We’ve previously discussed how the definition of managed services has expanded and even causes confusion in the marketplace. Another confusing aspect is the team structure of a managed services firm and how it compares and differs from an IT staff augmentation environment.
Difference in Firm Focus
Managed Service Providers and Staff Augmentation firms are different in their overall focus, in their contractors, and how contractors are hired. While a Managed Service Provider seeks to partner long term with small to enterprise businesses, either replacing or being a fractional IT service provider, an IT staffing firm is dedicated to augmenting an existing IT team with skilled candidates.
Several national IT staffing firms, even speak to how short term, subcontractors can be hired, “for just a few hours, a couple of months or the long term.” Although hiring a staff augmentation firm for the long term is costly and hotly debated. More on that later…
Many managed service providers allow for full IT outsourcing to partial outsourcing while staff augmentation is typically the most flexible option for companies and reserved for very short term projects. Many MSP’s don’t offer staff augmentation services, because it’s an entirely different model with a different philosophy, one that many MSP’s even disagree with.
Difference in Client Focus
A staffing agency is hired for ‘renting bodies’, while a Managed Service Provider is hired for expertise and guidance. The perfect client for a Staff Augmentation firm is a business that realizes it doesn’t have the resources to complete a significant IT project by a firm deadline. The burden of hiring qualified resources (screening candidates, writing job postings, interviews) is lifted by working with a staff augmentation firm. Often, these clients have attempted to in-source the work, but can’t hire the right employee or due to the short term nature of the project, require temporary help.
However, the perfect client for a Managed Service Provider realizes technology costs can be reduced, efficiencies can be achieved and productivity can be improved in the hands of an experienced IT consulting firm. It’s less about staffing and a shortage of talent and more about the outcomes: making IT reliable, secure, accountable, flexible and efficient.
Difference in Consultants
There is a difference in the personnel drawn to a Managed Service Provider vs. a Staff Augmentation firm. Both models require experienced and qualified technicians and consultants. However, MSP’s integrate within a client’s IT department, becoming like another employee while the short term hiring of a subcontractor from a staffing firm, leaves little room to become part of the team.
For staff augmentation firms to make a profit, they are constantly hiring as contractors need to be as close to 100% billable as possible. Sitting on the bench, waiting for the next project isn’t a profitable business model, so many staff augmentation firms need a few weeks to hire and deploy a team onsite. Is it possible for a sub-par consultant to be hired in order to meet a deadline? Yes, and that is one risk of the augmentation model.
A managed service provider typically employs a loyal team for years. Consultants at MSP’s are groomed to solve complex client problems in a variety of industries. Regular training and long term contracts with clients, are more likely to expose a MSP contractor to strategic IT outcomes: long term technology efficiency, productivity improvement, compliance and network security, etc.
Due to the short term nature of a staffing firm project, subcontractors are deployed for less strategic purposes and for more tedious tasks with defined start and end dates: a cloud migration, a disaster recovery, a new office setup. Utilizing a staff augmentation firm is not only more costly long term, but consultants rarely have the skills necessary to integrate into an existing IT department and affect long term technology outcomes.
Onshore, Nearshore, Offshore, Onsite, Remote
Both managed service providers and staff augmentation firms utilize a variety of employees to accomplish client goals. A hybrid model is best served depending on the project and task. For a managed service provider to be successful, on site employees are critical to shaping strategy and collaborating with IT. Staff augmentation firms will often fly subcontractors onsite. For a client, paying for subcontractor expenses (hotels, flights, food) during a project is still cheaper than hiring the resource long term, but doing so long term is not a profitable business model.
Many staff augmentation firms rely on offshore or nearshore teams as a cheaper option for budget conscious clients. Certain tasks can also be supplemented by budget friendly teams for both it outsourcing models.
Should a Business Hire a Managed Service Provider or an IT Staffing Firm?
Both models can work depending on budget, purpose and timeline. Understanding the differences between these two outsourcing models is critical to making technology strategic to your organization.