing can give hiring companies quite a few headaches.
When is outsourcing a good idea?
Because it is such a cost-efficient solution, outsourcing is clearly a smart idea for businesses that are looking to cut costs. With operations and processes being optimized, companies are relieved of unessential expenses, and the money thus saved can be invested in more important areas.
Outsourcing is also a great choice if your in-house specialists need more time to focus on core activities. With more time on their hands, they will be able to contribute to the company’s growth, and take it to the new heights that it deserves to reach.
Positives and negatives of staff augmentation.
As its name suggests, staff augmentation refers to the process of increasing companies’ capacity, when the already existing teams are no longer adequate. Whether hiring businesses are seeking short or long-term assistance, staff augmentation may the answer, as it offers many advantages.
One of these benefits is closely tied to the tiring and costly recruitment process. By resorting to staff augmentation, companies avoid this burdensome operation, and, in addition, secure their access to a large talent pool, that otherwise would be much more difficult to reach.
This strategy offers contracting companies flexibility as well; hiring businesses have the possibility to add or remove specialists, depending on their needs and requirements, making it a highly scalable solution.
But, as in the case of outsourcing, staff augmentation comes bundled with shortcomings. Such an acquisition of extra help requires increased resources, more time spent managing and supervising new team members, and everything that is included in the onboarding process.
On top of this, in the long-term, staff augmentation can prove to be more expensive than expected by the contracting business. The latter has to cover both expenses occasioned by fees, collected by the hired company, and costs related to the acquired talent itself.
When is staff augmentation the right choice?
As we have observed earlier, staff augmentation isn’t necessarily the right choice if you’re dealing with long term projects. It is, however, a great solution for short-term assignments and businesses that are searching for specific skill sets.
Filling such skill gaps in a short time is something that companies struggle with, especially in the current context where skill shortage is a bitter reality, but staff augmentation can prove to be a real life saver.
Advantages and disadvantages of hybrid approach.
The hybrid approach offers the best of both worlds, in the sense that it combines the benefits of outsourcing and staff augmentation. Therefore, the company that decides upon the hybrid approach, benefits from access to a large talent pool, reduced expenses, scalability, increased efficiency, and of course, a high level of flexibility, more than in the case of any of the two combined strategies.
At the same time, however, the disadvantages are there too, communication issues, misunderstandings, delays, cultural differences, and expenses occasioned by onboarding, are just some of the problems you could face.
How do you know if the hybrid approach is right for your company?
Apart from the cases in which outsourcing and staff augmentation would be an excellent choice, which obviously apply to the hybrid approach as well, this combined strategy is especially great for businesses that operate in a dynamic environment and have to deal with constantly changing requirements.
Conclusion
Outsourcing, staff augmentation, and hybrid approach are some of the most popular strategies that companies of all sizes turn to nowadays. The three all put forward great benefits, but in the end, it comes down to the hiring company’s needs, and it’s up to each business to decide which would meet its requirements best.
Choose Arnia Software for your IT outsourcing projects.
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