The difference between staff augmentation vs. managed services is that staff augmentation involves hiring external personnel temporarily to fill specific roles, while managed services involve outsourcing entire IT functions to a third-party provider.
“Managing technology and consistently hiring full-time employees to fill skill gaps can quickly consume your budget. Luckily, there’s a more cost-efficient way to achieve these goals.” – Jason Harlam, Business Development Manager, Technology Advisory Group.
The reason why most businesses look toward these outsourcing models is usually to reduce costs. High costs associated with managing IT staff and infrastructure can strain your company’s budget. However, 45% of companies who outsource IT say that the cost-effectiveness is obvious.
While both models have lower costs compared to expanding your existing team, the managed services model is generally more cost-efficient over time. The rest of this article will demonstrate why and when staff augmentation makes more sense.
The Ideal Use Case for Staff Augmentation
Staff augmentation involves the temporary use of external personnel to fill specific roles within an organization. This model gives companies the flexibility to scale their workforce as needed without the long-term obligations of permanent employment or a managed IT contract.
Situations where staff augmentation is particularly beneficial include short-term projects, seasonal work, or when specific skills and expertise are required for a limited period of time.
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Why Cost Savings Appear in Managed Services vs. Staff Augmentation
Staff augmentation offers a temporary solution for short-term needs. While this may seem like the more cost-effective solution upfront, the cost of rehiring augmented staff can add up over time. This is especially true if you need skilled professionals on a long-term basis.
The data supports this claim. Research from CompTIA discovered the following.
- 50% of companies working with an MSP reduced their annual IT costs by up to 25%
- 33% of companies saved up to 50% on their annual IT costs
- 13% of companies reported savings of more than 50% on their annual IT costs
1. Predictable Budgeting
Managed services often come with a fixed monthly fee. This allows businesses to predict and manage their IT budgets more effectively. With staff augmentation, costs can be unpredictable due to variations in the need for temporary staff and associated training and onboarding expenses.
2. Comprehensive Resource Utilization
Managed services provide access to a complete team of IT professionals that ensure every aspect of IT is covered. This holistic approach can be more efficient and cost-effective than hiring multiple specialists through staff augmentation.
3. Reduced Overhead Costs
Managed services reduce the need for additional office space, equipment, and administrative support, as these are covered by the managed service provider (MSP). In staff augmentation, companies still need to provide workspace, tools, and support for their augmented staff.
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4. Proactive Maintenance
MSPs provide proactive monitoring and maintenance of IT systems. Therefore, they can identify and resolve issues before they become significant problems. This proactive approach helps you minimize downtime and avoid the high costs of unexpected repairs and system failures.
5. Improved Efficiency
MSPs bring specialized expertise and efficiencies to IT management. As a result, you can achieve cost savings through streamlined processes and the implementation of best practices. This efficiency leads to better resource utilization and reduced overhead costs. In fact, research indicates that managed IT can increase operational efficiency by 50%.
6. Economies of Scale
Managed service providers serve multiple clients, which enables them to utilize economies of scale. That means they can offer services at a lower cost compared to what businesses would pay if they managed these services individually. Staff augmentation lacks this aggregated cost benefit.
Staff Augmentation vs. Managed Services Cost Calculator
If you’re interested in a demonstration of how managed services offer cost savings. Here is an interactive calculator to help you put it into perspective.
IT Services Cost Calculator
Compare Staff Augmentation and Managed IT Services
Result:
Here’s how you can use this calculator.
1. Enter Data for Staff Augmentation:
- In the “Staff Augmentation Hours (per month)” field, enter the estimated number of hours you expect to use staff augmentation each month. Use whole numbers for the hours.
- In the “Hourly Rate for Staff Augmentation ($)” field, enter the hourly rate you expect to pay for staff augmentation. Enter the rate as a number, including cents if applicable (e.g., 75.50).
2. Enter Data for Managed IT Services:
- In the “Managed IT Services Monthly Fee ($)” field, enter the estimated monthly fee you expect to pay for managed IT services. Enter the fee as a number, including cents if applicable (e.g., 1200.00).
3. Calculate the Costs:
- Click the “Calculate” button to compare the costs of staff augmentation and managed IT services.
4. View the Results:
- The results will appear below the form, showing which option is cheaper or if they cost the same.
Example:
- Staff Augmentation:
- Hours: 80
- Hourly Rate: 50.00
- Managed IT Services:
- Monthly Fee: 3500.00
After entering the values, click “Calculate” to see the comparison between the two options.
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Choose Personalized Managed IT Services From The Technology Advisory Group
One challenge business owners face while working with an MSP is less control over specific projects. Less control over the project may lead to a risk that the result won’t reflect expectations. However, you can avoid this risk while still enjoying the benefits of managed services.
Technology Advisory Group provides peace of mind and confidence. We offer flexible pricing and coverage options, letting you customize a support package to fit your budget and needs. Plus, we offer a 30-day opt-out clause that lets you cancel after 6 months if you aren’t fully satisfied. No need to worry about wasting your IT budget on services you don’t need.
Reach out to us today to get started.
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