A Practical Guide to Staff Augmentation and Outsourcing
Almost from the inception of information technology (IT), back in the dark ages when the function was called data processing, use of contract staff has been a fact of life for many companies. These outside “consultants,” as they are sometimes called, have consistently provided a variety of services, augmenting permanent staff. In the early days, contracting was the only method an IT manager had of obtaining additional manpower or specialized services. Over the past decade, however, a new word has entered the IT lexicon. “Outsourcing” has become a popular method of obtaining IT services.
Although there are similarities between the use of contractors and outsourcing firms, the two types of services have fundamental differences. This article will define the services, differentiate between them, and suggest the functions where each is most appropriately used.
Defining Staff Augmentation and Outsourcing
Whether they’re called contractors, consultants, or rent-a-body firms, the primary function of these IT service providers is to supplement existing IT staff. They are typically engaged when the IT department is unable to obtain or retain permanent staff, or when it needs specialized skills for a short period. As may be surmised from the term “staff augmentation,” contractors function as members of the department, taking their day-to-day direction from IT managers. Except for the fact that their paychecks come from a different company, and that their assignments can be terminated on short notice without cause, contractors are virtually indistinguishable from other members of the IT department.
Although some companies have exclusive agreements with one service provider, it is more common for a single IT department to use contractors from a number of firms. The reason for the use of several firms is the IT manager’s desire to find the individual whose skills most closely match the department’s needs. That is because the key component in staff augmentation, as in permanent staffing, is the individual person. Success or failure tends to be measured at a task level, and is dependent on specific staff. Because of this focus, when it contracts for staff augmentation, IT faces many of the same risks that it does with its own staff. Contractors may not perform as expected, or they may quit before a project is complete.
Contractor agreements are frequently informal, and, while engagements may be long-term, many are of short duration. From a contractual perspective, staff augmentation can be viewed as the dating stage of a relationship.
If staff augmentation is dating, outsourcing is marriage. It is legally binding, is typically monogamous, has long commitments, and—in most cases—divorce clauses. In contrast to staff augmentation, outsourcing focuses on services rather than individuals, and success is measured at the engagement level.
Some IT departments use a manufacturing analogy to describe outsourcing; explaining that they have chosen to “buy” a service rather than “make” it in-house. They argue that this is similar to the situation where a plant might choose to buy a standard part rather than make it itself. The analogy is valid; the risks and rewards of outsourcing IT services are similar to those of buying parts. Just as a manufacturer may sacrifice the ability to customize a part for its use, but gains speed or cost savings by buying it, IT outsourcing involves similar trade-offs in flexibility against cost and speed.
Outsourcing differs from staff augmentation in several fundamental ways. When an IT department outsources, it turns over day-to-day responsibility for specific services to a supplier. Although overall accountability for the success of the relationship remains with IT, detailed management and direction is provided by the outsourcer, and measurement is not of individual tasks, but rather of compliance with service level agreements (SLAs).
Insights
